Mixed Feelings About 2012 Prospects
Outlook Testing times, but some businesses are optimistic, writes Jonathan Moules in the Financial Times
The natural optimism of business founders is being tested as they look forward to a difficult year ahead.
Those who are able to export or who can demonstrate how their product or service can save customers money are the most bullish about 2012.
Others, facing a in customer spending and struggling to raise finance, are more bleak about their prospects. John Anderson, chief executive of the Entrepreneurial Exchange, a networking group for Scotland’s start-up community, said that even securing angel funding from wealthy individuals was difficult because those doing so were focused on propping up their existing investments.
Many companies have already trimmed their headcount and cut unnecessary costs, so it is hard to see where they will economise if trading conditions worsen, he added.
“The problem is that there is not a lot of fat left in these businesses, so another lost customer or a delay in an order could really hurt,” he explained.
At the same time, Anderson said he knew of several companies that were bucking the trend, such as Falkirk-based bus maker Alexander Dennis Limited, which has doubled its market share in the downturn.
Another bullish business is Henley-based babyfood maker Ella’s Kitchen, which almost doubled its turnover this year to £31m and more than doubled its profit, partly due to expansion in overseas markets. Paul Lindley, Ella’s Kitchen’s founder said: “We see lots of opportunity to grow internationally.”
Julie Meyer, chief executive of Ariadne Capital, an entrepreneur-led investor group, said opportunities exist for those who adapt to changing consumer demand. “People are learning to live more efficiently and companies need to react to that,” she said. “Frugal is going to be very sexy.”
Technology start-ups have held up pretty well largely because it has been needed to improve the performance of companies, said Simon Clark, managing partner at Fidelity Growth Partners Europe. “Everyone is more realistic, which is a good thing,” he said. “Good entrepreneurs focus on cash and growth, in that order.”
(This article appeared in the Financial Times December 17 2011)