It would seem that those on green shoots watch have had a whale of a time over the past couple of weeks with a number of positive bits of economic news emerging, as well as the apparently successful G20 summit in London.
The banking situation seems to be improving, with the news of record profitability for Wells Fargo in the US, and reports of a marked increase in the amount of loans being written under the Enterprise Finance Guarantee Scheme.
There are continuing signs of relatively robust consumer activity, and with property prices seemingly within sight of the bottom, cash buyers are interested again. A 90% mortgage product has recently been introduced by HSBC which could provoke a small boost to the housing market.
Also, although they have significantly increased, insolvencies and repossessions have not reached the predicted levels.
Then there are the many people who are securely in work and have been benefiting from significantly reduced mortgage payments. Once they have paid off some debt, they will be looking to spend again, although without necessarily borrowing to do so.
All the above would seem to support the idea that there are some signs of confidence returning, and as we all know it is confidence rather than credit which will drive economic recovery.
This blog has made no secret of its belief that the economy, or more pertinently the ordinary people and businesses that inhabit the real economy, is more resilient and positive than the various media outlets have given it credit for, and that many businesses have acted decisively and imaginatively to combat the impact of the downturn (one reason perhaps that the retail apocalypse predicted for the quarter rent day of 25th March did not come to pass was that fact that many businesses had already negotiated better deals with their landlords).
However there are still a number of macro economic clouds on the horizon, including the number of large corporate refinancings that are due over the next year or so, the state of government finances and the medium term action that will be required to improve them, and the feeling that for all the talk of deflation, the underlying inflation rate remains at a persistently uncomfortable level. Unemployment is also likely to increase further during the rest of the year.
As Aristotle is credited with saying “One swallow does not a summer make”. The selection of positive news above does not mean that the current economic problems have gone away. Careful planning and flexible use of resources remains the key, whether it is developing a new product, investing in new capacity or taking on new people, particularly at a senior level. There are some reasons to feel good at last, but that does not mean caution should be thrown to the wind.
Tuesday, 14 April 2009
Thursday, 26 March 2009
Green Shoots? Maybe we can work it out after all….
Hooray! I have at last found those elusive green shoots. There is a landscape gardener based in Guildford who is really busy at the moment. I know this is probably an example of the DIY syndrome which normally occurs in housing recessions i.e. if you can’t move to a new house you do up the old one (although B&Q, Homebase et al should be so lucky), but normally the gardener is one of the first cuts made by a cash strapped household, so maybe these are green shoots that really have taken root. It seems that Barack Obama thinks so as well.
I met the aforesaid landscape gardener at a breakfast seminar entitled “Preparing For The Next Upturn” organised by the Surrey Economic Partnership where the speaker was the ever ebullient Beermat man Mike Southon. His presentation compared the life cycle of an entrepreneurial business with the career of the Beatles, and mixed great music with amusing anecdotal snippets and a great deal of common sense advice. Mike kept the whole audience entertained for more than an hour and I think everybody left the seminar believing that they will get through the current economic downturn, and emerge well equipped to take advantage of the upturn.Maybe we are having a hard day’s night at present but if we can work it out and help each other rather than let it be, perhaps we will see the economy getting better in the end.
I met the aforesaid landscape gardener at a breakfast seminar entitled “Preparing For The Next Upturn” organised by the Surrey Economic Partnership where the speaker was the ever ebullient Beermat man Mike Southon. His presentation compared the life cycle of an entrepreneurial business with the career of the Beatles, and mixed great music with amusing anecdotal snippets and a great deal of common sense advice. Mike kept the whole audience entertained for more than an hour and I think everybody left the seminar believing that they will get through the current economic downturn, and emerge well equipped to take advantage of the upturn.Maybe we are having a hard day’s night at present but if we can work it out and help each other rather than let it be, perhaps we will see the economy getting better in the end.
Wednesday, 18 March 2009
Help from Top to Bottom
Real help for people and businesses is a phrase that is being bandied about an awful lot at the moment, particularly by the Government as it seeks to find ways to support the economy during the present downturn. This help currently includes the various funding schemes that have been put in place such as the Enterprise Finance Guarantee Scheme, business health checks courtesy of Businesslink, skills training for individuals and businesses, and many sources of advice to assist with personal debt, redundancy and getting back to work. Full marks for effort although clearly these are top down initiatives, and it will take time for this help to get through to those who need it and have some real impact on the economy.
