Ten facts the ONS has taught us about UK manufacturing

The Office for National Statistics (ONS) has this week released a detailed report on the UK manufacturing sector which will challenge the popular notion that it is ‘the sick man of Europe’.

 

I have been looking carefully at this report (Changing Shape of UK Manufacturing) and I am pleased that it confirms what many manufacturers have been saying all along, which is that the manufacturing sector is not just alive and well, but is adapting, thriving and growing.

 

Here’s 10 of the findings I found most interesting from the latest research, many of which are a cause for celebration, rather than commiseration:

 

  1. 1.     UK factories are more competitive now than at any other time in the modern era

While the number of people employed in manufacturing may have declined by over 60 per cent since 1978, overall manufacturing productivity has increased. Manufacturing productivity is actually growing at 2.8 per cent per year, higher than the overall economy. According to Joe Grice, the ONS’ chief economist, this is due to a “a better quality and more skilled workforce; a shift from the production of low to high productivity goods; an improvement in the information technology base; more investment in research and development and a more integrated global economy”.

 

  1. 2.     Manufacturers that invest more in IT do better

While this may sound obvious, the latest data puts forward a strong case for investment in IT and connectivity. It shows a direct correlation between firms where fewer employees have access to a broadband connection and decreased productivity – a drop of one per cent each year between 2001 and 2007. Firms with better connectivity grew over 11 per cent year-on-year during the same period.

 

  1. 3.     Investment in skills equals success

The data shows that the proportion of hours worked in the manufacturing sector by employees with no qualifications has fallen dramatically, from 26 per cent in 1993 to just eight per cent in 2013. The number of employees with degrees has risen from seven per cent to 16 per cent over the same period.

 

  1. 4.     Investment in research and development is propelling UK manufacturing growth

Over 70 per cent of total research and development investment in the UK was linked to manufacturing, despite the sector making up just 10 per cent of the overall economy. R&D investment in computer equipment and the pharmaceutical sector has been particularly strong, according to the figures.

 

  1. 5.     Older members of the manufacturing workforce are the most productive

While they may have once been considered ‘over the hill’, 30 per cent of manufacturing workers are now aged 50 or over, compared to 20 per cent in 1993. This is offset by a fall in workers aged 16 to 29. More experienced workers are ‘generally associated with higher productivity’, says the ONS.

 

  1. 6.     Technological advancement has saved manufacturing

Not only are our workers now significantly better skilled, more experienced and more educated, they have the access and knowledge to take advantage of technological improvements, leading to more efficient and innovative ways of communicating.

 

  1. 7.     Globalisation has been good for UK manufacturing

Integration of the global economy has also contributed to productivity growth. The ONS believes this is because ‘it allows the UK manufacturing industry to specialise in producing goods for which they have a lower opportunity cost and are therefore more efficient’.

 

  1. 8.     The North West is at the heart of UK manufacturing

While we in the North West have known this all along, the figures confirm the region contributed the most to UK manufacturing turnover in 2012, representing 14.1pc of total revenue. Aerospace, automotive, chemicals and electrical equipment are key sectors, though all sub sectors are performing well.

 

  1. 9.     America is our biggest export market

The United States purchased £40bn of UK goods in 2013, with manufactured goods comprising 80.7pc of this total.

 

  1. 10.  Outsourcing has led to increased productivity

Of course, I have saved the best to last. The ONS research suggests that the outsourcing of some administrative roles and support services performed by staff from manufacturing firms, such as accountancy, has allowed manufacturing firms to increase productivity by focusing on what they do best.

 

For further information, please contact Ginni Cooper.

 

Management buyouts for manufacturers: a simple guide

Management buyouts (MBOs) are common in the manufacturing sector, particularly in those businesses where employees successfully rise through the ranks to become managers, staying with one company for many years.

 

Such loyalty can mean that management teams in these businesses stay in situ for many years, making money for founding owners who often take a backseat and allow managers to run the business with little hands-on supervision.

 

But there always comes a point when owners are ready to exit the business and / or management teams feel they are ready to step up and become owners. But where do they start? And how will owners react to an MBO approach?

 

In this simple guide, Stephen Gregson, corporate finance director at Moore and Smalley, and Ginni Cooper, head of the firm’s manufacturing team, give a beginners guide to MBOs.

