Our last post outlined what we can learn from a recession and its impact on international trading. Here we examine additional challenges and outline what needs to happen to support businesses aiming to trade their way out of the recession.
The UK’s record low interest rates are not unusual: during an economic crisis it is common for a country to reduce its rates to try to stimulate economic activity among consumers and businesses. This weakens the sterling rate against the euro making British exports more competitive over the last few years
So what else might be holding us back?
We know that lower interest rates and higher taxes naturally have a significant impact on consumers’ disposable income. Couple this with the likelihood of cuts in government grants and support for businesses and the results are obvious – the public spend less, businesses produce less and jobs are sure to be cut, leading to a spiralling downward trend.
But some businesses are thriving; what is their secret? To paraphrase 19th century designer, artist and writer William Morris: people will only spend money on something they need, know to be beautiful or believe to be useful.
This is especially true in the current climate – there is still great potential for trading success but quality must become the over-riding driver for any growth. Quality and differentiation are key – dare to be different with well-researched, well-priced products matched to the right target markets.
This takes us to one other major challenge: how will you finance your company’s growth? It’s an accepted fact that banks are becoming ever more reluctant to lend money, tightening their lending criteria and calling in debts. That said, our own survey reflected a move towards alternative funding streams rather than the traditional bank route. The banks are losing their power: over 66% of businesses look outside of the banks to fund new investments and there is funding to be had.
Can we also look to our Government to invest more in our country’s development by providing tax breaks or incentives to those entering the more complex markets? We know that these are the most lucrative if researched and planned appropriately – let’s encourage professionalism and competence in our exporting companies and take them to the next level with a hand up.