north west business monitor 2016 q3/q4...

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NORTH WEST BUSINESS MONITOR2016 Q3/Q4 REPORT

In association with:

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CONTENTS

PAGE

1 INTRODUCTION 5

2 FOREWORD 6

3 THE REPORT 7

4 EXECUTIVE SUMMARY 8

5 KEY FINDINGS 9

6 REPORT FINDINGS:

• PERCEPTIONS OF THE FUTURE 10 • FUTURE FOR THE BRITISH ECONOMY 14

7 ABOUT NORTH WEST BUSINESS MONITOR 28

8 AUTHORS & PARTNERS 31

2016 Q3/Q4 REPORT

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INTRODUCTION

Welcome to the first Bi-Annual North West Business Monitor report. This report documents and analyses the results of a wide ranging survey of North West

business professionals, conducted from September – December 2016.

THE VISION FOR THE NORTH

If the North of England was a country, it would be one of the biggest economies in Europe (HM Government 2016).

The Northern Powerhouse Strategy (HM Government 2016), confirms the Government’s great ambitions for the North of England, with “a vision defined by a vibrant and growing economy, a flourishing private sector and a highly skilled population able to make the most of the great opportunities in the North.”

The North West is the fastest growing economy in the UK (Regional and Local Economic Growth Statistics, December 2016), being driven by international investment.

SME businesses are a key component of the UK economy There are 2.5M businesses with less than 50 employees and of this total just under 10% are based In the North West.

IS THE VISION BECOMING REALITY?

Not many can argue with the Vision, but is the gap between the North and the South going to narrow or keep on expanding?

There are compelling arguments for both sides, from why does HS2 (High Speed Rail) development start in the South, when this is promoted as an initiative to improve connectivity for the whole country, but primarily in the North? Or the expanding initiative to devolve power in the UK, which will see both Greater Manchester and the Liverpool City Regions become two of the first devolved councils in the UK.

INTRODUCING THE NORTH WEST BUSINESS MONITOR

The North West Business Monitor is a bi-annual report which tracks the confidence levels that North West businesses have on a variety

of issues, from the economy to funding, legislation and transport.

This is the inaugural North West Business Monitor which is made up of data collected between September – December 2016 both via the dedicated www.northwestbusinessmonitor.co.uk website and at a number of SME business events across the North West, principally the Wirral & Chester and Halton & Warrington Business Fairs.

The next North West Business Monitor survey is now open. To take part in the survey, which will take between 5 – 10 minutes please visit www.northwestbusinessmonitor.co.uk

2016 Q3/Q4 REPORT

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THE REPORTThe report was undertaken by Manchester based research & insights company

LOOKOUT! The survey ran between 21 September and 9 December, 2016, with respondents able to complete the survey both online via the www.

northwestbusinessmonitor.co.uk website or at a number of events across the North West, principally the Wirral & Chester and Halton & Warrington Business Fairs

METHODOLOGY

No weighting was applied, and no specific statistical methodology was applied excepting standard survey data analysis techniques. The survey was completed by a total of 458 respondents, broken down as follows::

• 15% collected online via the www.northwestbusinessmonitor.co.uk website,

• 27% collected at the Wirral & Chester Business Fair,

• 19% collected at the Halton & Warrington Business Fair,

• 39% collected at various SME Business to Business Networking events across the North West

THE SAMPLE

A comprehensive breakdown of the sample is provided in the “About North West Business Monitor” section – Pages 28 – 30.

FURTHER INFORMATION

If you require any further information, please contact

North West Business Monitor, Project Director – [email protected]

FOREWORD

At the start of the last decade of the 20th century a lot of correspondence was still done by post and if documents were needed urgently a courier was used - or a fax machine. Often mass B2B marketing was done via postal mailshot with the alternative of fax broadcasts. The internet was typically used sporadically (and normally via a modem), email was only just beginning to take hold, and mobile telephones were bulky and basically just telephones. Move forward 25 years and the office stops if the broadband connection goes down, the post seems to have been relegated to a vehicle to receive junk mail and mobile devices have significantly changed the way we work.

It has never been easier to start and operate a small business and stay in touch with contacts, colleagues and clients 24/7; and in any location.