However there are also some bottom up initiatives being launched, such as the one that I saw when I visited the Spelthorne offices of the Surrey Chamber of Commerce recently. Known as the Enterprise Zone (or EZone), it is a scheme intended to help new businesses through their start up period, and is designed to be a credible and more professional alternative to a home office. Along with a fully equipped office area with reception and secretarial support, there is also access to business services and advice, and perhaps more importantly the chance to share ideas and get peer support from like minded business people, who have decided for either economic or lifestyle reasons to strike out on their own. In short it is a practical, efficient and effective solution for new businesses looking to get going, and hopefully will quickly generate some benefits for all concerned as well as the economy as a whole. All in all a very good idea, which like all good ideas it just needs a little push, something I am more than happy to do.
However there are also some bottom up initiatives being launched, such as the one that I saw when I visited the Spelthorne offices of the Surrey Chamber of Commerce recently. Known as the Enterprise Zone (or EZone), it is a scheme intended to help new businesses through their start up period, and is designed to be a credible and more professional alternative to a home office. Along with a fully equipped office area with reception and secretarial support, there is also access to business services and advice, and perhaps more importantly the chance to share ideas and get peer support from like minded business people, who have decided for either economic or lifestyle reasons to strike out on their own. In short it is a practical, efficient and effective solution for new businesses looking to get going, and hopefully will quickly generate some benefits for all concerned as well as the economy as a whole. All in all a very good idea, which like all good ideas it just needs a little push, something I am more than happy to do.
Wednesday, 4 March 2009
A battle the optimists have to win
We received an e-mail this morning from the Birmingham Chamber of Commerce seeking member views on a new BBC documentary “Recession Britain”. The aim of the programme is focus on one firm that is struggling to survive the recession and how that struggle will impact on their supply chain, particularly the smaller firms that are part of it.
My immediate thought was why don't they follow it up with a programme on businesses that are actually doing well at the moment? There are more of these businesses around than people might think, and such a programme would provide encouragement for struggling and nervous businesses, rather than their proposed programme which will surely just exacerbate the situation.
People are more positive than is generally recognised in the media at present (witness today’s figures on consumer confidence which show an improvement since January), something that was reconfirmed at a breakfast seminar I attended organised by the accountants Smith and Williamson. Two well known names in the entrepreneurial world, Guy Rigby, Head Of Entrepreneurs at SandW and an old friend of Orchard, and Mike Southon, founder of the Beermat series of entrepreneur guides and regular FT columnist, combined in an entertaining double act to emphasise that there are always reasons to be optimistic as long as the basics of good management are adhered to.
Admittedly their optimism was tempered by a more pessimistic (or realistic? - take your pick) view from Mark Garnett, Director of Financial Services at SandW about the state of the British economy and its future prospects. OK we know it is not fun out there, and it seems that the BBC and other media take every opportunity to remind us of this. However we also all know deep down that the current economic battle is one that the optimists have to win.
My immediate thought was why don't they follow it up with a programme on businesses that are actually doing well at the moment? There are more of these businesses around than people might think, and such a programme would provide encouragement for struggling and nervous businesses, rather than their proposed programme which will surely just exacerbate the situation.
People are more positive than is generally recognised in the media at present (witness today’s figures on consumer confidence which show an improvement since January), something that was reconfirmed at a breakfast seminar I attended organised by the accountants Smith and Williamson. Two well known names in the entrepreneurial world, Guy Rigby, Head Of Entrepreneurs at SandW and an old friend of Orchard, and Mike Southon, founder of the Beermat series of entrepreneur guides and regular FT columnist, combined in an entertaining double act to emphasise that there are always reasons to be optimistic as long as the basics of good management are adhered to.
Admittedly their optimism was tempered by a more pessimistic (or realistic? - take your pick) view from Mark Garnett, Director of Financial Services at SandW about the state of the British economy and its future prospects. OK we know it is not fun out there, and it seems that the BBC and other media take every opportunity to remind us of this. However we also all know deep down that the current economic battle is one that the optimists have to win.
Tuesday, 3 March 2009
Look after your suppliers? No really - look after your suppliers….
The announcement that Zavvi, the music, games and DVD retailer is to close down for good, has brought home a salient point about the recession that often gets overlooked in those “top tips on surviving the recession” listings.
Nearly everybody will suggest that you imagine a scenario when one of your top customers goes bust, but very little emphasis is put on the situation when one of your main suppliers goes the same way. Yet that is precisely what has happened in this case, where the key supplier in question was Entertainment UK, which was a casualty of the Woolworths demise. Not only did Zavvi lose its key supplier at a time when it desperately needed stock i.e. the run up to Christmas, but more importantly it lost valuable credit facilities, which could not be replaced as new suppliers demanded immediate payment.
