NORTHAMPTONSHIRE still has one of the fastest growing populations in the UK, which fuels demand for housing and employment and should support the development of a £20bn local economy by 2021 – a similar size to the GDP of Bolivia or Latvia but from only some 750,000 people.
A key aspect of this growth will be the continued strong showing in the SME sector, including innovative spin offs from the growing, local high-technology, engineering, food and drink and logistics clusters.
Chris Lonergan, Head of Business Performance Improvement for Haines Watts in the South-East Midlands, said: “While this is good-looking picture, the elephant in the room remains the constant productivity gap between UK PLC and other advanced economies. This is compounded by the rather startling fact that based on OECD statistics, productivity growth in the first world has gradually slowed since 2004.”
“At a company-level, there appears to be a growing productivity gap to be found in middle-sized businesses. A small business owner may improve productivity by recruiting a new manager with new ideas and a larger business’s senior managers know they need to keep innovating to retain competitiveness, even though their innovations may fuel the success of smaller, nimbler businesses. This leaves a market gap where making big change is difficult because of entrenched ideas and funds to support major innovation are limited.”
So, how does this affect the profitability and value of Northamptonshire’s businesses?
Irrespective of economic conditions, innovation and productivity are key drivers of growth, and profitable and sustainable growth is the key driver of business value.
Chris added: “We would all do well to remember the simple business equation of Profit = Sales – Costs. If, as we continually should do, we aim to improve profits by eliminating surplus costs, we pretty soon hit a barrier where mere cost-cutting is no longer effective and we need to find new and better ways of operating, whether related to winning or servicing customers.”
Haines Watts has developed an innovative way of evaluating how innovation and productivity influences business value as part of an overall business mix and are happy to meet ambitious Northamptonshire business owners to explain how it works and adds value.
Haines Watts Business Performance Improvement team in the South-East Midlands comprises professionals from financial and non-financial backgrounds to enable assistance across the board, including making sure any investments you make in innovation are correctly treated to maximise R&D tax allowances.