The importance of small business in this time has grown. SMEs account for over 90% of UK businesseses and although the number of businesses has grown markedly over the last decade, the number of businesses registered as employers has decreased (relatively) with

much of the growth in the business population being accounted for by sole traders and freelancers.

Added to this, the down sizing of many larger companies has led to a further shift in the ratio of SMEs to larger businesses in the economy.

Now as a general rule, governments of all types don't tend to understand business very well and those they do come into contact with tend to be multinationals or media corporations. Small businesses are very different beasts and the government tends to develop policies which they term as 'business friendly' but often don't properly take into account the differences between small (especially micro) businesses and much larger organisations.

Against this background, and when you add in other factors such as the potential economic impact of leaving the EU, it is more important than ever before that the voices and opinions of smaller businesses are heard and understood.

So we were delighted when we were approached by LOOKOUT! to work in partnership with them on the North West Business Monitor. This will allow us to gather the views and opinions of the NW business community, to ascertain those issues which are most important and to feed this back to local, regional and national agencies to inform and influence any business related policies that are being developed.

Tony Haines

Director

Liverpool BA

Liverpool BA has been involved in working with supporting and representing the interests of small businesses since the early 1990s and there have certainly been some massive

changes in the business landscape and the way in which businesses operate in that time.

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KEY FINDINGS

• Perceptions of the future were generally positive, with 86% saying they expect turnover to improve, 79% saying they expect profitability to improve and 91% expecting to increase the number of clients or customers.

• However, this improvement does not always translate into increased employment, with only 39% saying that they expect to increase the number of people they employ.

• This optimism extends to the British economy. Overall 65% of respondents felt that the British economy would increase in the next 12 months.

• The factor affecting business growh most likely to be rated as significant was “Access to Business Support”, which was rated as significant by 52% of respondents. This was closely followed by “Regulation”, with 49% of respondents, and “Access to Skilled Staff” with 48%.

• Of least significance was “Transport Infrastructure.”

• In general, low significance was attached to Brexit, being the third lowest factor for net significance. However, opinion varies widely between the different ‘demographics’ of businesses, suggesting that there is some disagreement about the impact Brexit will have, and that people are having difficulty in judging the impact it will have.

• Most businesses agree that it was ‘business as usual’ following the Brexit vote, although on balance, businesses that said it wasn’t ‘business as usual’ were more likely to indicate a negative impact.

• However, Brexit was also rated as extremely significant as a growth factor, by 11% of respondents. So overall, Brexit has had an impact on only a small percentage of businesses, but those businesses have been hit hard.

• The positive impacts of Brexit are mostly felt as export opportunities. The negative impacts are mostly felt as an impact on customer orders and an increase in supplier costs.

EXECUTIVE SUMMARY

The report presents a snapshot of business leaders and managers on a number of key business issues, including Access to Funding, Confidence in the UK Economy and individuals’ perceived implications of the Brexit vote.

One third of respondents were sole traders, with half of them having less than 5 employees. However respondents who took part in the survey were generally from larger companies than in the North West economy as a whole, with 2 in 5 being established for more than 10 years.

Nearly half of respondents were owners of the business that they worked in, with another 21% either Directors, Partners CEOs or Chairpersons.

THE EXECUTIVE INSIGHT

The UK economy grew by just over 3% in 2014, the fastest rate since 2006. In 2016 growth was around 2% with the UK’s economic growth holding up better than expected following Brexit. And whilst many analysts do not expect the UK to enter a recession in 2017, many are expecting a slowdown, with the main reason being a decline in business investment, driven particularly by uncertainty about the UK’s future trading relationships with the EU in the longer term.

It is interesting that Brexit is not seen as a significant issue affecting North West businesses according to the results of the North West Business Monitor, it will be interesting to see how this materialises in future

surveys. Despite predictions that large parts of the UK are likely to see growth due to Brexit, the North West is expected to reduce from around 2% to around 1% (UK Economic Report, PwC). Business confidence levels, according to the North West Business Monitor, are generally very positive.

It is interesting to note that “Access to Business Support” is seen as the most significant factor affecting businesses growth over the next 6 months, an area which the 2010 to 2015 Business Enterprise Government Policy fails to address, with the “Business Growth Service” currently closed to new customers. However, overall, there is no doubt that the first North West Business Monitor tells a positive story.

