Now in its fifth year, Moore Stephens’ annual owner managed business (OMB) report entitled Powered by people and technology in 2018 provides a clear view of the confidence, plans and concerns of business leaders across Thames Valley and the UK, writes Miles Hewitt-Boorman, partner and head of Thames Valley at Moore Stephens.
Business confidence in 2018 and Brexit
Our research finds that confidence in the general outlook among OMBs has stabilised after dropping to a three-year low in our 2017 report; 60% of respondents express confidence in the general outlook for 2018 (compared to 59% in 2017, 77% in 2016 and 70% in 2015).
OMBs are concerned about the strength of the UK economy (a worry for 78%), with a major factor being the UK’s impending departure from the European Union. Just over half are concerned about the impact that Brexit negotiations will have on their business, with key concerns including the potential introduction of tariffs and a shortage of EU labour. On the other hand, a third of OMBs have no concerns about leaving the EU.
Business leaders continue to be pragmatic in spite of political and Brexit-related uncertainty, and with many indicators pointing to a period of reliable growth (albeit perhaps not ‘exciting’ growth) – owner managers have reason to be more optimistic than last year.
Strategies for the year ahead
Entrepreneurs across the Thames Valley and UK continue to push for growth, primarily through investment in staff training (51%), expanding their domestic customer base (50%) and investing in new technology or IT (33%).
Innovation – particularly in the development (38%) and launch (37%) of new products and services remain high on the owner managed business agenda for 2018, with leaders recognising the need to retain a competitive advantage over competitors, both domestic and overseas.
Perhaps linked to uncertainty around Brexit, the number of OMBs certain or very likely to be developing their succession plan for their business has decreased from 29% in 2017 to 24% in 2018. Similarly, just 5% are looking to sell their business in 2018. Business leaders are advised to take care: failure to plan ahead could not only reduce the potential value of your business, but lead to loss of advantageous tax reliefs and expose you to unnecessary risks.
Bridging the skills gap and the rise of technology
With a shortage of skilled staff being a primary concern for OMBs (41%), it’s encouraging to see that businesses are taking action. Our report finds that 48% of OMBs view digital skills as the area requiring investment, alongside sales and marketing (45%) and leadership and management training (43%). Businesses recognise that they need to provide opportunities for staff to develop, or run the risk of staff leaving to join a competitor who offers better development opportunities.
Linked to digital skills, 79% of business leaders view the rise of technology (including automation, machine learning and robotics) as an opportunity as opposed to a threat. A respondent to our survey based in the Thames Valley adds: “We are at a tipping point for these technologies – they have been around for a few years, but are now becoming mainstream. All companies need to be prepared for a change in the way that we run and do business within the next 10 years.”
An area we’re supporting many clients in the Thames Valley with is around business process efficiency, making better use of data and streamlining systems and operations. The more you can plan ahead, the more you can make technology work to your advantage.
Seeking the right advice at the right time
Recognising the need to keep pace with technological advances, business leaders plan to invest in digital skills and innovation during 2018 – so it’s important to explore the ways in which technology can be used within your business, and to take full advantage of tax reliefs and grants that may be available to you.
As the terms of the UK’s departure from the EU become clear, OMBs must take advice on the ways in which Brexit may impact their business and plan for what the future may have in store – and it’s in this area that our Thames Valley team is ready to help you thrive in a changing world.