Things are looking up by Adam Hawkins http://anodizeproductions.com

Things are looking up for trading with larger companies.

How can smaller business make the most of this trend?

A growing number of Britain’s manufacturers reported buoyant trading conditions over the past three months.

A new survey published by EEF, the manufacturers’ organisation, and BDO Stoy Hayward said that this is on the back of rising demand in overseas and UK markets.

The second quarter EEF/BDO Manufacturing Outlook report indicates that the broad-based recovery, which began at the end of 2009, has gathered pace. Output and order balances hit their highest levels since the survey began 15 years ago.

According to EEF, manufacturing is responsible for 55% of UK exports and its productivity regularly outpaces economic growth. All of this helps the UK maintain its position as the world’s sixth largest manufacturing nation.

How can smaller businesses benefit?

If you have pulled back from selling to manufacturing businesses because of the recession, now is the time to pick up the threads and start prospecting again. However, be prepared for big businesses to expect longer payment terms so either get agreement for faster payments before you start or factor this into your cash flow so that you don’t get caught out.

For more ideas, take a look at some of our case studies about business recovery.

Do you have examples of business picking up? Let us know ….

More money by Adam Hawkins http://anodizeproductions.com

So the recession is officially over.

Hooray!

Now for the really hard part – surviving the post-recession downturn that most pundits expected and most firms are now experiencing.

Strong leadership can make a huge difference to success or failure – never more so than today, so here are some things to consider:

1. Understand the big picture in your industry or sector – be sure of the true position.

2. Adjust sales forecasts to accurately reflect the true circumstances. Review every month.

3. Cashflow must be maintained, but it’s catch 22 because that can take resource away from sales and other vital activity. Deploy your people to be effective TODAY.

4. Target cuts carefully – at waste rather than core activity.

5. Keep an eye on the future – don’t act precipitously. Short term cost savings can result in being under-resourced when the upturn comes. Judgement is crucial.

6. Focus on customers – understand and try to help resolve your customer’s problems.

7. Innovate. If cashflow allows don’t stop all R&D. New products and services will help boost turnover and profit when markets improve.

8. Look for opportunities. Asset values are low and research by McKinsey & Company shows that effective acquisitions during a downturn “created significant value”.

9. Motivate. Make certain that you get staff on your side to retain the best and make sure they don’t leave as soon as the jobs market improves.

10. Action. Don’t be paralysed by fear, focus on your USP and take appropriate action.

Anything you’d like to add ? Leave your comments below ….

Business by Adam Hawkins http://anodizeproductions.com

£836m is to be cut from the Business budget as part of George Osborne’s £6bn attack on the deficit in the UK economy announced today. In practice a proportion will be re-invested but this still results in a net cut of £700m.

The good news is that the much maligned planned increase in NI will now be reversed, but it appears that the Regional Development Agencies will bear the brunt of the cuts and a significant proportion of Lord Mandelson’s last minute grant programme will also be reversed.

In practical terms this probably means the end of grant-aided research or ‘free’ Business Link consultancy in the short term leaving most SMEs to fend for themselves whether expanding or attempting to recover from the recession.

As many pundits predicted the effects of the recession on smaller businesses are only just beginning to become evident as the real effects of recession start to bite – low order books, cancelled contracts and the payment terms circle becoming tighter and tighter as firms of all sizes start to experience cashflow problems.

Well known Cambridge insolvency practitioner Mary Currie-Smith of Begbies Traynor has recently restated her view that far more businesses will go to the wall in 2010 than in 2009 and certainly so far the statistics prove her correct.

The key to avoiding the potentially dire consequences of falling sales and ever decreasing cashflow is to recognise the problem and act swiftly and effectively. Formal insolvency advice may not be required, but taking appropriate advice as early as possible can often save the day – see case study

If on the other hand your business is booming you may still be affected by cuts to grant-aided programmes which in the past have allowed important R&D projects to go ahead despite limited in-house resource. That sort of funding is likely to disappear.

So what can be done to keep your business prosperous – whether that means aggressive expansion or careful and considered survival?

In short the answer remains the same as ever – be sure of your objectives, be certain that in practical terms they are achievable and create a robust business plan to guide you to success. The banks may not be lending at present, but eventually they will have to loosen the purse strings to survive themselves – when they do, be sure your business is still around to benefit.

Do you have a question or a comment about the business budget cuts?

KPMG has warned that a fresh wave of company voluntary arrangements (CVAs) is expected in coming months as the full impact of the recession takes effect.

CVAs allow companies under threat of administration to renegotiate debts with unsecured creditors.

While the number of insolvencies has fallen in recent months, a full economic recovery is often preceded by many businesses struggling with cashflow as they find themselves under increased pressure to restock and repay debt.

Under a CVA business owners and directors reach a compromise arrangement with creditors in order to avoid going into liquidation.

They restructure the financial arrangements and propose a plan to pay off its debts.  This may involve a partial write-off of debt, rescheduling of payments or renegotiation of contracts.

The main difference between a company that negotiates a CVA and one that goes into administration is that the CVA gives stakeholders the opportunity to openly discuss the best compromise for everyone concerned.  Once a company goes into administration creditors have little say in the process and often end up with a lot less than they would from a company that continues to trade.

In the majority of cases these procedures are successful and allow a business to continue trading with minimum disruption, saving jobs and giving creditors the chance to recover debts, albeit over a longer period of time.

The key to success is often in the management of the process during the period immediately before appointing an Insolvency Practitioner, the choice of IP and making sure the business continues trading as near to normal as possible during a period of intense and sometimes stressful activity.

If you’d like to discuss how a CVA might help your company to re-organise while continuing to trade please give me a call.

Leave a comment below – we’d love to hear from you.

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