Moore Stephens published its annual report for owner managed business (OMBs), saying that due to continued uncertainty, owner managed business confidence has decreased for 2019. This shows a declining confidence for 2019, as well as the prospects for business performance in the year to come.
The main reason for the reduction in confidence is Brexit and the uncertainty regarding the details of the final deal. However, business leaders continued their business. Some are waiting for the Brexit situation to clear before making investment decisions, while others realise they need to push on.
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Nevertheless, across all three areas surveyed (general outlook, meeting revenue and profit targets), the survey found the lowest confidence levels reported since the beginning of the OMB surveys.
On the other hand, the report noted that despite current challenges, many OMBs are focusing on sustainable, profitable growth, rather than growth for growth’s sake. Namely, the key findings of the report are the following:
- OMBs’ confidence in the general outlook (53%) and their ability to meet revenue (60%) and profit (55%) targets for 2019 has decreased to the lowest level recorded in the surveys;
- 78% of OMBs either met or exceeded their performance expectations in 2018, but only 35% overall performed better than expected;
- OMBs are most concerned about the strength of the UK economy (80%), although concern about the global economy has increased;
- The impact of Brexit negotiations on their business is a concern for 55% of OMBs – and 91% don’t think the Government has provided them with enough information to plan effectively;
- The most popular strategies for 2019 are investing in staff training (48%), expanding the UK customer base (48%) and launching (36%) and developing (36%) new products or services – results that are highly consistent with last year;
- 84% of OMBs view advances in technology – such as automation, robotics and machine learning – as an opportunity for their business (up from 79% last year), but only 31% plan to invest in new technology or IT systems in 2019;
- 19% of OMBs are concerned about implementation of Making Tax Digital – up from 9% last year – reflecting the fast approaching initial compliance deadline of April 2019.
Nonetheless, as reported, many businesses want to push through and take measures to ensure a sustainable growth. In order for this to happen, Moore Stephens presented ten tips:
- Build on the core strengths of your business and if you can see an opportunity to develop and dominate, so much the better;
- Prioritise investment in areas that will boost productivity, whether that means investing in people (through training) or new technology, systems and processes;
- Keep focusing on ways to improve profitability as opposed to revenue growth – including assessing what you are selling and at what price;
- Do your analysis: if you have an advertising budget, assess past return on investment and spend your money in ways proven to attract profitable business;
- Try to build and maintain a balanced set of skills and viewpoints in your management team;
- Trust your gut reaction: don’t be afraid to take a calculated risk, as long as it is based on sound management information;
- Embrace the challenge of Making Tax Digital: if compliance means you will be improving your management and accounting systems, you should reap the benefits from reduced time spent on back office admin and more time freed up for performance analysis and business planning;
- If you’re gearing up for Making Tax Digital, look for an accounting solution that’s MTD-ready, gets you on the cloud and has additional functionality in the form of low-cost apps;
- Technological change is happening fast – understand how new technology and innovation is affecting your sector and consider how you can adapt to its opportunities in your business;
- Interact regularly with people at all levels of your business – they may give valuable feedback on improvement, as well as what is working well.
See more information in the PDF below
