Scotland’s mid-market companies are “overlooked” but essential to the UK economic recovery, according to new research which shows that their collective turnover has leapt 63% in the last five years.
In City AM, Simon Michaels, managing partner at advisory and accountancy firm BDO who published the report, says we need to support Britain’s Mittelstand to build a truly balanced economy. His words chime with what Business for Scotland has been saying recently.
In a blueprint aimed at helping to build a balanced “new economy”, accountancy firm BDO argues that mid-sized firms are agile enough to adapt to the new economic realities – and big enough to take advantage of the opportunities offered by global growth.
But it says that they are too large to benefit from policies specifically tailored to small business.
The firm’s research, published today, suggests that mid-sized businesses in Scotland – defined as generating annual revenues of between £10 million and £300m – are a thriving area of the economy, growing collective turnover over the last five years from £32 billion to £52bn. This compares to a UK-wide increase of 55 per cent in the last five years to £1.02 trillion.
The report – Building the New Economy – outlines three key recommendations, directed at UK policymakers: the use of long-term lending trusts to encourage investment in mid-market businesses, zero VAT for supplies to exporters and reducing overseas tax barriers for UK exporters opening a new branch or subsidiary overseas.
Martin Gill, head of BDO in Scotland, said: “Now that we are on the road to recovery, it is essential that we do not repeat the mistakes of the past and perpetuate an unbalanced economy too heavily reliant on one sector or region.
“The government has started tackling the issues and plans around the Northern Powerhouse, devolving powers to cities and infrastructure investment are all very welcome but it is important that Scotland remains a part of any economic benefits.
“More can be done though, and encouraging Scotland and Britain’s mid-market has to be at the heart of government plans. Yet currently the mid-market falls into a policy and profile gap – too big to benefit from the policies aimed at small businesses and too small to get the attention lavished on FTSE firms.
“We would like to see a ‘new economy’ that harnesses the entrepreneurial spirit of UK businesses and puts the mid-market front and centre of the UK’s growth plans.”
Read more in the Scotsman
A third of all board seats in Britain’s biggest companies should be occupied by women, a key report on gender equality has said.
The government-backed Davies Review says British business still had to “get their house in order” despite the reaching a “major milestone” in increasing the number of women in their boardrooms.
FTSE 100 companies have now met a voluntary target of 25% women board members, says the report’s author, Lord Davies.
But some 260 of the 286 women on boards are non-executive directors, with only a handful holding the key decision-making positions on executive committees.
The former trade minister Lord Davies has used his final Women On Boards review to call for a rise in the level of female representation at board level from the current 25pc to 33pc by the end of the decade.
The UK risks “[falling] well behind European and … international countries” if the new quota is not met, Lord Davies has warned.
It falls short of the call by First Minister Nicola Sturgeon for women to make up 50 per cent of boardrooms by 2020.
Sturgeon said the Scottish Government’s 50:50 pledge will “challenge all public, private and third-sector bodies” to commit to gender equality in the boardroom, hoping to achieve 50/50 gender splits on boards by the end of the decade.
The First Minister promised that the SNP would use any power they had in Westminster to push the cause of women’s equality across the whole of UK.
Britain is currently sixth in the world for the proportion of women on company boards, with Norway, where women make up 35 per cent of boards, topping the list.. Many countries ahead of the UK — including Norway, France and Belgium — have set formal quotas for female representation
Read the full story in The Herald.
Nearly half of SMEs in the UK believe their businesses would close in under 12 months, if their founder were to suddenly leave the business.
This is the headline result of a survey by IT firm Network ROI. More worryingly, nearly a third of UK businesses said their company would survive less than a month if this were to happen.
English businesses were the most pessimistic about their prospects. A third of English businesses felt they would not survive the month and in the West Midlands, this rose to over 50%.
In Scotland the picture is equally as bleak, with over 50% believing they could not last a year without their founder and a quarter believing they would go under in less than a month.
Respondents aged 65 or over were the most bullish, with 100% of respondents believing their businesses could survive, indicating the impact experience can have on business survival rates following a crisis or disaster.
