Forecasting business activity is much more short-term at present despite success, say business owners
Several owners of SMEs in Yorkshire said that they had had to change the way they forecast and plan for business activities because of the current economic climate.
The business owners discussed the issues and challenges facing them at present at a roundtable hosted by TheBusinessDesk.com and sponsored by Bdb Financial of Harrogate.
Catherine Shuttleworth of Savvy Marketing said that all sectors were paired back currently. She said: “I am about to do my year planning. But at the moment I am thinking of doing it quarter by quarter. I used to be able to forecast sales for a whole year but it’s difficult to do that for a month now. That means that my planning and thinking is much more short term now than it has ever been.”
Graham Richardson of family firm Johnsons of Whixley agreed, adding: “We haven’t been able to plan over the horizon. We are planning against an annual budget. It’s bizarre really. We are 20% up on last year currently – it is our most successful year in terms of turnover, profitability and cash generation.
“We should be in an extremely strong position going into next financial year. Yet, I don’t have sufficient confidence at the moment to break open than the plan any longer than the immediate 12 months in front of us. The route ahead is such uncharted territory.”
He said the firm would look to offset impacts by making “all the assurances possible and react as the situation dictates.”
Andrew Brook-Dobson of Bdb Financial added this made SMEs tactical rather than strategic.
Shuttleworth said her business was impacted as it works mainly with retailers, who “had stopped making decisions” and “stopped doing things.”
Some of the participants said that they are often challenged by long procurement processes and extended payment terms; making it hard for SMEs to work with those businesses.
Rupert Visick of Gent Visick said he felt that if SMEs showed the courage of their conviction and had faith in the service or product they were delivering – they could dictate better terms. He said: “If you are good and do what others can’t – while there will be a short-term loss – what you do get is an enduring business.”
Eron Erturan of Adept added: “We have been able to pick and chose clients at times.”
The group said often being “brave” in “ditching bigger clients” allowed them to see just how much more such contracts were costing the SME, especially in hidden costs.
Andy Needham of Approved Food added that he was “lucky enough to choose who I do business with.”
Being a “fast follower”
The group agreed that the digitised world and the need for firms to invest heavily in technology was just “the latest change” in the world of business and it’s one of many factors that every business needed to adapt to.
Erturan said it was about “being a fast follower” to stay ahead and succeed. And the pace of change and customer expectation shifting in terms of timeframes is one area companies are changing processes for.
Richardson added that his business now had mechanisms in place to deliver plants within five days to large landscaping schemes because this was the timeframe often buyers were now expecting them to work to. “That’s where we have remained ahead of our competitors.,” he explained.
Andy Needham, of Approved Foods and Morris and Son, is bringing together his businesses under one roof in Barnsley. “We solve problems for some of the major manufacturers and retailers,” he explained.
“It’s changing something from something that could be waste and re-purposing to make sure it has value instead of it being ploughed into the ground. The way we waste energy and resource [in this country] is absolutely criminal. It has to change.”
Cain said that his supply chain “got chopped” in the last recession because people were looking to stock. “The supply chain timings have shifted and there is no room for manoeuvre.”
He added that as a family business, it was important to build up stock and that it had created a reputation around “having the ability to serve.”
Having a support mechanism to ensure future investment
James Cain of Harrogate Water added: “As a business, we are feeling positive, with double-digit growth and that’s fantastic. But let’s not forget our support mechanisms and our networks.
“In 2008, it was very lonely for me – we weren’t the brand we are now, we were developing that brand. In the last ten years, I have attracted the right talent and we have great directors and a non-exec director in place. I am also a member of an alternative board and that is my venting space.
“The harsh reality is that we need to be thinking about who is around to support us through the next round of investment, which for us is millions.”
The group agreed that they needed to have “an eyes wide open” approach to what banking facilities and lending may be available to SME businesses across Yorkshire as the landscape for funding had changed so drastically.
Richardson said that there were benefits to having a working relationship with a bank to ensure they understood the business needs and pain points.
Shuttleworth said there needed to be talent in the banking sector in this regard.
Brook-Dobson said it was disappointing that many banks were “unsupportive of SMEs” given SMEs are such a huge driver in the UK’s economy.
Brook-Dobson who founded Bdb Financial, said business owners had to think about other aspects as well as the success of the firm. He concluded: “Time is our most valuable resource not money. A lot of people forget that. Our mission is to help people lead truly successful lives, not just materially successful lives.”