NORTH WEST BUSINESS MONITOR

Transcription

1 NORTH WEST BUSINESS MONITOR Q1/Q2 Report In Association With:

2 CONTENTS Introduction Foreword Executive Summary Key Findings The Report in detail Perceptions of the Future Factors Affecting Business Growth Brexit Perceptions of Local Politicians Overall Business Confidence About The North West Business Monitor Authors & Partners Page

3 INTRODUCTION INTRODUCTION Introducing the North West Business Monitor The North West Business Monitor is a bi-annual report which tracks the confidence levels that North West Small Business Owners and senior executives in larger businesses have with regard to a variety of issues, including the economy, funding, legislation, regulation and transport. This is the second North West Business Monitor report which is made up of data collected between late March and early July 2017, via the dedicated co.uk website and at a number of events for SME businesses across the North West, including the Liverpool and Greater Manchester Business Fairs. North West Business Monitor Q1/Q2 Report Welcome to the second North West Business Monitor report. This report documents and analyses the results of a wide ranging survey of North West business professionals, conducted between late March and early July, This survey took place during a period of considerable uncertainty, set against the backdrop of the Prime Minister s call on 18 April for a snap General Election on 8 June. In addition the mayoral elections took place in Manchester and Liverpool and we also had the triggering of Article 50 and the imminent commencement of the Brexit negotiations. However, in spite of this seemingly turbulent environment, business confidence in the region remains high with 9 in 10 businesses surveyed believing their firms will grow and develop in the next 6 months. Not that businesses are expecting an easy ride with regulation and government policy cited as areas of concern. In fact, it could be argued that the impact that government actions can have on business activity have never been clearer. John Allan, Regional Membership Director of Your Business Community, commented recently: Currently the most important issue for YBC members that I talk to is the Brexit situation, as the lack of certainty is starting to affect the decision making process. One of our engineering members has a healthy order book for the next five years, but in that sector it is very difficult to hire skilled engineers and the doubts surrounding the status of EU nationals is having a detrimental effect on the recruitment process. There is already a massive shortage of skills in manufacturing and Brexit isn t helping. However he does feel that some progress is being made in terms of the region s political landscape.. One of the positive political developments over the past decade has been an increasingly strong partnership and collaborative approach between the administrations in Liverpool and Manchester - and the background of the two new Mayors and their Westminster experience should see this partnership between the two city regions become even stronger. And that is positive for the business community and the North West as a whole. And so, even though there seems to be a lot of uncertainty and a touch of media frenzy, business confidence still remains high. But maybe this isn t so surprising as most businesses have had to become increasingly resilient and adaptable over the last decade, especially in regions like the North West. If not, those businesses would simply not have survived. 4 5

4 FOREWORD FOREWORD Alison Loveday Partner, Kennedys Director of pro-manchester Board and Chair of Science & Tech Group Confidence can be a strange thing in business, there when it is least expected, but often missing when it seems a mere formality. Yet it remains, for many, the most important of business barometers; revealing the truth behind the statistics and the forecasts. But at a time when we have so much political uncertainty to contend with, and a central Government without a clear majority, is confidence really possible for North West business leaders? Can we truly be secure when key transport infrastructure projects are being mothballed, and all the talk is of the danger of consumer credit building up to pre-credit Crunch levels? It seems that the answer is, yes. With an unambiguous nearly 90% of the region s leaders expecting turnover and profits to improve, and 70% expecting the overall North West economy to grow, perhaps as a result of this. So what does this tell us? It tells us that the North West has learned to be self-sufficient. At a time when Greater Manchester and Merseyside have elected high-profile Mayors, and continue to broker investment deals from the private sector, the region knows it can t afford to be side-tracked by the national circus. London is the Hollywood of UK politics and The City s wealth is an important factor for the UK; yet it receives a disproportionate amount of focus from business commentators. The North West, however, is pushing to be heard and I would hope that the results businesses aim to deliver will demonstrate the real need to re-balance this focus - politically, public spending and in overall media reporting. We will all benefit from a more honest and balanced approach to these issues. Yet despite this resolute approach, the uncertainty of Brexit is an undoubted concern for leaders in the region, with twice as many leaders citing its importance (22%) compared to the last survey (10%). Looking at Brexit compared to the rest of the survey, it is fair to say that the real elephant in the room isn t necessarily the debate over a good or bad measurement, but what it means for regulation. Regulation is the number one business concern for leaders in the North West, and I am certain we will hear a lot more about regulation in the near future. So whilst we look ahead to a national future that is almost impossible to predict, let s be thankful we work in a region full of business leaders determined not to be wallflowers. The survey reflects what we know about the North West, that we will continue to push boundaries and aim for growth, regardless of what is thrown at us nationally. It s an attitude that will serve us well in the months and years ahead. 6 7

