roundtable 55
Pemberton spoke of activity pockets, and deals having to stack up with good covenants showing a sustainable return. Profiles in lease lengths were also changing dramatically. While London and good quality south-east property had its own high-level of activity, “as you come further out, the property product and funding market becomes totally different, with a significantly higher risk profile.”
Pemberton added that commercial institutional investors were now looking to take an income from rental on housing stock by bankrolling housing associations. This will free up finance for further housebuilding he suggested, helping to meet the nation’s housing needs and boosting economic activity.
“We will see a shifting landscape in terms of property construction and development. Once housebuilding starts you will also see a shift in labour patterns, with migration out into the provinces, and businesses adapting to meet changing growth patterns.”
Understanding alternative funding
Lomer: “We have used specialist funders, such as Finance South East. They understand technology companies like us so much better than the retail banks, which tend to struggle with the ‘cloud’ business model. In other funding areas, too many ‘business angels’ seem to be looking to prey on people who have a cashflow problem.”
Elliott: “It’s about people understanding technology, and being able to make an informed decision on the risk, which the banks are not prepared to take on.”
Annan: “There is quite a lot of private money about, and deals can be a positive experience if you get the right people on board. These funders do plug a gap for riskier propositions where the banks are less inclined to go. Investors need to look carefully at what they are putting their money into, and recipients who they are getting into bed with.”
Elliott: “Getting the debt and equity balance correct is a key thing, but in terms of hooking up with appropriate private investors and high-net-worth individuals, there is currently a move away from the angel networks. Our role (VitalSix) is about getting the right people together with the right motivation, and to help ensure realistic valuation discussions take place.”
Blanford: “I don’t think there is any shortage of money, it’s the strings attached to it that’s the issue. OK, investors have got to look at the risk profile, but the amount of gain they want for a fairly insignificant loan is unreal. Even venture capitalists come in with too many pre-conditions. Funders have the wrong attitude. I believe they need to be more adventurous if they are to help the UK economy recover.”
Elliott mentioned new sources of government financing now coming through, for example with Local Enterprise Partnerships. “There is more risk potentially being taken on funding here.”
Muscles are flexed; cashflow tightens
Sekkat: “Even global customers with very strong balance sheets are toughening their payment terms, moving beyond 30 days and suchlike. Maybe they need to make their shareholders happier, but it’s not good for the supply chain. It’s a surprise that strong profitable world- class businesses are going that way and flexing their muscles.”
surveying. We simply lose those graduates to other professions.”
Allister Moorcroft
Williams agreed that customers were taking longer to pay, but wondered if they really had cashflow problems. “I think many businesses are doing reasonably well on the quiet, and just taking advantage of the economic conditions to be a little slower in paying.”
HMRC is toughening up too. “They did go through a stage of allowing payment overtime, but they are starting to flex their muscles. Now, you really have to justify your case to stay your payments.”
Skills need long-term educational planning
Sekkat: “Recruiting highly-skilled employees is very tough and for that I blame the Government. Education is a generational thing. You can’t grow skills in six months or a year.”
Waite highlighted the problem of educational timing. “When there is a shortage, universities react by attracting students to that field, but by the time they’ve qualified we have a different requirement within the economy. We have seen that repeatedly in property and
Fresh support for SMEs
During the Roundtable Ian Nash mentioned two major initiatives being introduced specifically to help SMEs.
* Breakthrough “A business support programme, including £200m of growth capital funding from Santander to help accelerate growth at some of the UK’s leading small businesses.” It aims to unlock the potential of smaller fast-growth businesses with turnover of up to £10m through access to growth capital investment, networking events, trade missions, business masterclasses and support in areas such as finance and marketing.
www.santanderbreakthrough.co.uk
* Open to Export Yell Group and UKTI are working together to build a network of UK business community partners to provide exporting information, advice and support for SMEs, enabling them to break into new international markets via business intermediaries and the Internet. Santander, for example, is offering trade mission places to the fast-growing Brazilian market.
Christopher Lacey
www.opentoexport.com THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2012 Ian Nash
Moorcroft agreed, but pointed out that the UK no longer had adequate training establishments for specific trades. His company had successfully recruited Polish workers, where good metalwork training existed. “We didn’t set out to employ from Poland, it’s just that they had the right skills when they applied.”
Sekkat: “We have seen that change too. The people we employ now are a more international mix, mainly from eastern Europe through the EU agreement.”
Is it difficult to get the right IT skills too, asked Murray?
Blanford: “It’s not a problem for us. London is a big magnet for IT skills, but much of our recruitment now is people who used to commute and want to cut their travelling and work in a nicer environment.” His major concern was younger candidates’ lack of basic abilities. “It’s shocking, some can’t write English properly. Creating good quality documentation is a key part of an IT role”
Elliott said finding software engineers was becoming difficult. Some IT areas – social media development, she exampled – being more ‘sexy’ and dynamic than others, created recruitment demand and supply anomalies.
www.businessmag.co.uk Continued overleaf ...
Sekkat: “If manufacturing is going to compete in the global marketplace, we can’t compete on price only. We have to compete on added value and innovation. Therefore, education is very important for us.” KAS was creating its own apprenticeship scheme to gain its skilled employees, he added.
Moorcroft said the Doherty Group was training its own employees in- house too.
Murray suggested there was a growing realisation of the importance of apprenticeships.
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