central south mid market 17
INTERNATIONALUPBEAT CHALLENGES AMBITIOUS
COMMERCIAL BULLISH
The strength and diversity of the region’s mid market can be seen across a wide range of sectors, most notably manufacturing and technology. Most companies have grown their sales over the past year, and expect continued growth in both domestic and export markets.
This can be a tricky line to walk.
There is evidence that UK businesses will have to play catch-up in this area. They are shown to have a lower proportion of exports compared with peers in the eurozone, and are less likely to export to emerging economies than their Italian, French and German counterparts. UK businesses also tend to lack the necessary depth in management teams to exploit new markets effectively.
Another obstacle is that they do not currently have enough access to capital markets, making it harder for them to obtain the financing necessary to expand overseas. Finally, they could do with a great deal more support from the Government. At the moment there is an awful lot of theory out there, but not enough in the way of practical help.
Daring to dream
In the middle but thinking big
No mid-market company should fall into the trap of thinking ’medium sized’ means ’local’. These days, you don’t have to be huge to have a huge reach. Businesses must think globally, never forgetting that their products are being offered all the time, all round the world, via the Internet – and thus exposing them to very broad-based competition. They can find themselves sandwiched between the pressure of international competition and the daunting risks associated with international expansion.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – FEBRUARY 2014
New ideas have always been the currency of the future, and yet the UK is still not fully exploiting the innovation potential of the mid market. The biggest obstacle these companies face is the lack of confidence and optimism for growth, which leads to a reluctance to spend on innovation. Even though it is innovation which should fuel the desired growth, companies end up being more concerned with maximising results today. The result can be a slow stagnation – and a vicious circle.
The frustrating thing is that plenty of incentives and tax breaks for innovation do exist (such as R&D tax credits and Patent Box), but too many businesses remain unaware of them. Another problematic issue is that the tax man may not always agree with the business on what constitutes R&D. Larger businesses do not find this such a problem, as they tend to have the in-house expertise necessary to make and support these claims. But mid-market businesses can end up missing out on a significant amount of tax breaks, credits and lower tax regimes, unless they can secure the help of a trusted professional adviser to enable them to seize these opportunities.
Pulling power Big companies attract top talent into their orbit through sheer force of gravity; for mid- market businesses, the task of recruiting and retaining the best people is considerably more difficult. It is clear from our exploration of the issues surrounding innovation and international business that the mid market tends to lack the necessary in-house expertise in key areas. Finding, wooing and keeping the people with outstanding skills and in-depth experience is a real challenge for these companies.
Particularly hard is sourcing locally-based candidates who have the sector specific skills required to work effectively in the business. Big corporations are accustomed to paying relocation costs for some workers, but this option is not often open to mid-market companies, who have far less supplemental income to pay for such plans. We have explored this issue as part of our analysis.
Too good to waste
The UK economy may have turned the corner, but questions still remain as to where sustained growth is actually going to come from. The answer could well be the mid market, particularly in the south – but only if the UK is prepared to seize this chance and not let it go to waste.
The role of manufacturers and exporters is now seen as key to revitalising the UK economy, so next month we will be asking whether the Central South mid market is ready to go global.
Details: Malcolm Thixton 023-8088-1895
www.bdo.co.uk
www.businessmag.co.uk
GROWTH
VITAL
ADAPTABLE
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