 

1. In a nutshell, what is an MBO? How does it differ from a trade sale or acquisition? Why do vendors and management teams want to do MBOs?

Put simply, a management buyout (MBO) is when the members of the management team acquire at least a majority stake in the business for which they work. It could be that the management team acquires 100 per cent of the shares in the business; but it would not be a management buyout if the management team held a minority share.

 

The make-up of the management team can also give rise to different variations on the theme. It is not unusual for a management team to need some external management resource in order to ensure the team possesses the right skills and experience. Hence there could be a buy-in candidate also involved. In these instances the deal might be called a BIMBO (buy-in management buyout).

 

An MBO differs from a trade sale in principally two respects. Obviously, the acquirer is different. More importantly, certainly from the seller’s perspective, is the typical funding of an MBO. The normal MBO funding structure would have a proportion of consideration deferred (payable in the future). There may also be elements which are contingent upon the future performance of the business (this is called an earn-out) and, increasingly common, it may be that the owner retains a minority share in the business going forward. All of these aspects are typically employed because management teams usually find it harder to raise the required funding than trade buyers, hence, in an MBO situation, there is usually less cash available to be paid to the vendor on completion.

 

Management teams usually want to do an MBO because they want to be masters, or mistresses, of their own destiny and often have a belief that they can run the business better than the current owners. Owners might want to carry out an MBO because they feel a sense of duty to their management team and they want to allow them the chance to own the business and build up value for themselves. Also it can allow owners ‘two bites of the cherry’ if they retain a minority stake in the business because they may see the value of this increase if the management team can successfully increase the value of the business.

 

2.How are MBOs usually initiated? What sort of personal and commercial sensitivities must be dealt with or resolved?

MBOs can either be initiated by management or by the owners. It usually does require a certain degree of trust and goodwill to exist already between owner and management team for management teams to feel confident enough to initiate the process. There will be understandable concerns on the part of management as to how the owner(s) might react. Will they see management’s desire to effect an MBO as a sign of disloyalty, for instance?

 

Another potentially thorny issue can be the valuation of the business. The vendor might have a suspicion that if management have been planning to try and carry out an MBO, then perhaps management have not been building the business as robustly as they might have been expected to do. This is on the basis that if they increase the profitability of the business then this only serves to make it more expensive for them to carry out an MBO.

 

3. What are the routes to finance for an MBO? What are the pros and cons of each?

Questions of funding a transaction depend to a large degree on the specific characteristics of the business being acquired and the financial wherewithal of the buyer(s). If the business has good growth prospects then it may be of interest to a private equity funder. Hence, the MBO team could look to secure private equity finance.

 

This can be tremendously helpful in strengthening the capital base of the business and providing it with the funds to grow, but it does mean that the funder shares in the ownership of the business. Also it will usually have the final say on when a sale takes place and may also want a reasonably active role on the board of directors.

 

There may be the ability to use the assets in the business as security to raise debt funding. Thus no equity is surrendered by the management team. However, this debt will need to be serviced. It could prove difficult to do so if the business suffers a downturn. Additionally it may be a condition of some debt packages that the MBO team has to provide a personal guarantee that the debt will be repaid. This means that the management team is theoretically carrying significant risks.

 

Usually, a key component of any MBO funding package is ‘friends and family’. The potential downsides here are that unless your friends and family are particularly wealthy, the total amount raised this way is unlikely to be a significant amount in the context of the overall deal. It also runs the

risk of blurring any dividing lines individuals may have between the work and non-work aspects of their lives.

 

4. What are the main issues of the MBO process itself? (eg raising funds, due diligence, maintaining business performance during the negotiations)

Principally, the main issues are the same as with any sale. Once the price has been agreed, can the buyers raise the funds on acceptable terms and, secondly, can the performance of the business be maintained during the sale process?

 

Typically you would expect that the due diligence required on an MBO would be lighter than on a trade sale. The reason for this is that the MBO team should pretty much know the business inside out already. However, depending upon the funding sources for the MBO it may be that funders require detailed due diligence, particularly on the members of the management team themselves. This applies whether the funder is providing debt or equity.

 

Funders all say that they back individuals rather than backing a business. A great business is all well and good; but it can rapidly become less than great if it is mismanaged.