5 EXECUTIVE SUMMARY EXECUTIVE SUMMARY The North West Business Monitor Q1/Q report is the second in the series and provides a barometer on a range of issues facing Business Owners and Senior Managers of North West enterprises. Compared to the inaugural report (published in March 2017), overall business confidence has increased to 95.6% from 94.1%. The report presents a snapshot of business leaders and managers on a number of key business issues, including Access to Funding, Confidence in the North West Regional Economy and individuals perceived implications of the UK s exit from the European Union. The survey audience comprises exhibitors and attendees at the Liverpool and Greater Manchester Business Fairs, held in March and April 2017 respectively. Data was also gathered at a number of other B2B networking events around the region. Overall perceptions of future business potential are very good, with 9 in 10 respondents believing they will see an increase in the number of clients, profitability and turnover in the next 6 months. However, fewer people expect employment to increase, with just 47% saying it would increase. Only 6% felt that employment would decrease, with the remainder saying that employment would remain the same. In this survey, respondents could also indicate by how much they thought these factors would increase. This allows an average percentage increase across the region to be calculated. Businesses are expecting to increase profitability by an average 4.7% in their profitability over the next 12 months, whilst turnover is expected to increase by 2.9%, suggesting that profitability will increase through a combination of increased turnover and business efficiency. The number of customers/ clients is expected to increase roughly in line with turnover, as might be expected, but employment in the region is expected to increase by just 1.3%. All of these areas are forecast to grow at a faster rate compared with the last report in March of this year, with the highest level of expectation being in the area of profitability. The top factors affecting growth were thought to be Regulation, Access to Skilled Staff and Local Government Policy, and although Access to Business Support is also important, it has declined since the last survey. Three quarters of respondents say that Brexit has had no impact on their business, but apart from this, the larger proportion say that it has a negative impact, compared to the percentage that said it was positive. Interestingly, the percentage that said it had a positive impact had increased the most. Just 26.1% of respondents felt that politicians are doing enough to support businesses whilst 32.3% said they did not. The main actions people wanted from their politicians was in the areas of access to funding, business support, more action on the Northern Powerhouse and for politicians to simply listen and engage more with local business. Over 70% of respondents expect the North West economy to grow over the next 6 months, with growth averaging 1.7%. Overall confidence is high amongst businesses, with 95.6% saying they felt confident about the future success of their business, a marginal increase from the last survey (94.1%). 8 9

6 KEY FINDINGS KEY FINDINGS Overall business confidence has increased to 95.6% from 94.1%. The percentage of respondents stating that they are very confident has also increased from 57.2% to 62.2%. Perceptions of the future were generally positive, with 89.5% saying they expect turnover to improve, 88.9% saying they expect profitability to improve and 90% expecting to increase the number of clients or customers. The expected improvements in turnover and profitability figures represent an increase from the last survey (86% and 79% respectively). However, this improvement does not always translate into increased employment, with only 47% saying that they expect to increase the number of people they employ. This however, is up from 39% in the last survey. This optimism extends to the North West economy. Overall 70.6% of respondents felt that the North West economy would increase in the next 6 months, with growth expected to average 1.7%. The factor affecting business growth most likely to be rated as significant this time around was Regulation, with two thirds highlighting this as significant. This is in contrast to the last survey when Access to Business Support was the most significant factor. Access to Skilled Staff was highlighted by 58% of respondents with Local Government Policy cited as the third most significant factor. As with the last survey, Transport Infrastructure was the least significant factor according to our respondents. An interesting point to note is the increasing importance since the last survey of Brexit, which has more than doubled in the net percentage from 10% to 22%. This may be due to the formal triggering of Article 50 and the general election, both of which have taken place since the last survey, and may have focussed people s attention on this issue. The percentage that felt the impact of Brexit would be negative has increased marginally from 17.5% to 18.7%; whereas the percentage who say it will be positive has increased from 4.8% to 7.8%. For the rest, it is business as usual. Export opportunities were still seen as the potentially positive impact of Brexit, whereas the negative impacts are mostly felt as an increase in supplier costs, and to a slightly lesser extent, customer orders

