North West businesses showing healthy appetite for investment

A study by Grant Thornton has revealed that North West businesses are adopting bolder external investment strategies than companies elsewhere in the UK.

It says they are showing more willingness to explore options such as private equity backing, venture capital funding and crowdsourcing.

When asked to prioritise the different parts of their strategy in the next 1-2 years, 76% said they would generate growth by using external financial investment, compared with 61% nationally.

The findings come from a nationwide survey of 1,000 UK businesses with turnover between £10m to £1bn – including 82 based in the North West.

The most promising growth accelerator was considered to be partnerships, including improved supply chain links, developing more expansive networks, and international connections.

Some 45% of North West respondents identified this as key, above the national average of 37%.

The report identifies two other distinct characteristics which set high-growth businesses apart from their peers – they are purpose-driven and tech confident.

Neil Sturmey, partner at Grant Thornton North West, said: “Fast growth companies are not just open to doing deals, but are more willing to take on external investment to reach their next stage.

“The strong interest shown here by North West businesses is a good indicator of the dynamism in our region and the willingness to really go for it.

“While the availability of external finance from banks may be tight, there is still significant capital available from other forms of external funding.

“Private equity firms have significant levels of funds to invest. One of the challenges for companies is building a coherent business case on which to raise money.”

He added: “The power of ‘purpose’ is also there in the findings.

“Winning the talent battle has a strong relationship to business performance – and an overwhelming majority of North West business leaders agreed, or strongly agreed, that they attract new talent because of their businesses’ purpose.

“People want to be inspired and are more socially conscious than ever before.”

The UK’s largest manufacturing sector is food and drink, contributing £28.2bn to the economy annually and employing 400,000 people.

In the North West the sector is led by established businesses such as Iceland Foods, Princes, The Billington Group and Duerrs.

Nationally, the Grant Thornton survey shows that organic growth is seen as the way forward by companies, with 71% of food manufacturers prioritising this, and 69% planning to seek external investment to support market gains.

Focusing on brand was seen as offering the best route to accelerating growth.

“This research paints a picture of this key industry being relatively conservative in its approach,” Neil Sturmey added.

“Organic growth is given primacy over the more risky mergers and acquisitions favoured by other sectors.

“Tried and tested ingredients, such as good people and great marketing, are seen as more important than accelerators.

“Just 29% of businesses in the sector were actively pursuing market ‘disruption’.”