GET Consultants looks at why the manufacturing and technical sectors in the UK have capacity for growth, and what these business types can do to offset any risks to their future survival. He also looks at how we might rebalance the economy to unlock the potential of some of the fastest growing smaller companies in the UK.
The 2016 Coast to Capital report identified that there are specific barriers that are concerning for the scale-up and growth of UK medium sized businesses in two key sectors.
The reasons for business growth limitations fall into the three ‘C’s
- Customers – both online and offline sales and marketing to create and retain local UK and overseas buyers
- Capacity – capability to grow including staff, factories, office space, warehousing and overseas premises
- Cash – easy access to finance at affordable interest rates to ensure growth when it is required
Creative and technical sector
Growth potential is around products, particularly technical innovation, ‘big data’, and increased interconnectivity that can create new products and services, both to consumers and in the supply chain. The second key area for growth is skills where increasing technology and creative expertise in technical and managerial positions are required, and they are increasingly merging. These skills are needed to drive the innovations that will create future new opportunities, and to exploit these opportunities and, in turn, manage business operations more effectively.
Key barriers to growth:
- Lack of revenues for re-investment for scale-up and growth
- Lack of ‘move-on’ premises that companies can grow into
- Excessive workloads and intense competition for staff
- Lack of staff training in technical and managerial skills
- Lack of business visibility or profile
Advanced manufacturing and engineering sector
Globalisation is one of the key drivers for this sector, with increasing competition from countries such as China and Brazil as they move up the value chain and more research and development is conducted internationally. It is also increasing opportunities for companies to outsource their production, which in turn is increasing demand for supply chain management skills.
There are 3,400 Advanced Manufacturing and Engineering businesses in the Coast to Capital region, accounting for 4.4% of total businesses. This sector accounts for 4.3% of employment, around 33,000 people, with 12% growth in AME businesses between 2010 and 2014, around 2% slower than in the South East.
Key barriers to growth:
- Difficulty for companies and managers to keep track of the rapid pace of technological change
- Issues with providing staff training, both in identifying the best type of training and the cost of undertaking it
- Shortage of strategic and supply chain management, production / process control and quality assurance skills
- Gaining access to overseas contacts and markets and navigating overseas environments and regulations
- Lack of strategic management to navigate and respond to rapid change and turn threats into opportunities
Every medium sized business sector needs a strategy for growth. Both of these two critical UK business sectors have scope to survive and thrive in a global economy, but having a strategic plan to do this has become essential.
Staff skills, both recruitment and training, have become critical, especially in areas like new technology. But business strategy for growth is paramount too. A good business strategy needs to have a clear focus and need not even be that big, just have the key detail of how you are going to forge your own future in the next five years.
GET Consultants is holding a series of Scale Up Labs to help High Growth Small Businesses to transform and grow and avoid some of the pitfalls and barriers to long term and efficient growth. Click for details