 

5. What are the rewards of a successful MBO?

For the management team they will include independence, freedom of action and the potential for future financial reward on a subsequent sale.

 

For the vendor they will receive an acceptable value for their shares; have the satisfaction of feeling they ‘did the right thing’ by allowing loyal employees to own and benefit from the business and, possibly, they will have been able to ‘have their cake and eat it’ by virtue of retaining a minority stake in the business.

Manufacturing experts back call for ‘Demand-Led’ education

Moore and Smalley has given its backing to a ‘Manifesto for Manufacturing’ which calls for radical changes to the education system to boost skills.

The report, compiled by the Manufacturing Group at MHA, the national association of independent accountants, calls on government to move towards ‘demand-led education’ to help the sector bridge the current skills gap.

Businesses contributing to the report recommendations believe secondary and tertiary education needs to be re-focused away from ‘abstract academic targets’ towards skills needed by employers.

The recommendations in the report, which will be sent to politicians of every political persuasion ahead of the 2015 election, are designed to put the case for increasing the support given to the manufacturing and engineering sector by whichever party forms the next government.

Ginni Cooper, head of the manufacturing team at Moore and Smalley, which is one of nine MHA members, said: “The UK has made some significant steps in re-establishing manufacturing as a mainstream economic activity, but unless our schools, colleges and universities start to produce young people in large numbers with the skills and motivation to become engineers and technicians, our ability to compete in the global market will be severely limited.

“Demand-led education is an obvious way to help achieve this. Instead of targeting our schools to achieve abstract academic targets we should as a nation, look at what we need by way of a future workforce and challenge our schools to meet that need. In simple terms, it’s about educating our young people in the skills which employers want now, and in the future.”

The report also recommends changes to the tax system to encourage investment and innovation as well as a more consistent delivery of government support across the UK to encourage things such as exports and re-shoring of production into the UK.

Click here to read the manifesto

Summer shutdowns: A time to take stock?

For those who don’t work in the manufacturing sector, the idea that a business would shut down its factory for a couple of weeks in July or August and ask most of its production staff to go on annual leave will seem absurd.

 

But summer shutdowns have long been a characteristic of the manufacturing industry, particularly in the automotive sector, or other sectors that are primarily production-line based.

 

They allow essential repair and maintenance work to take place and for production lines to be tweaked to make them more efficient or capable of producing new product lines. Many use the quieter summer months to replace outdated machinery altogether, which forces them to suspend production.

 

There’s also the argument that shutdowns reduce overheads, such as energy usage, at what is a quiet time of the year when orders typically reduce and most staff would elect to take time off anyway because of the school holidays.

 

But critics have begun to question the wisdom of traditional summer shutdowns, claiming they hamper output and productivity and thus risk allowing the UK to lose ground to its international competitors, particularly when you consider most UK factories shut down for a week or two at Christmas too.

 

Indeed, many of the large car manufacturers, including Ford, Chrysler, and Vauxhall, have in recent years announced plans to scale back their summer production shutdowns in the hope of boosting output.

 

Significant investment in plant and machinery has given many large manufacturers ‘round the clock’ flexibility and reduced the need for summer shutdowns. Even some smaller manufacturers are beginning to buck the trend and opt for either a shorter shutdown period or none at all.

 

But, of course, not all manufacturers have that luxury. The summer can be the only time other than Christmas where essential maintenance can be carried out.

 

Regular readers of my manufacturing blogs will not be surprised to learn that my advice to those businesses having a summer shutdown period is not to just focus on production issues.

 

It should also be used as a period of respite from the day-to-day challenges of running the business. It’s a chance for directors and senior managers to use at least some of that time to regroup, review their business plan, or revise their strategy (once they’ve had their own holiday of course!).

 

Whether it’s during the shutdown period, or just those quieter weeks towards the back end of summer, it’s also a good time to focus on the financials, so you can hit the ground running during that busy ‘back to school’ period.

 

Ginni Cooper is head of the manufacturing team at Moore and Smalley

Six ways to overcome skills shortages in your manufacturing business

Barely a day goes by at present where I don’t hear about a survey highlighting the chronic skills shortage facing businesses, particularly those in the manufacturing sector.

 

With the economy growing again, there’s no doubt the demand for skilled staff is being felt acutely by manufacturers, particularly those with a niche where the requisite knowledge is held by the few, not the many.