Sean Elliot, Managing Director of Network ROI comments: “We carried out the business continuity and succession planning survey to get a better understanding of attitudes towards these issues within the UK small business community. The results show that business continuity is an area that requires a greater deal of investment and understanding, especially within the SME space.”
The consequences of inadequate business continuity planning are shocking. The Federation of Small Businesses has released figures showing that up to 80% of businesses affected by a major incident close within 18 months, while 90% of businesses that lose data from a disaster are forced to shut down within 2 years.
So why is business continuity so low down in the agenda? According to Continuity Central, a recognised portal and news site for business continuity professionals, SME’s are held back by their ‘entrepreneurial culture’ and have limited resources for ‘non‐productive’ investments.
They also argue many smaller businesses have limited or no knowledge of business continuity and are not in a position to develop a business continuity plan to the fullest extent. Many have some IT‐knowledge, but usually not about systems availability and IT recovery.
You can read this more about what SMEs could and should be doing about their succession planning and wider business continuity strategy on Network ROI.
The number of Scots firms going bust has fallen to pre-recession levels, according to the latest report by auditors.
New figures from accountancy giant KPMG show improving fortunes for Scottish enterprises as more ventures succeed and business confidence grows.
However, the reduction is expected to plateau and Blair Nimmo, head of restructuring for KPMG in Scotland, warns the full impact of the steel industry’s collapse is yet to be felt.
Unveiling the figures, he said: “There are now fewer businesses failing than before the recession, and there is no doubt that, for the most part, business confidence is on the rise.”
According to the report, the change has not affected small, medium-sized and large organisations equally.
The number of corporate insolvency appointments for July to September was 177, down 30 per cent from the same period in 2014, when the total was 254.
The latest results also mark a fall of 17 per cent on the previous quarter to June 2015.
Liquidations, mainly used for smaller firms, fell by 34 per cent year-on-year, going from 239 to 158.
However, administrations, which typically affect larger organisations, rose by 27 per cent year-on-year, from 15 to 19.
Nimmo said: “The latest figures reveal a material fall in the number of companies going into insolvency in Scotland over the past quarter compared with the three months prior and the same period the year before. We can see similar six- and nine-month comparative trends.
“That being said, we’re reaching a natural levelling-off period which will likely prevail, irrespective of economic conditions, meaning we will continue to see similar numbers of businesses going into liquidation and administration.
“The effects of the recession are still fresh on the minds of most corporates, which is reflected by cautious optimism.
“Instead of a flood of deals, businesses are focusing on less risky transactional activities.
“From a sector perspective, the low oil price looks like it might be around for a while yet, but it is pleasing to note that most corporates are addressing this through active cost and working capital control, and this is certainly where we are concentrating our efforts with clients.
“We have also recently seen significant problems in the steel sector, albeit it is a little early to forecast the likely outcome and impact across Scotland.”
More on this in The National.
The deal will see the energy service firm working in the Gulf of Mexico, UK and Norwegian continental shelves and offshore Azerbaijan.
Wood Group Kenny (WGK) will deliver programme, project and integrity management and operational support for subsea projects under the five-year contract, which is effective immediately.
The contract will be delivered from WGK’s offices in Aberdeen, London, Norway, Houston and Baku and adds to WGK’s work with BP globally. WGK continues to perform work under a contract held since March 2007 to provide engineering and project management services to BP’s portfolio of future subsea projects.
WGK chief executive Bob MacDonald, said: “This significant contract demonstrates our unique independent model and our ability to deliver a complete portfolio of subsea services across global projects.
“Wood Group has over 40 years of experience working with BP. We look forward to continuing our close partnership with this long-term client on this project, which will see us provide operational support for many of the assets we helped to design.”
This is the second major contract secured with BP this year.
Massy Wood Group, a company jointly owned by Wood Group PSN (WGPSN) and the energy division of Massy Holdings Limited commenced a five year contract, with a potential value of up to $250 million, to provide services to BP’s 13 upstream offshore facilities, and two onshore assets in Trinidad and Tobago.
More on this in Energy Voice.
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