October 2012

R&D tax breaks make UK more attractive

UK-based SMEs could save up to 31.25% of every £1 spent on research and development (R&D) through tax relief aimed at supporting innovation in British companies. The definition of R&D activity is broad and can be extended beyond the obvious research streams.

We have come long way since a few years ago, when the Treasury refused to accept that policy makers could have any effect on innovation.

Whilst technological innovation must undoubtedly be at the centre of growth and recovery, the market still needs, and responds well to incentives like the R&D tax incentives. This is key as the benefits of inventions are experienced by other companies, who can then copy the new idea without having to pay the research costs involved.

Crowdfunding, a Serious Option for Startups

Crowdfunding is fast becoming a genuine funding option for start ups to fund their earlier phases of growth – it is not only those who are unable to access Bank loans or get the support of business angels that are turning to crowdfunding, but also businesses that want to run on their own, without being forced to give up a large slice of the company.

The following, are the top 10 benefits of crowdfunding:

  1. It provides access to capital.

  2. It hedges risk.

  3. It serves as a marketing tool.

  4. It gives proof of concept.

  5. It allows crowdsourcing of brainstorming.

  6. It introduces prospective loyal customers.

  7. It’s easier than traditional applications.
  8. 
It’s free PR.

  9. It provides the opportunity of pre-selling.

  10. It is free!

UK economy grows

According to recent figures published by the Office of National Statistics (ONS), the UK economy has climbed out of recession.

The figures revealed that in the final quarter of 2012:

  • GDP has increased by 1%
  • The output of services industries has increased by 1.3%
  • Construction sector output has decreased by 2.5%

In response to the release of these figures, Chancellor George Osborne announced “There is still a long way to go but these figures show we’re on the right track and are a sign the economy is healing.”

Wales SME Investment Fund strikes first deal with Channel Fisheries

The Wales SME Investment Fund, managed by Finance Wales has made the first investment from its £40m fund.

The fund’s first deal is a £750,000 equity and debt investment into Channel Fisheries – one of the UK’s leading wholesalers of fish and seafood. The business is headquartered in Cardiff and supplies established businesses like the Jamie Oliver Group and Harrods.

The investment is being used to acquire a UK competitor, Murray’s Fresh Fish. Further plans are in place for Channel Fisheries to expand its processing facilities, in order to double its commercial operations within 3 – 5 years.

SMEs across the world target rapidly growing markets

SMEs across the world have identified new emerging markets with high growth rates as an important target for expansion.

Countries such as Brazil and China are rapidly growing, and hence have been identified as one of the key markets to enter by a survey carried out by Economist Intelligence Unit (EIU). The main findings are as follows:

  • 60% of respondents said emerging markets were the most important platform for growth
  • 79% said the biggest obstacle to growth is finding new customers.
  • 88% of businesses felt bureaucracy is still a significant hindrance.
  • 75% of Brazilian and 72% of Indian businesses believed that IT efficiency is the most important step for their company.
  • 78% of SMEs felt seeking out suitable employees was a priority.
  • 60% of small businesses and 47% of medium enterprises believe growth of sales and earnings is the most important step.

HSBC research identifies businesses shrugging off the recession

Research from HSBC has found a breed of business owners who are well placed to drive the UK out of recession.

HSBC’s “Growing British Business” report reveals some of the hidden success stories of British Business – where businesses are using innovation, diversification, investment and international focus to motor on despite the challenging economic landscape.

The business leaders behind such success stories have experienced benefits from the economic crisis by re-thinking their strategy behind international trade and innovating around business funding.

The report explains three types of growth pioneer that are experiencing positive returns:

  • “New Exportentials” – businesses seizing the export-led recovery strategy.
  • “Co-operationals” – businesses that are forming alliances and partnerships in order to grow.
  • “Confident Capitalisers” – who are investing to get ahead of their competitors.

Scottish businesses to bid for share of £1m from Dragons' Den-style fund

The Scottish Government has set up a Dragons’ Den style fund to help entrepreneurs.

Business owners will be able to pitch their plans to leading business figures such as Sir Tom Hunter and Sir Willie Haughey in a bid to cash in on this £1m fund.

The new fund will invest up to £50k in businesses, with applicants submitting business plans and a minute long online video pitch. Those shortlisted will then get the opportunity to pitch directly to the panel, together with representatives from RBS, Scottish Enterprise and Highlands and Islands Enterprise.

Businesses that secure funding through the scheme will also be provided with mentoring and support.

13% of businesses considered closing in last quarter

84% of senior decision makers from British SMEs are concerned about current economic conditions.

The SME Risk Index, polled by YouGov, showed the highest level of concern was in the construction industry (93%), followed closely by manufacturing businesses (88%) and retailers (85%).

Furthermore, 13% of businesses have stated that they have considered closing down in the last quarter – up from 11% in the quarter before.

Finally, the research suggests that the London 2012 “boost” did not materialize, as 79% of respondents said the Olympics had no impact on their business.

Angel Investors do make money

The largest data set on angel investor financial returns has shown that investors receive, on average, 2.5X return on their money invested.

The interesting thing about this is that there has been suggestions in the past that angels are just unwitting philanthropists as apposed to genuine entrepreneurial investors. however a return of 2.5 times the money invested is entirely competitive with venture capital returns!

There were 3 main findings from this research, summarized below:

  • In any individual investment, an angel is more likely to lose money than make a profit. However, once an angel’s portfolio exceeds 6 investments, the median return shows a profit.
  • 90% of all cash returns are produced by 10% of exits – essentially the same as in VC investments.
  • When all data is aggregated, angels across the US and UK produce a gross multiple of 2.5X their investment, in an average time of 4 years.

Retail footfall rises for first time this year

Recent figures released by Ipsos Retail Performance show that the Retail Traffic Index has grown by 7.3% in the last 3 months. The number of shoppers in non-food stores has increased by 1.2% in September – marking the first month in which footfall has risen.

The figures support Ernst & Young’s forecast because the Asda Income Tracker also showed that household spending power has increased for the 3rd consecutive month.

However, the number of retailers entering administration is still on the rise as a result of continuing low levels of demand and margin sacrifice. Furthermore, the number of store units in the UK run by multiples shrunk for the first time in history.