7 FUTURE BUSINESS GROWTH NORTH WEST ECONOMY Future Business Growth North West Economy Respondents were asked how they expected their business to grow over the next 6 months. As with the last survey, this latest survey showed a generally positive outlook for the future, with 9 in 10 respondents expecting turnover, profitability and the number of clients/ customers to increase. However, businesses were not so confident about their ability to increase employment with fewer than half being positive. Percentages were also assigned to the different ratings. So Decrease substantially represents a decrease of 7% or more, whilst decrease a lot represents a decline of between 4% and 6%. The same analysis was applied to respondents perceptions of the overall level of growth in the North West economy. Overall 70.6% of respondents felt that the economy in the North West would grow over the next 6 months. In the last survey, 64.7% of respondents felt that the economy would grow. The increase from 64.7% to 70.6% could reflect the improving optimism reported in the section above. The average growth predicted by the respondents to the survey was 1.7%, up from a 1.4% growth in the last survey. Using this additional information, it is possible to generate an approximate average increase expected in growth across the region. This chart shows the results of this analysis. It shows that on average, respondents expect turnover to increase by just under 3% and their number of clients to increase by just over 3.5%. However, their profitability is expected to increase by almost 5%. Employment is expected to increase at a much slower rate of 1.3%. All four of these figures have increased since the last survey. Respondents from Wigan were more positive about the North-West economy, where 87% were positive about the future. Expectations around growth were lowest in Lancaster at just 40%, although the sample size in this location was low. Companies that worked in the construction industry were very positive, with all expecting the economy to grow, followed by companies in the utilities sector, where 87% were positive. However, only 38% of those in education or training were positive about future growth. People working in their company s finance teams were more likely to be positive about future growth, with 89% expecting it to increase to some degree, whilst only 20% of those in the media teams thought it would increase

8 FACTORS AFFECTING BUSINESS GROWTH BREXIT 5.2. Factors Affecting Business Growth 5.3. Brexit Respondents were then asked how significant various factors would be in the growth of their business. Regulation was the factor most significant, according to this latest survey. Two thirds highlighted this as significant, and it differs from the last survey, when Access to Business Support was the top issue. It was followed at 58% by Access to Skilled Staff and Local Government Policy was third at 52%. Interestingly these top three factors are all factors local policy makers have some influence over. As with the last survey, Transport Infrastructure was rated least significant, with 32% giving it some level of significance. Net significance is the percentage that said a factor was significant minus the percentage that said it wasn t. Regulation, Access to Skilled staff and Local Government Policy were still rated top, but it can also be seen that they have increased substantially since the last survey. By contrast Access to Business Support has reduced in importance since the last survey. Another interesting point is the increasing importance of Brexit, which has more than doubled in the net percentage from 10% to 22%. This may be due to the formal triggering of article 50 and the general election, which both occurred since the first wave, and may have focussed people s attention on this issue. The next section asked directly about Brexit. The consensus was that it was business as usual when it comes to Brexit, with nearly three quarters, or 73.5% saying it was business as usual. However, this has declined slightly from 77.7%, which is not a statistically significant change. More interestingly, the change has been in the positive elements of Brexit. The percentage that felt the impact of Brexit would be negative has increased from 17.5% to 18.7%, whereas the percentage who say it will be positive has increased from 4.8% to 7.8%. Of course, this may be due to the different types of businesses responding to these two surveys. Respondents were then asked the reasons for their choices. As with the last survey, export opportunities are still the most common reason selected, but the second most common is staff investment