 

Unlike many other sectors, manufacturing businesses need to recruit quickly and flexibly, which can present a problem if there’s a lack of good quality candidates.

 

However, there are ways to overcome these skills shortages. Even if your business doesn’t have a skills gap now, it might do in the future, so here are six tips to help your business address skills gaps and plan effectively to avoid them in the future.

 

  1. 1.     Don’t limit recruitment purely to jobseekers

 

Limiting your candidate pool to people who are actively looking for a new job can actually increase your overall recruitment costs, as well as putting you far behind your competition in hiring top performers.

 

By making ‘passive recruiting’ an integral part of your overall recruiting strategy, you can attract staff who aren’t necessarily looking for a move, but might consider one if the offer is right.

 

For example, you might go back through previous job applicants who might now have gained the skills and experience they lacked previously. These candidates, even if they are not looking, will almost always be open to a conversation if they have previously applied to work for your business.

 

Similarly, those who have previously worked for the organisation may also be open to coming back. Many manufacturing businesses were forced to make redundancies during the downturn. How many of those skilled workers would jump at the chance to work again?

 

  1. 2.     Don’t look for what’s already there

 

Businesses can miss potential talent pools already present in their organisation because of an unconscious bias that existing staff can’t make the step up to fill more skilled positions. Canvas the existing workforce to identify staff who, with a little training, can meet the needs of your business. Encourage continuous communication between HR and management teams to identify training needs for the short, medium and long term.

 

  1. 3.     Make yours the greenest pasture

 

The financial impact of losing skilled, reliable and high-performing staff members can be huge, so retain top talent by convincing them they can’t get a better deal elsewhere. This doesn’t just mean pay, but the overall employee package, such as working conditions, work-life balance, holidays and other benefits, such as healthcare, gym memberships and so on.

 

The aim is to get to a position where your staff would see leaving the organisation as a major risk. Making yours the ‘greenest pasture’ will turn your organisation into a talent magnet as word spreads that your business is the best employer in the sector.

 

  1. 4.     Plan for the inevitable

 

In my experience, the term ‘succession-planning’ is a real turn off for the majority of business owners. Nobody wants to focus on the ‘what ifs’ when everything is going to plan, but here’s a fact for you –everybody currently employed in your business will leave at some stage.

 

Being ready to move swiftly when good talent leaves is essential to the long-term health of your business. Some organisations do this really well by constantly monitoring and testing the employment market – inviting potential candidates to interview even when there isn’t a position immediately available.

 

  1. 5.     Use a broad range of labour sources

 

A highly functioning business will have a broad mix of people and skills. Apprentices and trainees can be a vital tool, bringing fresh, knowledge-hungry talent into the business and helping meet future skills needs.

 

That said don’t underestimate the value of your longer serving employees. These members of staff will provide the experienced, loyal and productive human capital required to keep the business healthy. I’m aware of a number of businesses who have proactively rehired recently retired employees to plug skills gaps and help train others to prevent those skills being lost to the business forever.

 

  1. 6.     Don’t be afraid of recruitment consultancies

 

In an ideal world we’d all be able to recruit the best talent, without having to pay a fee to the third party, but the truth is good recruitment consultancies can save you time and money by streamlining the recruitment process.

 

They can review hundreds of CVs and thus provide you with only the top candidates for interview. They can also be a very useful sounding board on the current salaries and other benefits that will attract the best talent.

 

All of this comes with a huge caveat of course. Like any industry, some recruitment firms are very good at what they do and provide genuine consultancy, but some aren’t, so choose carefully and build a meaningful relationship.

 

 

Ginni Cooper is head of the manufacturing team at Moore and Smalley

Four sources of finance for growing SME manufacturers

 

Access to affordable finance continues to frustrate ambitious manufacturers, though there are signs that it is getting easier to come by, particularly as the government continues to increase the pressure on banks to support businesses.

 

In May 2014, the Federation of Small Business and British Chambers of Commerce helped set up a Business Banking Insight (BBI) survey to help SMEs rate the performance and services of different lenders and share their feedback on bad banking experiences.

 

City minister Andrea Leadsom has called the BBI a ‘wake-up call’ for banks to improve services and target better lending products that small businesses want to see.

