Going for Growth: UK company growth strategies to 2021 summary video
Richard Spofforth, Audit and Assurance Partner, summarises our Going for Growth report – a nationwide research project exploring how businesses are looking to grow.
Want to learn more? Download your copy of our Going for Growth report here.
UK private businesses, despite the greatest period of political uncertainty for over a decade, remain confident of their potential for growth – optimistic and still predict strong growth for the next three years.
In their view, future growth is most likely to come from domestic markets yet, despite the UK’s decision to leave the EU, continental Europe remains a key market.
These are just two of the conclusions from our recent researches among more than 500 companies which I will summarise in this short video.
My name is Richard Spofforth and today I’ll be covering the following six issues that will help you and your business focus on key aspects of growth: what promotes it, what holds it back and where others see potential. As we enter a momentous new business year, we’re here to help you strengthen your business and its potential for the future.
- Favoured growth strategies for businesses
- Perceived constraints upon growth
- How businesses prefer to finance growth
- Key barriers to growth
- The scope of business plans
- Going international – aspirations, barriers and opportunities
Favoured growth strategies for businesses
Where to start?
Well, the main growth multiplier for companies in the coming years will be technology but worryingly, the two other findings that came out of our report undermine our government‘s ambitions to build a ‘Global Britain’.
In the 2nd column here, 27% of businesses are looking to expand their product offering but since the strategy of moving into international markets was only the fifth most popular strategy – many people seem to be acting and thinking locally. We’ll come back to the concept of international trade later.
The perceived constraints upon growth
Whether it’s a combination of the UK’s patchy record on skills development and vocational training, or our tightening labour markets under Brexit, businesses are concerned about access to skills and labour. It’s clear that larger companies with the strongest recruitment programmes were the ones who not only offered a strong training programme of their own – but had thought ahead and had committed to building medium term relationships with local schools and colleges. They didn’t perceive access to skills as a constraint.
However, the larger a business, the more likely it was to complain about the burden of regulation and compliance on their growth.
One final item to add is, while many businesses are confident about the way forward until 2021, most are also confident in their managements’ abilities to rise to the challenge – only the £10m+ turnover companies were of a size and scope to start questioning their own management experience and skillset for the way forward.
How businesses prefer to finance growth
Unsurprisingly, in uncertain times, using retained profit and organic growth are the UK’s preferred methods to finance further growth.
However, in industries with heavy investment in plant, machinery or product development the most common source of growth finance continues to be bank loans and external finance.
Some of the key barriers to growth
Of course, the primary potential barrier to growth discussed was Brexit.
We found the UK’s optimist spirit shone through and 45% believe Brexit will have a positive effect on business growth plans.
Possibly because it has forced people to assess their business, review sources of work, potential markets and to plan ahead.
The scope of business plans
Given that some companies are confident about their growth prospects, even with the implications of Brexit looming, there are still one or two worrying signals.
35% of UK private companies still haven’t done any ‘what if’ scenario planning, as part of their strategic plans and, despite the salutary lessons of Carillion, BHS and others, over a third of the businesses surveyed have still not considered their exposure or response to key supplier/key customer failure.
Going international – aspirations, barriers and opportunities
Even with the government‘s Global Britain mandate there is a continued heavy focus on trading within the UK.
Europe still dominates as the most attractive overseas marketplace, with 46% of respondents believing our European friends represent the nearest and strongest future market.
Ominously, though, for many of our 500 respondents the focus for expansion is mainly in the UK market.
To help realise the government’s global aspirations there is obviously some work that needs to be done.
We believe that if the government is to create a global trading nation for the UK – it needs to invest more time and attention in talking directly with private businesses, encouraging them and supporting them to trade internationally.
Of course, responsibility for incentivising international trade doesn’t solely sit with the government, but respondents highlighted the following measures that could act as catalysts for international growth.
This is a theme we will return to later in the year, when we will look at some of the support mechanisms that advisers, and the government, can apply to help guide and enable growth companies to trade internationally.
Despite much of the gloom-laden press reports we hear, many businesses are still confident of growth in the next 3 years. But there’s a real red flag for companies who are not yet factoring in scenario or contingency planning into their business strategy.
Yes, you can argue that some of the issues decisions lie at our government’s doorstep but I’d recommend you look into scenario or contingency planning as soon as possible. And, if you’d like some assistance, of course we’d be happy to help!
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