9 BREXIT PERCEPTIONS OF LOCAL POLITICIANS The percentage for each reason has increased, mainly representing the increased percentage that responded positively, but in this most recent survey, there was a higher completion rate in terms of these questions Perceptions of Local Politicians When asked if politicians are doing enough to support local businesses, the picture is generally negative, with almost a third saying they weren t, compared to 26.1% said that they were, with no respondents strongly agreeing that politicians are doing enough. However, things have improved over the two survey periods, with the percentage expressing a negative view declining from 40.8% to 32.3%, whilst the percentage being positive increased from 18.8% to 26.1%. Supplier costs are the key reason for giving a negative impact of Brexit, suggesting that the impact of exchange rates on inflation is starting to have a direct impact to the respondents in the survey. Customer orders also seem to be a factor, with 38% saying they had been impacted in this area. Looking at the breakdown of businesses in this second survey, people working in manufacturing & engineering,media & publishing and retail & wholesale were more positive about Brexit. Larger organisations (250+ employees) were also more positive, with just a net 4.3% expressing a negative impact on their business, as were the very youngest companies at 3.3% net negative. People working in engineering teams and production/operations teams were more negative about the impact, whilst those working in IT were a bit more positive with only a net 5.9% negative about the impact of Brexit. Senior and junior managers were more positive about Brexit with just 2.1% and 3.6% net negative, but middle managers were more pessimistic, with an overall net 14.8% negative impact of Brexit. They were then asked exactly what they would like politicians to do to improve the North West business environment. This was a free text field, allowing respondents to make any suggestions they felt appropriate. Despite this, there were some common themes, as displayed in the chart below. The most commonly stated help that politicians could do was to improve access to funding sources in the local area, which was mentioned by 12 people, but this was followed by business support and advice, which was suggested by 10 people

10 PERCEPTIONS OF LOCAL POLITICIANS PERCEPTIONS OF LOCAL POLITICIANS 5.4. Perceptions of Local Politicians Funding (12) Listen & Engage (7) Political Negativity (5) Other (5) Tax & Rules (4) Transport (5) Training (4) Looking at the business breakdown, respondents from Stockport were much less positive about their politicians. None of the respondents from this area who voiced an opinion were positive. The most positive area was Chester where 36.8% of respondents were positive about their politicians, against only 21.1% who were negative. Business Support/ Advice (10) Northern Powerhouse (7) Interestingly 7 people asked that politicians simply took time to listen to, engage with, visit or talk to local businesses, to learn about them or find out more about the business community. Lobbying & Representation (4) Events (3) The same number of respondents queried the status of the Northern Powerhouse initiative. Five voiced general disapproval of the political class, but the same amount requested improvements to the local transport network. Respondents working in construction and retail/ wholesale were particularly negative about their politicians. By contrast, people working in finance & insurance were more positive than they were negative, as were those in professional or consultancy services. Respondents from the utilities sector were very positive, with 38% being positive about their politicians, and only 4.8% being negative. By contrast, those working in the finance and accounts department of their companies were generally negative about politicians, despite those working in the financial sector being positive. Also expressing more negativity about politicians were people in the marketing/pr teams of companies. People in general management were more positive than average. Owners, CEOs and Senior and Middle management teams had more confidence in their politicians, but people who were directors, partners or junior managers were less positive

11 OVERALL BUSINESS CONFIDENCE OVERALL BUSINESS CONFIDENCE 5.5. Overall Business Confidence Finally, respondents were asked to rate their overall confidence in the future success of their business. The clear majority are confident with 95.6% being confident, up from 94.1% in the last survey. Importantly, the percentage that are very confident has increased from 57.2% to 62.2% since the last survey. Looking at the breakdown, companies in the Bolton, Stockport, Blackburn, Lancaster and Crewe postcode areas were confident. Companies in manufacturing and engineering seem less positive about the future, with only 76% saying they were confident. By contrast everyone in retail, wholesale, utilities, marketing, advertising, education, transport and logistics said they were confident about the future. Respondents working in sales or general management roles were less confident, as were senior managers. Diane Earles - Regional Network Manager for the Chartered Institute of Marketing - is not surprised that the bullish nature of North West businesses and people is reflected in the levels of business confidence. She also understands businesses concern over regulation, with the forthcoming General Data Protection Regulations (GDPR) a particular case in point and one area that is also high on marketers agendas. She is working on a CIM event exploring the issue with her colleague, Jane Harrad-Roberts FCIM, who recently explained, The General Data Protection Regulations (GDPR) come into force in May 2018, affecting how organisations store and use data on EU individuals. Marketing professionals across all sectors will need to re-evaluate the tools they use to target customers, as protection power shifts towards consumers and message recipients. With opt-out permission no longer an option, many databases will be rendered useless and secure storage of the information within each will need to be assured

