Published on 3 July 2012 by Tony Groom
Optimism has been in short supply as 2011 comes to its end and businesses will need to be even more innovative and proactive if they are to survive and grow in the face of the gloomy economic predictions of stagnation for the next few years.
The Office for National Statistics has just reported that industrial production fell by 0.7% in October which is a contrast to a rise of 1.7% last October. Last week, the Office for Budget Responsibility downgraded its growth forecast for this year from 1.7 per cent to 0.9 per cent and from 2.5 per cent to 0.7 per cent for 2012. Also last week the OECD predicted that the eurozone economy will shrink by 1% in the fourth quarter of 2011 and then by 0.4% in the first quarter of next year.
In response, business doctor Tony Groom, of K2 Business Rescue, argues that UK businesses in both manufacturing and service sectors have become too reliant on the domestic market and need to look overseas, well beyond Europe. He argues that we should revive some of the spirit of our Victorian forefathers.
In apparent contradiction to the figures above, HMRC (HM Revenue and Customs) recently published their latest figures for UK exports. These show non-EU exports grew in September by £0.4 billion (3.4%) more than August while exports for the EU increased by £1.6 billion (13.4%). September’s non EU exports were worth £11.3 billion and the month’s exports to the eurozone were worth £13.6 billion.
Although both figures show a slight improvement on August 50% of UK exports go to the eurozone. This suggests that given the ongoing turmoil in the eurozone it would be foolish for UK business to continue to rely so heavily on Europe being able to continue taking such a large share of UK exports, let alone support any growth.
The best performing non EU exports are nuclear reactors, plastics products, pharmaceuticals, spirits, beverages and vehicles.
Currently the UK imports more than it exports and the trade gap (the difference between imports and exports) with areas both inside and outside the eurozone is increasing both monthly and year on year.
In an echo of former MP Norman Tebbitt’s famous advice to the unemployed to “get on your bikes” Tony Groom tells businesses to “get on a plane”.
“The Victorian spirit of adventure that built an empire has been somewhat absent and we need to rediscover it,” he said. “Essentially UK plc has become insular and complacent; we have been too dependent on the domestic market that in turn has been dependent on credit.”
He believes the UK needs Business Heroes who are prepared to explore foreign lands and open up new markets abroad, to sell our goods and services to countries that have potential for real economic growth. Regime change in North Africa and the Middle East offers some terrific opportunities, while elsewhere some parts of the globe are thirsting for the standard of living that we take for granted. Indeed few of us have ever visited the BRIC countries of Brazil, Russia, India and China let alone considered doing business with them.
Invoking a spirit of adventure needs to be supported by a change of mindset about investment, he argues. Investing in UK businesses has become too much like bank lending. Investors too often expect asset backed security or the ability to deliver a quick return rather like lending under a debenture as the primary bank security instrument. Instead we need a culture that rewards risk-taking and celebrates those who profit from risking their own capital.
“Most people in the UK want to invest in land and property as a long-term safe haven for their capital. Neither the culture, nor the tax incentives encourage us to invest in exciting business ventures. We are not encouraged to be adventurous for the future of UK plc.
Opportunities abound. One example is to exploit the goodwill towards us in Libya. “American salesmen are here already” was the response from Omar, a Libyan co-shareholder to whom Groom spoke during a recent trip to Tripoli. He asks: “Are we still hoping that business will come to us? The world has changed and we must go out and start finding it.”
Businesses have plenty of expertise as well as products that are in short supply in the emerging economies, he says, but the only way to identify markets for them is to get out there. Join a trade delegation, contact the local embassy, join some of the many LinkedIn trade and country groups that cover just about every market, join one of the Chambers of Commerce that cover most markets and countries, or just use the internet to make contacts. Ideally set up some meetings before travelling but you really do need to get on a plane if you want to find new customers.
To those readers who are saying “yes, but…” to this argument, the reply is: “our forefathers conquered the world. They took risks and it’s time we started taking some ourselves. We need to rediscover our spirit of adventure.”