Business News Round Up (25/11/2022)
Mid-sized business key to the UK’s economic recovery, with seven in 10 expressing optimism for the next 12 months
A new report, ‘The Mighty Middle Market’ released today from RSA Insurance, in partnership with the Centre for Business and Economic Research (Cebr) reveals that mid-sized businesses* offer a beacon of hope for the British economy, with this sector having a critical role in driving stability and growth. The report shows that 71% of mid-sized businesses are positive about their outlook despite the current economic environment. Compared to small businesses, mid-sized businesses are also more likely to have exceeded their targets in the last year (32% compared to 45%, respectively), further demonstrating their importance as a valuable powerhouse of growth, employment opportunities and tax receipts at a time of great economic challenge. The number of mid-sized businesses has been growing every year since 2010 and consistently delivers disproportionately in terms of economic contribution relative to their size, accounting for around 1.5% of all businesses but 13.1% of employment in 2022. Despite this, the report reveals that society often overlooks this business cohort in favour of smaller businesses or larger corporates. Analysis of online conversations over the past 12 months sheds light on this issue, with small businesses enjoying 60 times more mentions in the news and on social media channels than mid-sized businesses.
Report reveals UK SME outlook remain optimistic despite a future of cost-cutting, financial borrowing, and price concerns
The SME Outlook Report 2022, conducted by UK-based digital business lender Fleximize, has revealed that most UK SME owners are confident about the future and consider themselves financially resilient – despite confirming they will likely be looking to find ways to cut existing business costs, revising pricing and consider lending options. From those surveyed, 54% of SMEs confirmed they would be looking to make cuts within their business, with renegotiation with suppliers the most common approach, followed closely by making cuts in technology/software and reducing production expenditure. With rising costs starting to put the squeeze on businesses, increasing prices has become an inevitability, with 92% of SMEs reporting that they will pass on costs to the customers – with a 1 to 10% increment being the most likely increase in pricing change. To accommodate cash flow concerns, 64% of businesses were considering borrowing money to maintain steady levels, expand their business or simply survive the recession. Given that running out of cash is the main reason for business failure, there is no surprise that SMEs are considering taking this option in order to maintain a healthy cash flow reserve. Not only is the cost-of-living crisis affecting consumers across the country, but it is also proving to be the latest challenge for businesses. The severe hike in energy prices remains the biggest threat to business owners, with 54% agreeing that the cost will put a tighter squeeze on their cash flow. Increasing staff wages are also a major concern for business owners, who are likely feeling the pressure to increase staffing costs in line with inflation levels.
Solid performance for North West M&A market
The North West mergers and acquisitions market made has performed solidly so far in 2022, according to a report by information specialist Experian. Experian’s M&A Review for the nine months to date said North West M&A activity has been “relatively stable” year-on-year, with a small dip of 3.6 per cent on last year’s volume – from 698 to 673 so far in 2022. The Experian review said this “outperforms the wider UK market and represents a solid result” when considering Q1 2021 had the single highest quarterly volume recorded in the last ten years. It also said comparisons with 2020, 2019 and 2018 are all much more favourable, with a 36 per cent, 5 per cent and 3.2 per cent uplift, respectively. However, a lack of activity at the higher end of the market this year meant that the total value of Q1-Q3 deals in the region was down by 47 per cent year-on-year, from almost £12bn to just over £6bn. Experian said there have been a total of 16 large transactions recorded so far in 2022 in the North West, worth around £4.7bn. The largest recorded transaction was supermarket chain Asda agreeing to acquire the fuel retail operations of Manchester’s Co-operative Group for a total consideration of £600m. The report added: “Corporate acquisitions remain the bedrock of North West deal activity and have increased from 461 last year to 481 so far this.
https://www.insidermedia.com/news/north-west/solid-performance-for-north-west-ma-market
Government must have a plan to reskill UK workforce if we are going to see growth
The UK is falling behind the rest of the world in reskilling its national workforce and the Government must urgently rethink its approach if we are going to see growth in this decade, a new report called Access All Areas: People from Enterprise Nation and The Entrepreneurs Network has found. The UK currently has 1.25m job vacancies, according to the Office for National Statistics (ONS), and with a pipeline of innovative start-ups and early-stage businesses also expecting to hire, that figure is only set to be stretched significantly. According to figures from small business support platform Enterprise Nation’s Small Business Barometer, 46 per cent of start-up business owners are looking to make their first hire as part of their growth strategy. Another 66 per cent of scale-up businesses say access to talent is very important or vital to their growth, with a third rating it as their top priority. But the skills they need are just not there. Since 2005, UK employers’ investment in training has fallen by 28 per cent in real terms. Businesses in the EU invest double that of the UK. At the same time 90 per cent of business owners say school leavers are not ready for employment and two thirds of parents believe the education system is not preparing children for the workplace.