12 ABOUT THE NORTH WEST BUSINESS MONITOR ABOUT THE NORTH WEST BUSINESS MONITOR 6.1. The Data 592 responses were collected using a combination of an in person, face-to-face survey and an online survey distributed by to industry contacts. The face-to-face surveys were mainly completed at Liverpool BA Business Fairs and other networking events and forums in the North West. Confidence intervals in this analysis are given at the 95% level, with a typical confidence interval for the full sample being around +/- 4.0%. However, where demographic breakdowns are provided, they have lower sample sizes and confidence intervals will therefore be higher Demographics This section explores the type and nature of the businesses that took part in the survey, which is important context for the analysis contained in this report. 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. There was a greater variety of postcodes featured in this analysis than in the last survey, and a greater proportion from Manchester, which makes up the largest proportion in this survey, at 30%. This chart shows which industry the respondents to the survey operated in. There is a significant proportion from Professional and Consulting businesses, but unlike the first survey, the IT & Communications and Finance & Insurance sectors feature more prominently. Together they make up almost half of respondents in this latest survey

13 ABOUT THE NORTH WEST BUSINESS MONITOR ABOUT THE NORTH WEST BUSINESS MONITOR 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 140, or about a third of the sample, being sole traders, with a further 140 having less than 5 employees. More than half of respondents were from companies that had less than 10 employees. Despite making up more than half the respondents, micro-businesses are still (relatively) under-represented in the survey, with more respondents coming from larger organisations, and fewer from smaller companies than in the local economy. However, the survey records the number of people, whereas the economic data records the number of companies. Consequently, larger companies have more employees to send to events, and therefore may be better represented in the survey. There is a difference between the first and second surveys as far as the size of the organisations are concerned. There are a greater proportion of respondents from larger organisations in the second sample, with companies with employees making 35.8% of the sample, compared to 23.4% in the first wave. This chart shows the age of the businesses that participated in the survey. The largest proportion of respondents were from organisations that had been established for at least 10 years, with almost half from this group. This is also more than the last survey, suggesting again that the demographics of this and the last survey are somewhat different, and therefore may not be directly comparable

14 ABOUT THE NORTH WEST BUSINESS MONITOR AUTHORS AND PARTNERS Unlike the last survey, the most common job function from respondents in this latest survey was sales & business development, with fewer from general management roles. There has also been an increase in Marketing roles and people classifying themselves as Other. More than half of respondents were at senior level in their organisation. 57.6% were owners, CEOs, Chairpersons or Directors & Partners. A relatively small proportion were from lower levels of the organisation, such as junior managers which makes up just 8%. The size of the organisation does affect the level of their job role. Owners were more likely to be sole traders, making up nearly 3 in 10 of owners. LIVERPOOL BA 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 have been providing a showcase for North West businesses since 2002, when 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 Conversely, Owners were much less likely to come from large organisations, and junior managers were more likely to come from large organisations. In general, there has been some shift in the nature of organisations participating in the survey since the last survey, with more from Manchester and Liverpool (geographically), Finance & Insurance, IT & Communications (sectorally), and larger and older organisations. This may explain some of the variance between this and the last survey. In addition, it is also apparent that different job roles have participated in the survey, which may also bring different perspectives to the survey. LOOKOUT! LOOKOUT! is an independent market research and insights consultancy. LOOKOUT! works with startups, SMEs and International organisations. providing comprehensive research and intelligent insights; helping clients their businesses and providing clarity to them in a range of areas including: Market Analysis, Reporting & Monitoring Stakeholder Analysis & Mapping Competitor Analysis & Benchmarking Investment & Feasibility NORTH WEST BUSINESS MONITOR PARTNERS 26 27

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