Latest SME Monitor Results

In the latest SME Monitor produced by Cebr for Aldermore Bank many positive indicators show that the economy is on the mend.

Here are just a few of the indicators that the report highlights:
• The UK economy expanded by 0.7% quarter on Quarter in Q4 2013.
• Recovery is expected to gain further momentum over 2014 as a whole, as GDP is projected to rise by 3.3% year on year
• Growth is coming from all three major industrial sectors, production, manufacturing, and services.
• Annual cost inflation for small and medium-sized manufacturers fell back in Q4 2013 to 0.2% down from 0.7% in the previous two quarters
• Borrowing costs continue to fall back for UK SMEs, with the median interest rate offered to medium-sized enterprises falling to 3.2% in November 2013. Rates have not been lower than this since June 2009.
• The same goes for small enterprises where the median rate offered was 4.4% down from 4.8%
• The confidence level for SMEs climbed to +39.7 this quarter, its highest reading since Q1 2010.
• In Q4 2013 there were 3,800 business failures, down from 4,200 the previous quarter

All in all the future is definitely looking brighter for SMEs.

Can a recovery in the economy be dangerous for SMEs?

The answer is yes.

Naturally we all welcome the emerging recovery we are experiencing in the UK but SMEs should look very carefully at their finances as they need to be very aware that the pattern established following previous recessions is that more businesses go bust as the economy recovers not less. Typically businesses slowly wind down during a recession until they eventually run out of cash. Economic growth is often the last straw for them. They need to fill new orders and recruit more staff to meet demand but just cannot get any more credit and administration beckons. They may also have been slow in paying VAT and PAYE and built up large arrears which now must be paid as during a recovery the tax man becomes more aggressive.

Pegasus Funding Resources can help SMEs that find themselves in this situation and in need of growth funds to take advantage of the recovery.

Types of funding that are available in this situation include:

• Trade Finance to finance the importation of goods needed to fulfil orders
• Stock Finance to make certain they can meet increased demand
• Invoice discounting & Factoring to finance increasing debtor ledgers, and this also includes single/selective invoice discounting for those that do not want to sign up for more than the occasional invoice
• Turnaround Angel Funding to bring in new capital and ideas
• Sale and leaseback of existing plant and machinery to fund new equipment and add to working capital
• Debt Crowdfunding to fund growth and asset purchase

Smaller manufacturers planning to Invest

The UK’s smaller manufacturers are planning to boost investment in the coming year, according to the CBI’s latest SME Trends Survey.

The survey of 335 small and medium-sized manufacturers revealed that total orders and the volume of output increased in the three months to January. Domestic orders rose, while export orders fell. However, in the coming quarter domestic and export orders are both expected to grow more strongly and production is set to rise again.

Stephen Gifford, CBI Director of Economics, said:

"As the recovery takes hold, the investment cycle is starting to turn.

It’s encouraging to see smaller manufacturers planning to boost investment, particularly in their plant, machinery and buildings.

Orders and output continued to grow at a healthy pace, although not as fast as predicted. However, firms remain optimistic about prospects, with growth in orders and production expected to accelerate."

Key findings – three months to January

• 37% of firms reported an increase in total new orders and 23% said they decreased, giving a balance of +14%
• 34% of firms reported an increase in domestic orders and 26% said they decreased, giving a balance of +8%, a slower pace of growth than in the previous survey (+20%)
• 23% of firms said export orders increased and 30% said export orders fell, giving a balance of -7%
• 30% of firms said output increased and 24% said output decreased, giving an overall balance of (+6%),
• Optimism continued to rise for the third consecutive quarter: 34% of respondents said they were more optimistic than three months ago and 13% said they were less optimistic giving a balance of +21
• Manufacturers’ investment intentions have improved significantly further on the previous quarter, with plans to spend on buildings (+14%) at their strongest since the data began in October 1988 and plant and machinery investment intentions (+14%) at their strongest since July 1995
• Average unit costs were flat on the quarter (0%), the lowest result since 2000 and are expected to rise modestly in the coming quarter (+8%)

New Incubation Service for Media, Technology & Design

Ravensbourne's Incubation service is now open to applications from London-based media, technology and design businesses that show growth potential.

Business Incubation by Ravensbourne offers a platform for small creative digital businesses to develop and grow by providing access for up to 12 months to facilities, business development opportunities and access to our vast knowledge base. This is available for free due to funding from the European Regional Development fund.

Business Incubation by Ravensbourne has already supported more than 100 creative technology companies spanning transmedia, music technology, software development, graphic and web design, UX, architecture, TV and film production, product design and fashion.

