Five tips to help manufacturers stay focused during the upturn
A recent slew of positive data would suggest that the UK’s economic recovery is well underway.
– UK GDP figures for Q2 showed growth of 0.6 percent.
– Figures from the Office of National Statistics (ONS) showed that manufacturing output in June grew at its strongest pace since the end of 2010.
– Retail sales enjoyed their fastest July growth in seven years, according to the British Retail Consortium.
– UK car sales enjoyed another strong month in July, according to the Society of Motor Manufacturers and Traders, with a total of 162,228 new cars registered in the month, up 12.7% on a year earlier.
– A Purchasing Managers’ Index (PMI) survey indicated that the UK service sector expanded last month at its fastest pace since December 2006.
– The PMI survey for the construction sector suggested it was growing at its fastest pace for three years.
With so much good economic news around, manufacturers could be forgiven for getting a little carried away.
Our advice throughout the downturn has been that owners and managers should base their business and investment decisions on what their own management information is telling them and on conditions in their own particular sector, rather than getting distracted by the macro-economics.
The same advice applies for the upturn. While short-term opportunities can be exploited, growth and innovation must continue to be based on long-term business planning and strategy. Here are some top tips to help manufacturers stay grounded during the recovery:
Don’t let good habits go out of the window: Continue to keep a close eye on costs and budgets. Make sure you are producing 13-week cashflow projections and basing decisions on up-to-date management information. In short, maintain discipline with financial controls and practice robust debtor management.
Stay true to your business plan: Upturns present new opportunities. Of course, the potential of these should be explored and exploited where relevant, but don’t let this throw you of course. Remember your business plan and stick to your strategic objectives.
Make the most of available tax reliefs: Changes to capital allowances rules and generous R&D tax relief make it a good time to make investments in new products, plant and machinery. Speak to your professional advisors to ensure you are making the most of these opportunities.
Avoid the perils of overtrading: Overtrading happens when new orders you take on are out of synch with your capacity to do the work. It’s a common ailment during an upturn and can potentially derail your business if not properly managed. My previous blog on this subject offers tips for avoiding overtrading.
Take advantage of available business support: Just because your business is growing again, doesn’t mean you shouldn’t take advantage of business support funding that could help you prosper in the long term. I’m not just talking about grants, but funded support programmes that can help with innovation, leadership skills and mentoring. Again speak to your advisors to see what’s available in your area.
Ginni Cooper is head of the manufacturing team at Moore and Smalley, if you would like more information on this topic please call 01772 821021.