 

But of course, it isn’t just bank finance that’s available to SMEs to help them grow. Let’s take a look as the funding options open to growing SME manufacturers.

 

Traditional bank funding

 

The availability of traditional bank funding is improving.  However it is often necessary for most SMEs to have some form of security for the funding. Personal Guarantees are not uncommon. Security is not the be all and end all though. To obtain this type of funding, you must also demonstrate strong cash flows to convince the bank you can service the loan.

 

There are also government schemes that are in place to help facilitate debt funding to suitable businesses, such as the Funding for Lending scheme. It is possible that businesses can access some of this funding where there is no security or insufficient security, but not all applicants will be successful.

 

Invoice discounting and stock finance

 

Invoice discounting is readily available and can be very useful for established growing businesses because it links your sales ledger directly to your credit facility, so funding grows in direct proportion to business expansion. It is now a much more common type of lending. Unsecured overdrafts are much rarer as a result of developments in banking regulations both pre and during the recession.

 

Private equity and venture capital 

 

PE and VC funders become an investor in your business. This means that they are part owners of the business, so the business owner no longer has 100% ownership. However, the aim of PE/VC funding is to significantly grow the value of the business so that when the business is sold, the owner receives more value than if they had not secured PE/VC funding.

 

To secure PE/VC funds a business must have very strong growth prospects and be able to convincingly demonstrate that those are achievable within a short timescale of, typically, five years. Businesses can flourish as a result of securing PE/VC funding as an added benefit can be the sector expertise and knowledge they can bring to bear as part of their commitment to their investment.

 

Alternative funding

 

Alternative funding includes sources such as Lancashire County Council’s Rosebud Fund and the North West Fund. However, because these are ultimately government-funded programmes (local and EU) they have specific eligibility criteria.

 

Another source which is emerging rapidly is peer-to-peer lending, such as Funding Circle, which matches business and individuals who want to invest with businesses looking to borrow. There are also peer-to-peer funding providers, like Kickstarter, that are potential sources of start-up / early stage equity funding.

 

Many of these new sources of funding are seeking to replicate already established American models.

 

Alternative funding can be very useful, but it’s by no means straightforward, especially where public funds are involved.

 

Your professional adviser will be able to give you more information on the funding options available to your business.

 

Stephen Gregson is corporate finance director at Moore and Smalley

Five tips for opening up new export markets

 

The export market can be highly profitable for entrepreneurial businesses with an ambitious mindset and an eye for opportunity. Here are some valuable tips for first-time exporters.

 

Research your market. Decide on a single country that best suits your business, product or service and take one market at a time. For example, the Republic of Ireland, Denmark and the Netherlands are geographically close to home and share many cultural similarities.

 

Manage cashflow and insure against risk. Lengthy transit times and extended credit terms can put a huge strain your finances. Visit the UK Export Finance website and ask your bank about letters of credit and invoice finance, which creates instant revenue through your sales ledger.

 

Get sound advice. The government’s UK Trade & Investment team offers SMEs valuable support and information on overseas markets, including trade missions. Also, speak to a commercial law firm about how best to handle import restrictions, regulatory issues and sales contracts.

 

See for yourself. Taking a first-hand look gives you a valuable feel for market conditions on the ground, so factor in a travel budget. You may need to fly out more than once to establish an effective trading presence. Getting a grasp of local business etiquette will also pay dividends.

 

Take the time to get your paperwork right. The Export Control Organisation (ECO) has to return half of all export licence applications, either for more information or because the application has been wrongly completed.

 

Damian Walmsley is a partner at Moore and Smalley

Five questions to answer before re-shoring

 

The trend for manufacturing businesses bringing production back to the UK has emerged strongly over the last 12 months.

 

This trend for re-shoring is being driven mainly by soaring transport costs and rising living standards, and hence wages, in foreign markets that have until now provided a valuable source of cheap labour.

 

The age of ‘mass customisation’ – making products to the liking of customers in different markets – has also meant companies gain more value by having factories closer to their markets and R&D facilities.

 

Other valuable benefits include better control of the manufacturing process, better lead-times, dealing with suppliers in the same time-zone (who speak the same language) and better relationships with customers who value a British seal of approval.

