How accountants can bolster business in periods of low growth
20 February 2020: in its quarterly Monetary Policy Report, the Bank of England predicts a period of low growth for the UK. How can businesses adapt and thrive in such a climate? And what part can accountants play? Beth McLoughlin reports.According to the Bank of England, Britain’s growth potential is likely to be half what it was before the EU referendum in 2016. That prediction is based on Prime Minister Boris Johnson being able to successfully negotiate “an immediate but orderly move, at the beginning of next year, to a deep free trade agreement”.
But while that picture may seem gloomy, there is some evidence – backed up by ICAEW members – that uncertainty facing businesses has fallen since the UK left the European Union.
Some say that there are opportunities even in periods of low growth. “The fact that we are out is saying to entrepreneurs there is no excuse for indecision,” said Paul Samrah, Partner at Moore Kingston Smith and the firm’s Brexit impact specialist. “A decision has stimulated businesses to be decisive themselves.”
Samrah added that now is the time to meet face-to-face with customers and suppliers overseas, to strengthen relationships and make a commitment to continue working with trusted partners even as tariffs and regulations within the EU and beyond are yet to be figured out. “If you are a lean, mean business [then] you will thrive in times of low growth,” he said.
Compared with previous periods of low growth, including the recessions of the late 80s and 90s, there is a huge amount of real-time data available. That, according to Samrah, can help businesses respond quickly to trends and challenges. The rise of technology such as apps which allow a business to scan invoices instantly has also meant huge time savings are available to those willing to invest.
Sancho Simmonds, Partner at Smith & Williamson, agreed that times of slow growth are an opportunity to reflect on how technology can drive efficiency.
“Technology investment should be accelerated,” he said. “When RPA and AI can take over some tasks which humans do, businesses are freed to focus on making sure their customers have the right experience.”
Simmonds has focused on improving the health of businesses in the scale-up phase as Director of the ScaleUp Institute.
While the UK government has historically supported new businesses, those which are in the next phase of growth, known as scale-ups, have not traditionally been as well served. Scale-ups tend to be more productive than start-ups, which is why they are seen as driving much of the economy,” he said.
These important businesses, which typically employ more staff and pay more in tax than smaller, newer companies do, can struggle to attract the right talent. This is likely to be even more of a challenge without automatic access to the best of the EU.
He said they must make sure they understand what the key attributes are for the employee of the future to get the right people on board.
“Critical thinking and being service-orientated are now the most important skills,” he said. Testing for these at the interview stage, rather than solely seeking those with traditional qualifications, is a good idea.
Developing the kinds of leaders who can steady the ship through stormy waters can also be a challenge. One way of meeting this is for business leaders to join a local peer group of other owners and managers they can learn from.
“Wherever there is change, there is opportunity. One of the things we don’t want to do is talk ourselves into a downturn,” Simmonds added.
Irene Graham, CEO of the ScaleUp Institute, will be speaking at ICAEW’s SME conference this year. For more information click here.