Thursday, 15 October 2009
Scotland’s businesses better prepared for recovery than rest of UK
Scotland’s businesses, although reeling from the effects of recession, are more prepared to face a return to economic growth than their counterparts across the rest of the UK, according to a new study from Bank of Scotland.
[Entrepreneur and Dragons' Den judge James Caan: “Those businesses that have adapted, diversified and are prepared for the upturn are well placed to prosper and grow as the economy recovers.”]
The research reveals that a quarter of Scotland’s firms (26 per cent) have put a plan in place to help them grow, more than any other region across the UK. Scotland’s firms have also been taking other positive steps to ready themselves for a recovery. Four in ten (42%) have made cutbacks to get themselves in shape, and a third (32 per cent) believe that these have improved their business processes.
In a sign that many businesses believe a recovery is on the horizon, more than half (58%) of those who have taken action have done so within the past few months. Those businesses that have started to prepare for recovery are also clear about the importance of taking action. Three-quarters (74 per cent) say they need to act now in order to benefit, while two-fifths (41 per cent) say they don’t want to lose out when the recovery arrives.
However, despite widespread recognition (40 per cent) that taking action to prepare for the upturn is essential for long term survival, one in six (18%) firms have still not taken any such steps. More worryingly, of those that have not taken any steps, just under half (42 per cent) don’t believe they need to do anything to ensure their business is ready to benefit as the recovery starts to gain momentum. One in six (17 per cent) admitted that they had not even thought about the steps they might take.
Despite this laissez-faire attitude on the part of the few, Scotland’s businesses are conscious of several business risks which might leave them unable to exploit the upturn.
More than half (55 per cent) believe their business will suffer from low cash resources, while a fifth (21 per cent) believe depleted capital will be an issue. More than third (37 per cent) fear they will lack the capacity to meet demand for their products and services, while just over one in eight (13 per cent) are concerned about potential management or strategy gaps.
Donald Kerr, Head of Commercial Banking for Scotland said: “Recession has weighed heavily on Scotland’s businesses, and it is easy to see why talk of a recovery might bring welcome relief. But in the same way that we have encouraged firms to take action to survive the downturn, they will also need to prepare for the return to growth.
“The shape and scale of any recovery is still uncertain, but one thing is clear – those businesses already looking towards the upturn and planning how to make the most of it, are the ones which will thrive. And those firms that sleepwalk towards recovery risk not just losing out, but falling into the overtrading trap.”
Entrepreneur and Dragons' Den judge James Caan (pictured above) said: “Those businesses that have adapted, diversified and are prepared for the upturn are well placed to prosper and grow as the economy recovers. Businesses without a plan seldom go far, and that’s especially true in times like these. It’s important that companies act now to plot how they’ll approach the opportunities that exist in the prevailing economic climate.”
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