A salutary lesson for everybody - when your key supplier goes down not only do you lose products that you need for your business, you potentially lose a valuable source of finance. One to add to those key financial relationships that have to be managed.
Nearly everybody will suggest that you imagine a scenario when one of your top customers goes bust, but very little emphasis is put on the situation when one of your main suppliers goes the same way. Yet that is precisely what has happened in this case, where the key supplier in question was Entertainment UK, which was a casualty of the Woolworths demise. Not only did Zavvi lose its key supplier at a time when it desperately needed stock i.e. the run up to Christmas, but more importantly it lost valuable credit facilities, which could not be replaced as new suppliers demanded immediate payment.
A salutary lesson for everybody - when your key supplier goes down not only do you lose products that you need for your business, you potentially lose a valuable source of finance. One to add to those key financial relationships that have to be managed.
Look after your suppliers? No really - look after your suppliers….
The announcement that Zavvi, the music, games and DVD retailer is to close down for good, has brought home a salient point about the recession that often gets overlooked in those “top tips on surviving the recession” listings.
Nearly everybody will suggest that you imagine a scenario when one of your top customers goes bust, but very little emphasis is put on the situation when one of your main suppliers goes the same way. Yet that is precisely what has happened in this case, where the key supplier in question was Entertainment UK, which was a casualty of the Woolworths demise. Not only did Zavvi lose its key supplier at a time when it desperately needed stock i.e. the run up to Christmas, but more importantly it lost valuable credit facilities, which could not be replaced as new suppliers demanded immediate payment.
A salutary lesson for everybody - when your key supplier goes down not only do you lose products that you need for your business, you potentially lose a valuable source of finance. One to add to those key financial relationships that have to be managed.
Nearly everybody will suggest that you imagine a scenario when one of your top customers goes bust, but very little emphasis is put on the situation when one of your main suppliers goes the same way. Yet that is precisely what has happened in this case, where the key supplier in question was Entertainment UK, which was a casualty of the Woolworths demise. Not only did Zavvi lose its key supplier at a time when it desperately needed stock i.e. the run up to Christmas, but more importantly it lost valuable credit facilities, which could not be replaced as new suppliers demanded immediate payment.
A salutary lesson for everybody - when your key supplier goes down not only do you lose products that you need for your business, you potentially lose a valuable source of finance. One to add to those key financial relationships that have to be managed.
What do you mean you’ve never had it so bad?
Thursday 26 Feb 09 - Just come back from an excellent breakfast presentation at Clydesdale Bank given by NAB (their parent company) head of markets strategy Nick Parsons, a man well known to Sky News viewers.
Nick is someone who seems to have developed a habit of getting it right when it comes to economic forecasting, so when he says that 2009 is going to be horrible and that recovery won’t start until 2010 you tend to take a bit of notice. He sees the UK economy declining by about 2.6% in 2009, with growth returning in 2010 at about 1.4%. His long term view is that the normal annual growth trend will settle at about 2%. Not brilliant but still enough encouragement for businesses, while still remaining cautious, to start focusing on how to get the best of the upturn when it arrives.
By the way, if you think it is bad for us over borrowed consumption obsessed Brits, have a glance at the poor Germans and Japanese, those nations that actually still make things (as opposed to money) and still put their euros and yen aside for a rainy day. Their export driven economies have fallen off a cliff over the past few months and their pain in 2009 is likely to be greater than that of the UK. Maybe there is a moral there somewhere, although it gets confused when you look at the two economies that are going to expand more that 5% in 2009, China and India. Learning to export may still have its advantages so UK companies should take note and start looking at how they can.
Nick is someone who seems to have developed a habit of getting it right when it comes to economic forecasting, so when he says that 2009 is going to be horrible and that recovery won’t start until 2010 you tend to take a bit of notice. He sees the UK economy declining by about 2.6% in 2009, with growth returning in 2010 at about 1.4%. His long term view is that the normal annual growth trend will settle at about 2%. Not brilliant but still enough encouragement for businesses, while still remaining cautious, to start focusing on how to get the best of the upturn when it arrives.
By the way, if you think it is bad for us over borrowed consumption obsessed Brits, have a glance at the poor Germans and Japanese, those nations that actually still make things (as opposed to money) and still put their euros and yen aside for a rainy day. Their export driven economies have fallen off a cliff over the past few months and their pain in 2009 is likely to be greater than that of the UK. Maybe there is a moral there somewhere, although it gets confused when you look at the two economies that are going to expand more that 5% in 2009, China and India. Learning to export may still have its advantages so UK companies should take note and start looking at how they can.
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