The North West Business Monitor 2016 Q3/Q4 Report provides a barometer on a range of issues facing Business Owners and Senior Managers of North West enterprises,

with 94% of respondents indicating a high level of overall business confidence.

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PERCEPTIONS OF THE FUTURE

Looking at the size of business, medium sized businesses are more optimistic about employment growth. But across the other three elements, sole traders seem to be the most confident for turnover and the number of clients, although they were just behind Small & Medium Sized companies on improving profitability.


FUTURE BUSINESS GROWTH

Respondents were asked how they expected their business to grow over the next 6 months. It shows that most businesses are optimistic about the future, with 86% saying they expect turnover to improve, 79% saying they expect profitability to improve and 91% expecting to increase the number of clients or customers. However, this improvement does not always translate into increased employment, with just 39% saying that they expect to increase the number of people they employ. However, this is perhaps unsurprising as nearly half say that they expect turnover to increase only marginally. As such, the increase in turnover may not be sufficient to warrant additional members of staff.

Looking at the location breakdown, it can be seen that sentiment was more positive in the Crewe postcode

areas, whilst they were relatively lower in ‘Other’ postcode areas.

Looking at different industry sectors, Retail & Wholesale looked to be the most positive, being above average

for the following: employment, turnover, profitability and clients. They were joined in this by Finance

& Insurance and Media & Publishing. These three appear to be the most positive of the different sectors.

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Finally this chart shows the breakdown by the level of seniority of the respondent. People describing their level as ‘other’ were the most optimistic by some margin. Senior managers are more positive about

employment, but along with junior management, they felt that the prospects for turnover weren’t as good as others believed them to be. Junior managers were also less optimistic about the number

of clients they would have. Middle managers, by contrast were more positive about profitability.

PERCEPTIONS OF THE FUTUREThis chart shows how these factors vary across the different ages of businesses. Organisations which are less well established are generally less optimistic about employment and profitability, but more positive about turnover and the number of clients, reflecting their clear intention to grow their businesses.

Looking at the different job functions, Media and Training/HR roles seem particularly pessimistic about seeing an increase in the number of employees. Media personnel also

seem concerned about profitability. Perceptions about the number of clients are relatively consistent, but particularly high for Sales & Business Development staff, which is perhaps

unsurprising, given their role. Those in Marketing & PR roles were particularly positive about profitability.

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FACTORS AFFECTING BUSINESS GROWTHPERCEPTIONS OF THE FUTURE

THE FUTURE FOR THE BRITISH ECONOMY

This optimism extends to the British economy. Overall 65% of respondents felt that the British economy would increase in the next 12 months, although 48% said it would only increase a little.

Only 15% felt that the economy would decrease, but a significant percentage, 20%, said they thought the economy would stagnate over the next 12 months.

The chart below shows how this data breaks down across the different categories. The least optimistic were respondents from the Preston postcode, where 11% of respondents felt optimistic

about the future. The least optimistic were from ‘Other’ industries, and in the “Age of Business” category, the mid years of 4-10 years were the least optimistic. Respondents working in media roles were also the least optimistic, as were those in the most senior posts.

The most optimistic people were from the Crewe postcode area, with a net 72% positive about the future of the economy, as were those working in the Finance & Insurance sectors, in ‘Middle Management’ or ‘Other’ levels of the organisation.

Respondents were then asked how significant various factors would be in the growth of their business.

The factor most rated as significant was “Access to Business Support”, which was rated as significant by 52% of respondents. This was closely followed by “Regulation”, with 49% of respondents, and “Access to Skilled Staff” with 48%.

Rated least significant was Transport Infrastructure”, which had the lowest percentage of significance at 30%. “Access to Training” and “Access to Finance” were slightly higher at 31%.

Net significance is the percentage that said a factor was significant minus the percentage that said it wasn’t. “Access to Business Support” again scored highly

on net significance at 38%, with “Regulation” next highest at 33%. Lowest was “Transport” again, at 0%, while “Access to Finance” was next lowest at 5%

It is important to note the low significance given to Brexit in these charts. Only 37% said that it was significant, the third lowest of the factors. It was also more likely to be

rated as insignificant, with 26% rating it so. Net significance was just 10%. However, it is worth noting that Brexit had the highest proportion that felt Brexit was extremely significant, at 11%. As a relatively small percentage, it indicates that a small percentage of businesses is being hit hard by Brexit.

