Businesses focus on driving profits to beat low growth economyFollow @PwC_Midlands
Private businesses in the Midlands are staying focused on driving profits to beat the low growth economy.
With no conclusion to the Eurozone crisis in sight and a flat domestic economy that is unlikely to achieve growth of 2% before 2015 at the earliest, privately-owned businesses in the region are looking for new ways to drive growth.
A number of private businesses in the region are managing to turn a healthy profit and hit growth targets despite the economic conditions.
Existing in a low growth economy is challenging for all businesses – not least for private businesses that quite often will not have easy access to finance or large cash reserves. However, many are still managing to perform well and achieve growth rates well above current national GDP growth.
This re-emphasises the importance and resilience of private businesses. Being entrepreneurial in nature, they are demonstrating their agility by exploring new market opportunities and investing in innovation.
Among the region’s private business success stories, three companies in the East and West Midlands have been shortlisted in this year’s national Private Business Awards, which are sponsored by PwC. In the West Midlands, Tamworth-based Instarmac, which manufactures construction and repair materials, has been shortlisted in the Employer of the Year category and Staffordshire-based JCB has been shortlisted for the Private Business of the Year award. In the East Midlands, corrugated packaging company, Logson Group, based in Coalville, Leicestershire, has been shortlisted in the Rising Star category.
To help private businesses stay focused on driving profits in a low growth economy, we believe the following areas are key:
- Manage your costs – stay focused on identifying opportunities to reduce costs by making sure you are getting value from your supplier contracts or by making changes to the way the business operates. It is also important to ensure the structure of the business is optimised in order to deliver tax efficiency.
- Improve your working capital management – working capital presents a huge opportunity for companies to release cash from their balance sheets and free up funds for investment to drive profits. PwC’s recent Cash for Growth survey reported that UK companies have the biggest untapped cash source in Europe which could be released by better working capital management. The working capital requirement in periods of growing profits can actually be a multiple of the sales growth and so can be crucial.
- Look for new market opportunities – keep an open mind when it comes to your company’s market potential and make it part of your long term strategy. Identifying new markets in developing or growing economies will help to drive profits, regardless of the UK economy’s performance.
- Ideas are good for business – establishing and maintaining an innovation culture is a vital part of achieving growth in a flat economy. Investing in new products and services is vital, as is coming up with strategic ideas to drive business productivity.
Email: Chris Romans
Tel: +44 (0)121 265 5432