The Triad of Problems Slowing the Growth of UK Private Businesses
British businesses are booming and the private sector now comprises an astonishing 5.2m companies. Of this 5.2m, only 2,000 companies are publicly listed, leaving the vast majority in private hands.
These private companies cover a diverse range of industries and contribute a great deal to the British economy; family-owned companies alone employ 9.4m people, pay £102bn in tax and generate revenues in excess of £1tn.
However, Sajid Javid, Secretary of State for Business, Innovation and Skills, recently stated that many private businesses in the UK are held back by a triad of issues: skills shortages, high premises costs and the difficulty in securing financial support.
The government, supporting initiatives and banks have come together to try to solve these issues that stunt business growth. Banking programmes now provide 40,000 UK businesses with £2.3bn worth of financial support, while government apprenticeship schemes are looking to create 3m new positions by 2020 to address skills shortages. On top of this, specialist start-up growth programmes have successfully provided UK entrepreneurs with loans worth over £155m to facilitate business growth in the last year.
However, apprenticeship schemes to resolve skills shortages are a longer-term solution that cannot address pains that businesses are feeling today. If your rapidly-growing business is in desperate need of a certain skill, it’s implausible to wait until 2020 for that talent. Equally, cash injections can provide businesses with the fuel to accelerate, but this does not address the critical business support that businesses need to sustain this growth.
Ultimately, in order for the UK’s private businesses to grow, it’s about more than the provision of cash to prompt acceleration, it’s about the sustainability of the business and, ultimately, its legacy.
Many businesses are finding that there is an alternative remedy to address these issues – M&A. Businesses need skills now, as expertise and knowledge can make the difference between a business thriving or failing. Equally, an injection of cash into a growing business can burn out quickly, and therefore support and experience can be a thousand times more valuable than cash, in many instances.
A merger or acquisition can solve the triad of issues that have been stunting the growth of a business, providing access to valuable skills, to premises that had until that point been a pipe dream, to cash and even access to experience – an engine that can make the fuel (skills and cash) go further.
This may be the reason why UK M&A activity is up 58% this year compared to at the same point last year. Could M&A be the answer for private businesses struggling to realise their potential?
Whether you’re looking for an exit strategy or to grow, Benchmark International can help you drive your business into the future. With representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.