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FACTORS AFFECTING BUSINESS GROWTHFACTORS AFFECTING BUSINESS GROWTH

ACCESS TO FINANCE

Overall a net 5% of people said that “Access to Finance” was a factor affecting growth. People in the Preston and Manchester postcode

areas were higher at 20% and 16%. It was also more of a factor in the IT & Communication sector, (29%) as well as Construction & Trades (20%) and Retail & Wholesale (17%). As might be anticipated, “Access to Finance” was more

of a factor for those in larger organisations. People in Media roles were most likely to say that “Access to Finance” was an issue, but by far the highest were people at ‘Other’ levels of the organisations.

ACCESS TO TRAINING

Again, people from the Preston postcode area were more likely to cite “Access to Training” as a factor affecting their business

growth, with a net 40%, and just 10% saying it was insignificant. Those working in the Construction industry were almost as likely to cite “Access to Training” as a factor, whilst people working in marketing, PR and Media roles were less

likely to. Again those in the “Other” category of organisation levels were most likely to say it was a factor. SMEs employing between 10 and 250 staff were most likely to say “Access to Training” was a factor in business growth.

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ACCESS TO SKILLED STAFF

“Access to Skilled Staff” was cited as a significant factor by 48% of respondents, and as an insignificant one by 24%, resulting in a net 24% saying it was significant. The Preston postcode area was again the location

which had the highest net percentage at 50%, with the next highest being the Manchester postcode area. The Finance & Insurance sector was the most likely to say “Access to Skilled Staff” was an issue, as were the longer established companies. Larger organisations were also particularly likely to have an issue

with sourcing skilled staff, with 53%, almost twice that of other sized organisations. People in Marketing & PR roles were also more likely, although again the highest demographic group were people at “Other” levels of the organisation.

TRANSPORT INFRSTRUCTURE

“Transport Infrastructure” was, on balance, the least significant factor. People from the IT &

Communications sector were the least likely to cite transport infrastructure, but those in Construction were more likely to say it was a factor. However, people from “Other” levels of the organisation

were particularly likely to say transport infrastructure was a factor.

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LOCAL GOVERNMENT POLICY

People from the “Other” organization category (as defined within the survey) were also most likely to

say that local government policy was a factor. Geographically, the Manchester, Crewe and Preston postcode areas saw the largest net percentages. Those working in the Media and Publishing sector seem

to believe the local government policy is less of an issue, as well as those working in marketing, PR and media roles in all companies. Larger companies were also more likely to cite it as an issue.

REGULATION

“Regulation” was cited as a factor affecting business growth by a net 33% of people, but significantly,

people in the Preston postcode area were particularly likely to mention it as a factor, with none saying it was insignificant. People working in Construction & Trades were the most likely to say that

“Regulation” was a burden, whilst people working in Marketing, PR and Media roles were less likely than average to see it as an issue.

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BREXIT

Brexit was less of an issue than might have been expected, actually being one of the three lowest issues in terms of net percentage at just 10%.

However, there was some variation across the different types of business. For example, people in the “Other” postcode group were more likely to cite it as a factor, at 38%; as were people from the Preston postcode area at 30%, whilst those from the Crewe postcode area

were on balance more likely to say it was insignificant at -18%. There was also some disparity between different industries, with 34% in ‘Other’ industries saying it would be a factor affecting them, whilst people in Retail & Wholesale again on balance said it was insignificant. Larger companies were also more concerned about Brexit.

Similar disagreement about the impact of Brexit was felt across different job functions, with 28% of those in general management roles saying it was a factor, but media and training & HR saying it

was insignificant. There was also a difference in opinion across different levels of the organisation, with junior managers saying it was significant, but senior & middle managers saying it wasn’t, whilst people at the very top of companies were again more likely on balance to say Brexit was a factor.

Clearly there is some confusion about the impact of Brexit. Possibly this is because it is not yet clear exactly what the impact of Brexit will be, and therefore businesses find it difficult to plan for all eventualities.

