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Successful business strategies for 2012
25/01/2012

Gill Gardner, Corporate Partner at leading North West law firm Brabners Chaffe Street shares her thoughts on successful business strategies for 2012.

Predicting economic trends is not without perils at the best of times and there are simply far too many uncertain factors to give any realistic predictions for 2012. Those who optimistically predicted a recovery in 2011 last January were not rewarded, but it was certainly not a bad year for many businesses; it was simply much harder to achieve.

The British Chambers of Commerce has recently confirmed through survey that business confidence remains low and this is due in large measure to the uncertainty over the euro and demand within the euro zone. Locally we face challenges in the reduction of employment in the public sector and major employers, such as BAE. A continuing challenge is the lack of availability of bank funding or other credit whether for acquisition or investment. There is uncertainty as to demand in domestic and international markets. Sellers are unwilling to put their businesses up for sale and buyers are finding it difficult to raise finance. Banks are warning against future increased capital adequacy requirements which may make credit even harder to obtain for acquisition or investment.

Towards the end of the sixteenth century Francis Bacon set out his famous principle that ‘knowledge is power' and this could be a good motto for 2012. The general business sentiment for 2012 appears to be one of some trepidation for the months ahead. Taking forward Bacon's principle, those who understand the state of their business, the economic climate, its prospects and possibilities, including their competitors' products, services and pricing will be those most likely to survive and thrive. Knowing your business starts with good financial control. Knowing the strategic direction of the business should be considered carefully, monitored closely and again after observation corrective action taken where necessary.

When it comes to medium term strategy businesses need to research opportunities and possibility for exit. Taking sensible advice has certainly helped many companies over the last 2-3 years. Companies have taken on different legal structures to limit liability; they have undertaken a full review of their contractual positions to ensure their financial exposure is as expected and fully insured. When it comes to exit, certain owners have also understood that the market for businesses of their type may not attract a third party trade sale within the next 3-5 years and have realised that the most likely succession is in the form of management buyout or increased involvement of senior personnel, short of a complete takeover. That in itself brings challenges regarding incentivising and increasing the skills of management, possibly through company share option plans or other schemes.

From our experience in the North West, business in 2011 seems to have been a period of hard graft but some success and there are many who would be happy to see the same for 2012.


For further information contact Gill Gardner at Brabners Chaffe Street on 01772 823 921

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