SMEs urged to go for growth

THE funding landscape and the talent pool in the North West are in good health, but challenges remain in certain sectors.

At an event organised by North West executive search company Rowan Partners, there were calls too for the Government to address east-west connectivity as a priority, and more radically underline its Northern Powerhouse ambitions by moving one of its departments to the region.

Discussing  how to  unlock growth in SMEs and whether the region is well-served for finance and skills, were: LDC investment director Richard Ibbett, Rowan Partners directors David Anwyl and Paul Waite, Elstat chief executive officer Nick Nearchou, KPMG partner John Hughes, Living Bridge associate director Mo Aneese, Barclays corporate director Liam Brougham, Harrington Brooks chief executive Matthew Cheetham, Dow Schofield Watts partner Craig Richardson and Business Growth Fund senior investment manager Neil Inskip.

Panellists agreed that SMEs are in general optimistic and have an increasing appetite for growth, particularly in new markets.

There was varying demand across sectors for new talent, with Nearchou, the CEO of Elstat, a Preston company revealing his business had to open a London office after being unable to recruit a specialist software developer in this region.

Generally though, the jobs market is meeting employers’ needs.

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Anwyl said: “When we’re doing a senior assignment, the first thing we do is try to find someone in the North West.

“I do think the NW has got a very good talent pool and we can usually solve the problem in the region.  

“The two biggest challenges are engineering and we’ve done a lot of work in IT. In the IT sector there is pool of available talent in the NW but as you get into larger private equity type businesses, I think it gets to be quite thin.”

Waite continued: “The regional SME sector is really dynamic and I think there are significant advantages to working in a growing business, not least in terms of career advancement prospects, autonomy and rapid decision making. I think people see the North West is an exciting place to live and work, and that London in not the automatic choice.”  

High on the agenda was the possible HS3 trans-Pennine link, which the panel agreed was more important for the vitality of the North as a whole than the HS2 north-south connection.

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Cheetham said: “HS2 to me seems incredibly expensive for not a huge amount of benefits. Whereas as east to west where we’re clearly lacking good infrastructure, appears to be a no brainer.”

Aneese agreed: “Better to connectivity from the North East to the North West would be great.”

Hughes pointed to the current Liverpool Waterfront development being undertaken by Peel Group as evidence of the need for better east-west links.

He said: “If Peel continues to do what it’s doing in Liverpool, the M62 corridor between Liverpool and Leeds, through Manchester, is going to be filled up.”

The panel broadly agreed that improved transport infrastructure in the North would help halt the “brain drain” to London.

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There was positivity around the Northern Powerhouse, the concept championed by Chancellor George Osborne to address the North/South economic imbalance by devolving more spending power to the regions.

Cheetham floated the idea that the Department for Transport should be moved from London to Liverpool as a statement of intent from the Government.

Anwyl stated: “The other elephant in the room which will help the North West is housing prices.

“You’ve got people coming out of university now and we are at the point where even the buy-to-let landlords are moving out of London.

“They cannot get property in London. So there comes a point when young highly talented individuals cannot go to what they may think is their natural destination point.

“We’ve got a great university here with a science base and Media City. What I’ve seen there is lots of small early-stage businesses setting up and you will get to the point where bright individuals will think ‘I do not need to go to London’.”

Nearchou agreed that the high prices of London homes is a “great opportunity” for the North.

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He said: “Most young managers will not be able to afford a place in London. There is a huge opportunity for the North West. The question is can we attract and retain it?”

Panellists established it was important to make working for North West SMEs attractive to prospective recruits.

Aneese said: “It comes back to the issue of work-life balance. If you want to recruit great talent, it’s not just about the money, it’s about all the other things that come along with the job. Like work benefits.

“Employers need to be more open to it. The young people being recruited now will not stay at the business for 15 to 20 years anymore.

“People are used to changing jobs. But I also think movement of talent is quite good because you learn new skills and it is required and moving abroad or to the international scene does create more rounded individuals and brings them back into the city.”

Critical to the success of SMEs in the region is their understanding of the vast array of financing options available to them as they look to expand.

Neil Inskip from Business Growth Fund said: “Some businesses still don’t know that BGF exists and others are suspicious of private equity. I think there is work to do to dispel myths around entrepreneurs losing control of their businesses and being forgotten about by investors.”

The discussion then turned on the routes to receiving such advice.

Richardson continued: “One of the issues in raising funding is the lack of awareness of general advisers to businesses, particularly accountants who don’t have much experience.

“They may know about private equity – that it’s expensive and controlled by horrible people. They know about bank debt, but anything else in between, there isn’t much experience at all.  Because it’s still relatively new, a lot of accountants are still in the dark.”

Both private equity investors said they were seeing significant interest in the leisure, holidays and software sectors in particular.

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Ibbett concluded: “We’re see a lot of activity in travel – all sort of travel, corporate, retail and consumer, whether that’s cruises, short haul, or long haul. It seems to be a very hot space.”

Rowan Partners can be reached at http://rowan.global/rowan-partners/

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