ACCESS TO SUPPLIERS

“Access to Suppliers” was one of the least likely to be cited as a factor affecting growth, although this was not a view held by people from the Manchester postcode area, where a net 30% said it was a factor. It was also a factor for companies in Media & Publishing, but also “Other” industries, whilst IT

& Communications companies were actually more likely to say it was insignificant as a factor. Training & HR staff were also less likely to say that sourcing suppliers was an issue..

“Access to Suppliers” was also not an issue for very young companies; those trading for less than 12 months. However, companies aged 1 to 3 years did find it an issue, perhaps indicating

that finding suppliers during the growth phase of a company can be challenging. The largest companies were also the most likely to say that suppliers were a factor.

But people in “Other” levels of the organisation were also more likely than average to say that access to suppliers was an issue.

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FACTORS AFFECTING BUSINESS GROWTH

ACCESS TO BUSINESS SUPPORT

“Access to Business Support” was the factor most affecting business growth, as measured by a net significance rating of 38%. It was particularly felt by people in businesses from the Manchester postcode area at 63%, but much less likely when the business was from “Other” areas postcode. People from the Crewe postcode area were also above average in their likelihood to cite it as a factor.

In terms of sectors, there was less variation, with the highest being Finance & Insurance industries and Retail & Wholesale at 49% and 48% respectively, whilst at the other end Professional & Consulting organisations had the lowest net significance rating at 25%.

Younger businesses were more likely to want “Access to Business Support”, although interestingly, companies aged 1 – 3 years were slightly higher than those established for under 1 year.

What may be surprising is that people who were themselves in a consultancy role were the most likely on balance to say that they wanted business support. Perhaps the nature of their work means they are more likely to value the opinion and advice of others. Perhaps unsurprisingly, those at the top of the organisations, charged with making the key decisions, were the most interested in business support.

OVERALLFinally respondents were asked to rate their overall confidence in the future success of their business. The vast majority are 94% “Confident”, With a significant 57% being “Very Confident”.

The following chart shows how business confidence breaks down across the different types of respondent.

Respondents from the Chester postcodes were slightly less likely to be “Confident”, with a net confidence of 88%, followed by Warrington postcodes at 89%, Whilst those from the Crewe and Preston postcode areas were 100% “Confident”. The IT & Communications sector was the “Least Confident”, as were businesses of 10 years or more standing and large businesses, at 88%, 89% and 87% respectively. Those in media roles were the least confident with just 75% saying they were “Confident”, and in terms of different levels of the organisations, middle managers were the least confident at 81%.

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BREXIT IN DETAIL

Respondents were then asked what were the reasons for their choice. Of those that said Brexit had a positive impact, 14% cited export opportunities as the reason, with another 10% saying import opportunities. 10% said that “Customer Orders” was a factor.

Looking at the negative impact, 17% said that they had seen an impact on customer orders, whilst 13% said they had seen supplier costs affect them. 10% said staff investment was an issue, whilst 9% cited a negative impact on securing finance.

It is worth noting though, that import and export opportunities were less frequently cited as a contributing factor to someone giving an overall negative impact of Brexit.

BREXIT IN DETAIL

The next section asked directly about Brexit and 78% (+/- 3.9%) said that it was ‘business as usual’. Just 5% were positive about Brexit, whilst 18% said it had a negative impact, and 3% of those saying very

negative. As a result, on balance the impact will be negative.

However, it is worth noting that, when it comes to Brexit, most of the impact is yet to come. Very little has happened since the

vote, and therefore businesses in general are yet to feel the impact.

The following chart shows how this breaks down across different types of organisation.

Whilst the theme of ‘business as usual’ runs across this chart, there are some small variations. For example, people from ‘Other’ postcode areas seem to be particularly negative about the impact of Brexit, whilst those in the

Manchester postcode area were the least negative. Those in the Retail & Wholesale industry were also less likely to be negative, whereas the largest organisations and those who had been in business 10 years or more were more likely

than average to take the ‘business as usual’ stance. Middle managers were least negative about Brexit, whilst junior managers were more negative about Brexit.

