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Small businesses warned over 'going for growth' after a long recession
10:00am Thursday 22nd May 2014 in News
SMALL businesses have been warned about the dangers of 'going for growth' after a long recession.
The National Institute of Social and Economic Research has forecast that the economy will grow by 2.9 per cent this year.
It also forecast that unemployment would average 6.5 per cent this year and lifted its GDP growth forecast for 2015-17 to around 2.4 per cent.
Business adviser and chartered accountant Nick Hixson, at Hixsons Business Advisors in Bournemouth, said the recovery was 'tentative' in many areas.
He added: “Recovery can be a risky time for business if not managed sensitively. Many SMEs have been too busy ‘surviving’ to plan ahead.
“This means personal and business objectives have probably got well out of kilter. “We are recommending and working with clients to start aligning their objectives so they can move quickly into setting their own strategy and implement it with our help if needed.”
He said many businesses had survived for 'so long on so little' that resources like money, labour and investment were scarce.
“This means they will struggle to take on anything new – yet most know they have to innovate to grow.
“Nothing happens without spare management capacity.
“That’s sometimes where we have to step in to get something started, then hand it back once it justifies a fixed overhead,” he said.
He said businesses should be wary of grabbing at 'the next big thing'.
“Generally, successful entrepreneurs make small, fast movements into new markets and products.
“That way they can draw back without too much loss if it goes wrong or have the ability to refocus if it’s not quite right.
“The stories of big successful launches where the business owner just bet their house on a lucky guess are mainly just that – stories.
“Some happen, but most – the ones you don’t hear about – failed,” he said.
He also urged businesses to look at their debt planning, in the light of the forecast fall in unemployment.
The Bank of England said last year it would consider raising interest rates if unemployment fell below seven per cent.
The National Institute of Social and Economic Research has forecast a rate rise as early as the second quarter of 2015, though this is expected to be a year after the seven per cent threshold is reached.
Nick Hixson's business recovery tips:
Start aligning your personal and business objectives and develop a plan for the future.
Do an audit of your resources: money, labour skills, investment and management capacity.
Plan how you can fill any gaps.
If you want to move into new markets or develop new products, prepare a marketing plan.
Consider how you can fail successfully, if need be.
Review your debt – are there better options for your business?
What position will you be in in 12 months’ time if interest rates rise?
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