 

A December 2013 survey by manufacturer’s organisation EEF showed that one in six businesses re-shored production in-house or to a UK supplier in the last three years. In January 2014, UKTI and the Manufacturing Advisory Service (MAS) launched Reshore UK, a service to help companies bring production back to the UK.

 

However, re-shoring isn’t a decision that should be taken lightly. There are complex issues to consider and important questions to answer first. These include:

 

What is driving my business’ need for re-shoring?

 

It’s important to review the reasons for the decision to off-shore in the first place. Was this merely driven by labour costs, or were other factors, such as logistics, inventory levels, quality, exchange rates and responsiveness, also playing a role in the decision. Answering these questions again will give you clarity on exactly why you feel the need to re-shore. It may even be the case that those original reasons for outsourcing still hold true, but a bad supplier experience has put doubt in your mind. Finding a different supplier may be a better solution than re-shoring.

 

Will our circumstances changes again in the future?

 

It’s quite possible that the factors that have changed since the original outsourcing decision was made could reverse again in the near future. Re-shoring may bring production closer to existing markets, but does it move it further away from new emerging markets.

 

Do the right skills still exist in the domestic market?

 

Large scale off-shoring means many skilled jobs have been lost to lower cost overseas markets. Consequently, there are potential skills and knowledge gaps in many areas of the UK. Any decision to bring production back should consider whether you can pick a supplier that has the right skills to meet the needs of your business. Can the supplier handle the product and knowledge transfer process?

 

How can I ensure a successful transfer?

 

What contingency plans can be put in place with the new supplier to ensure a successful transfer, particularly in light of the potential for having an incumbent supplier who becomes uncooperative because they’re losing the contract. Ask yourself how continuity of supply can be guaranteed, perhaps through building up stock inventory to cover the transfer period, particularly if important equipment has to be moved, or whether there will need to be some parallel production.

 

What are the longer term commercial and contractual issues?

 

Re-shoring needs a robust strategic plan attached to it that looks at the long term, not just the fluctuating short-term conditions. The risks attached to re-shoring are equal to, if not greater, than those of off-shoring, so it requires significant time, effort and resource. Consider carefully the financial, legal and logistical implications.

 

Ginni Cooper is head of the manufacturing team at Moore and Smalley

Six tips to avoid overtrading

 

Rising optimism in the manufacturing sector can result in some businesses overreaching themselves – and ending up with serious cashflow problems.

 

Issues around overtrading happen when your current assets or working capital are insufficient to bridge the gap between funding new work and getting paid for invoices you have already issued.

 

Overtrading is particularly common among young manufacturing businesses that have capital intensive manufacturing methods and the need to invest heavily in raw materials.

 

It also affects fast-growing businesses that are chasing new work but haven’t developed a financial management system that is synchronised with the payment cycle.

 

Here are six useful tips for avoiding overtrading:

 

– Produce a 13 week cash projection to identify weaknesses in your cash flow. This should reflect best, worst and medium-case scenarios.

 

– Speak to your suppliers about renegotiating credit terms so you pay them after you get paid by your customers.

 

– Take a careful look at your credit control systems. Set out straightforward payment terms for customers and chase invoices immediately they become overdue.

 

– Arrange staged payments or deposits for your products or services.

 

– Be prepared for seasonal fluctuations in sales and ensure budgets reflect this. The cash projections mentioned above will help with this.

 

– Manage your stock control so that you aren’t carrying excess stock that ties up your working capital. If necessary, have a system in place for selling unsold stock and free up working capital.

 

Invoice discounting is an effective antidote to overtrading. It involves borrowing cash against your invoices, while staying in control of debt recovery. Factoring is a similar funding stream, but involves the fund provider recovering your customers’ debts.

 

If you think your business is in danger of overtrading, speak to your professional advisers as soon as possible. Signs that this could be happening include slipping of your payment terms, having to pay your suppliers late as a result and a constant need to access your business’ overdraft facility.

Five tips to help manufacturers maximise the upturn

 

Recent data would suggest that the UK’s economic recovery is no longer just gathering pace, it is entrenching. With so much good economic data 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 in 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 advisers 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 blog tomorrow will offer 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 that could help you prosper in the long term. I’m not just talking about grants, but funded business support programmes that can help with innovation, leadership skills and mentoring. Again speak to your advisers to see what’s available in your area.

 

Ginni Cooper is head of the manufacturing team at Moore and Smalley