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ABOUT THE NORTH WEST BUSINESS MONITOR 2016 Q3/Q4ABOUT THE NORTH WEST BUSINESS MONITOR 2016 Q3/Q4

THE DATA

458 responses were collected using a combination of in person, face-to-face surveys and an online survey distributed by email to industry contacts throughout the North West business community. The face-to-face surveys were mainly completed at the Wirral & Chester and Halton & Warrington Business Fairs. Confidence intervals in this analysis are given at the 95% level, with a typical confidence interval for the full sample being around 4.6%. This suggests that the data is up to 99.6% reflective of those respondents who

replied during the survey phase, and as low as 90.4% given the high level of respondents over the duration of this survey process. However, where demographic breakdowns are provided, they have a lower sample sizes and confidence intervals will be higher.

DEMOGRAPHICS

This section explores the type and nature of the businesses that took part in the survey, and provides important context for the analysis that follows.

This chart shows the location of the businesses. For privacy purposes, businesses were only required to enter the first one or two letters of their postcode.

This chart shows that the largest percentage of respondents were from the Chester postcode area, with Warrington being the second highest.

Liverpool and Manchester, despite being major urban centres, were lower contributors to the survey and therefore formed less of the sample.

This chart compares the size of businesses in the survey to the companies in the North West. This shows that there are a larger percentage of companies from larger sizes, and that, in fact, micro businesses are under-represented.

This is somewhat unavoidable in survey methodology, because larger companies have more employees, there is a greater chance of those employees participating in the survey.

This chart shows which industry the respondents to the survey operated in. It can be seen that there is a significant proportion from professional and consulting industries, with media and publishing, finance and insurance making up almost half of responses. This means that a significant proportion of respondents come from professional backgrounds.

This chart shows the different sizes of the organisations involved in the survey. It can be seen that a significant proportion are micro businesses, with 152, or about a third of the sample, being sole traders, and 261, or more than half, having less than 5 employees.

However, it is worth noting that there are a number of respondents from much larger companies.

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AUTHORS & PARTNERSABOUT THE NORTH WEST BUSINESS MONITOR 2016 Q3/Q4

This chart shows the age of the businesses that participated in the survey. It can be seen that the largest proportion of businesses

Consultants and general managers were the most common job function in the data, although sales and marketing make up a significant proportion.

Respondents who were consultants were commonly small companies, with 41% being sole traders and 69% having less than five employees. Media and health & wellbeing were also more likely to be from smaller

This chart shows the level within the organisation of the respondents. Nearly half of respondents were owners of the business that they worked in, and another 21% were directors, partners, CEOs or Chairperson.

The group most likely to be the owner of their business

are at least ten years old, at 38%, with the remainder being roughly split between under a year, one to three years and four to ten years.

companies. General managers and sales/business development staff are more likely to come from larger companies, as were marketing

& PR staff. 17%, 23% and 13% respectively were from companies with 50 or more employees.

were consultants, suggesting a typical one-man band. People in training or HR were also more likely to be the business owner. However respondents who were from media companies were also likely to be a senior employee with 86% being CEOs, Partners, Directors, Chairpersons or owners, the same as Consultants.

The North West Business Monitor is a joint project between Liverpool BA (organisers of 4 key Business Fairs in the North West) and LOOKOUT!

a market research and insights specialist based in Manchester.

LIVERPOOL BA

LOOKOUT!

NORTH WEST BUSINESS MONITOR PARTNERS

LOOKOUT! is an independent market research and insights consultancy.

LOOKOUT! works with start-ups, SMEs and International organisations. providing comprehensive research and intelligent insights; helping clients make significant improvements to their businesses and providing clarity to them in a range of areas including:

• Customer Profiling & Experience

• Market Analysis, Reporting & Monitoring

• Stakeholder Analysis & Mapping

• Competitor Analysis & Benchmarking

• Investment & Feasibility

www.wearelookout.com

Liverpool BA have been providing a showcase for North West businesses since 2002, when we first held our flagship event, the Liverpool Business Fair.

This proved to be a very popular business occasion and we have gone on to hold many events, including our four key annual Business Fairs:

• Liverpool Business Fair

• Greater Manchester Business Fair

• Wirral & Chester Business Fair

• Halton & Warrington Business Fair

www.businessfairsuk.com

Copyright 2017 North West Business Monitor

www.northwestbusinessmonitor.co.uk

@NW_Monitor

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