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    In partnership with Lloyds Bank, the Institute of Chartered Accountants in England and Wales (ICAEW) is encouraging the UK to pay more attention to the ‘M’ in ‘SME’. Clive Lewis, ICAEW Head of Enterprise, looks at the untapped potential of Britain's mid-sized firms.

     

    The Chancellor’s Budget earlier this year committed to double UK exports to £1 trillion this decade. This followed previous announcements as part of the UK government’s growth agenda, which included a review of the Mid-Sized Business (MSB) sector.

    The review focused on the contribution MSBs make to the British economy and their potential for increasing exports. But how important is this contribution and what is its potential?


    ICAEW asked members who work within the sector to tell us what their future plans are. The MSB sector is important to economic growth and recovery. Its 10,000 companies account for around one-fifth of registered private sector employment and output.

     

    Our findings help to assess three key questions:

     

    What is the condition of the MSB sector?

    Our research suggests that some MSBs may have turned a corner since the recession began in 2008. Over the next two years, three-quarters expect turnover growth and 5% expect reduced turnover. Overall, 55% of surveyed businesses might be considered “sustained growers”, experiencing increased turnover growth in the past three years and expecting continued growth in turnover over the next two years.

     

    What might hinder the increased growth of the MSB sector?

    When asked about the key issues affecting their growth, most reflected concern about the general economic environment, including resolution of the Eurozone crisis.

     

    Financing issues were a lower concern, but are still troubling for 30% of MSBs surveyed.

    MSBs external debt sources are still very traditional with 55% using an overdraft facility and 44% term loans. This compared with 12% using loan notes, 5% mezzanine finance and 3% corporate bonds, suggesting that Tim Breedon’s report on alternative sources of funding will be relevant to many MSBs.

     

    Despite the economic climate, MSB’s see potential in the UK market and want to concentrate on what they know best. They are predicting growth for the next couple of years and there is no doubt that there is potential for some of them to take advantage of certain conditions and take the next step from being a medium to becoming a large business

10/25/2014 11:02:01 PM