The deadline for applications to be received is February 10th.

Full details are available here: http://dmic.org.uk/incubation/

Business Experience Exchange

BeXeXTM is a new event format and methodology that enables the peer to peer sharing of valuable information between business leaders to help them solve their challenges.

HCBA are running a series of Business Experience Exchange events in partnership with the Surrey Chambers of Commerce. The first of which is on 29th January 2014 in Redhill.

It is your opportunity to exchange ideas and discuss issues with other managers and owners of local businesses in a unique format.

Hot Topic: Social Media Marketing

The first session will cover the use of social media in a B2B context, lead by a social media marketing expert.

Afterwards we open the floor for an interactive discussion on the issues you face, there is no agenda except the one you help create. There will be other business experts on hand to discuss any business issue you want to raise, however the experts aren’t the only ones who know a thing or two about business. Some of the best ideas come from those that manage their own business, who not only have been there but are there and doing it, business people like you!

If you manage an SME business and would like to exchange your experiences, challenges and opportunities with other similar business people, make sure you are part of the Business Experience Exchange.

Date: Wednesday 29th January 2014 Time: 18.00 – 20.00 hrs

Venue: East Surrey College, Redhill, RH1 2JX

To Attend:
Tel: 01483 735540

Or Visit: www.surrey-chambers.co.uk

Bank of Cyprus Owner Managed Business Barometer Shows Business Confidence Improving

The Bank of Cyprus undertakes research 3 times a year to provide an on-going measure of the level of confidence within the Owner managed business sector in the UK. The research is based on a survey of decision makers all of whom are sole or part owners of businesses with 50 or fewer employees. This latest research was carried out in November 2013.

The headlines of this research show that confidence has been growing throughout the year and were at its highest point at the end of the year.

46% of the respondents expect sales and revenue to grow in the next quarter, compared to 32% and 38% in the previous two surveys. Over the longer term the results are even more impressive with 56% expecting sales and revenue to grow in the next 12 months. This is up from 50% and 43% from the previous two surveys.

This optimism is being reinforced by real success with 39% reporting new contracts and 12% entering new markets.
They also believe that the chances of securing finance from the banks is improving. 41% now believe that their banks will support them with new finance, up from 24% in the previous survey.

This is great news for the UK economy and for the survival of small businesses.

Banking Reform Act Becomes Law

The biggest reforms to the UK banking sector in a generation become law

The government's Banking Reform Bill has received Royal Assent, now becoming an Act of Parliament.

The Banking Reform Act is a key part of the government's plan to create a banking system that supports the economy, consumers and small businesses.

It implements the recommendations of the Independent Commission on banking, set up by the government in 2010 to consider structural reform of the banking sector.

It also implements key recommendations of the Parliamentary Commission on banking standards, which was asked by the government to urgently review professional standards and culture in the banking industry following revelations of attempted LIBOR manipulation last year.

The government's reforms are based on almost three years of consultation on the future of the UK's financial sector and represents the biggest ever overhaul of Britain's banking system.

Since 2010, the government has acted to transform the banking industry through four key areas of reform:

- supervision: the government has put the Bank of England back at the centre of the supervisory regime, with new powers to identify and address systemic risks as they emerge, ensuring safe banks that will not bring down the economy in the future;

- structure: the government has brought forward new laws to separate the branch on the high street from the trading floor in the City to protect taxpayers when mistakes are made;

- culture: the government is imposing higher standards of conduct on the banking industry by introducing a criminal sanction for reckless misconduct that leads to bank failure, and a more stringent approval regime for senior bankers;

- competition: the government is acting to empower consumers by giving them greater choice, which should incentivise innovation and competition within the banking sector.

Financial secretary to the Treasury, Sajid Javid, said:

"I am delighted that the Banking Reform Bill has received Royal Assent. This is a major milestone and marks the end of a three year process, led by the government, to make the UK banking system stronger and safer so that it can support the economy, help businesses and serve consumers.

"From the outset the government has built a consensus on this issue and this legislation will deliver crucial changes to the structure of banks, ensuring that UK taxpayers are not on the hook for future bank failures.

"The Banking Reform Act will also help to deliver much need competition in the banking sector and increase the conduct standards amongst bankers."

Sir John Vickers, who chaired the Independent Commission on Banking, said:

"With key Independent Commission on banking recommendations now in law, the UK is at the forefront of banking reform. The international reform effort still has further to go - to ensure that banks have deeper capacity to absorb losses, and to build safer structures for banks in the rest of Europe."