ICAEW held their annual SME conference in London recently and discussions centred on the importance of balancing growth with effective risk management. Whilst small and medium sized organisations across the country have cause to be optimistic after a lengthy period of consolidation, the message from economic thinkers is still one of caution.
The audience consisted of ICAEW members either heading up SMEs or operating on behalf of them, with an open floor discussion. Tony Tydeman, heading up the Commercial Finance division of asset-based lender ABN Amro, was the first to initiate proceedings at One Moorgate Place. He was followed by Steve Merchant of chartered accountants Baker Tilly, who introduced himself with the line “what a difference a year makes” – pointing to the predicted economic growth rate of 2.4% by the end of this year, rising to 3.8% in 2014. “Pretty stunning,” in his own words, and certainly cause for real optimism. His sentiments were echoed by recent research carried out by ABN Amro which discovered that 69% of SMEs are actively planning growth in the next one or two years. Though despite this, Merchant still urged caution.
“If your head is in the oven and your feet are in the freezer, your body temperature on average is OK,” he stated in reference to being wary of statistics coming off the back of surveys. In other words, whereas some companies and industries are enjoying a positive spell others are still lagging behind. However, his conclusion derived from spending time talking to business owners up and down the country was that there is a lot of “energy, optimism and activity” in evidence.
Corporate asset finance was discussed by the panel, with ABN’s Tydeman pointing to supplier-side finance issues through traditional finance and a growing appetite for alternative ways to access funding. Whilst a lot of SMEs are indeed keen to grow, research found that 44% of SMEs don’t feel that they have the right kind of people in charge to realise their growth ambitions.
Joining the discussion at this stage was Joe Jouhal of Data Duplication, a company pleased to have utilised asset-based lending in order to grow their business into the corporate sector. Backing up Merchant’s analogy, he explained that “things are mixed at the moment, it depends on where you are based and what your marketplace is as to whether you find the economy in a positive state or not.”
In conclusion, he referred to “downward pressure” on the economy, despite a growing surge of confidence in it. “The media’s coverage is important,” he went on to say. “During the Olympics, everyone felt great and it contributed to the uplift in public mood. The media can be quite negative in its take on the economy and it will filter into a business’ way of thinking.”