This is no time for heroics. With a freshly squeezed coalition government, a fiscal deficit as deep as Loch Ness, a monster sized public sector and an unfolding Greek tragedy, it is difficult to envision an entirely calm and rosy future. Indeed, the chickens that were hiding just around the corner have now come home to roost and we can only hope that some green shoots of recovery will tempt them out again. We have all had quite enough of recessions and sovereign defaults and would now like normal service to resume. Thank you!
With that off my chest, there are plenty of opportunities out there. Well run businesses will be using these still difficult times to improve their systems and processes, increase their efficiencies and work out how they will out-market and outsell their competitors, as and when circumstances permit. They will be looking at acquisitions and other strategies to increase their market share and may also be considering how our weak pound can increase their international opportunities. Above all they will be carefully managing their working capital and making sure they don’t run out of cash.
Are you one of these businesses that will be ready to take advantage of the real recovery, when it finally arrives? It’s worth thinking about…
On the financing and business development front, there have been some interesting announcements in recent weeks.
In case you have missed them, here are some of the headlines:
- A new company, UK Finance for Growth Ltd (UKFG), has been established to manage and coordinate the delivery of finance to SMEs. The range of funding will be from £25,000 to £10 million and funding will be in the form of debt, equity or mezzanine funding. Over time, it will bring together all of the existing SME finance schemes including the Enterprise Finance Guarantee and the newly announced Growth Capital Fund- a total of around £3.5 billion.
- The new Growth Capital Fund (part of UKFG) has been created to address the funding gap identified by the Rowlands Review of Growth Capital which was published in November 2009. Starting with a total of £200 million and an ambition to grow this to £500 million, it will provide funding for SMEs seeking between £2 million and £10 million, with the first investments being planned for the autumn.
- Over the next year, RBS and Lloyds have agreed to provide a total of £94 billion of new business loans. Of this, apparently nearly half is earmarked for SMEs.
- From December 2010, there will be a new portal providing access to Government contracts, with relevant contracts flagged as SME friendly. The aim is to increase Government procurement from SMEs by 15% to a total of around £23 billion. This is still only around 10% of the Government’s annual spend, so hopefully there will be much more to come.
- Although taxes are increasing to pay for our nation’s profligate spending, the budget introduced some welcome tax breaks for entrepreneurs and SMEs. There have also been some interesting developments at Royal Mail, where a decision by the European Court of Justice means that many businesses may be able to reclaim VAT on the cost of a number of Royal Mail services, including Parcelforce. Make sure you don’t lose out.
With a new coalition budget just around the corner, there will be more to report in the coming weeks. Watch out for the well trailed increases in VAT and Capital Gains Tax. Is now the time for business and property owners to consider realising some of their assets?