What will the new year bring for businesses?

Jan 1 2010 by Iain Laing, The Journal

AT the dawn of a new year as heavy with challenges as any for decades, nebusiness asked some of the region's businesspeople and some of our favourite commentators to share their thoughts on what lies ahead and how to deal with courage and traditional North East pragmatism.

Keith Hann is a financial PR and Journal columnist

So far we have faced up to our appalling financial crisis like those cartoon characters that keep running long after they have passed over the edge of the cliff. But soon grim reality must surely dawn, and we will all plummet downwards amid a resounding crash of tax rises and spending cuts.

Before that we are doomed to months of relentless point-scoring in the run-up to the General Election, as each party seeks to demonstrate that things would be even worse under the other lot. Then, whoever wins, we will face the shock revelation that things are far worse than expected, and that drastic emergency action must be taken.

For this reason, the General Election of 2010 will surely be like that of 1992, one not to win. Our electoral system almost guarantees that the winning party will have been backed by only a minority of the electorate, so at least most of us will be able to derive some grim satisfaction from watching the new Government rapidly sink to record depths of unpopularity. Personally I would like nothing more than to consign him to the book of Great British Failures, but, for poetic justice, surely that poisoned chalice has got to be Gordon’s?

James Ramsbotham, chief executive of the North East Chamber of Commerce (NECC)

All eyes are on the General Election in 2010 – be it May or June – and what the political heavyweights have to offer for the economy. As inevitable as it is that we will have an election, equally unavoidable is the fact that we will endure a public sector recession.

It is well documented that we are a region that is more exposed to the public sector than any other and NECC’s focus will be on the policies the incoming government has which will manage and mitigate the impact of it tightening the public purse strings.

NECC has lobbied strongly that any moves to reduce public spending must not harm measures that are already in place to support businesses through the recovery. It is imperative that the new government recognises the crucial importance of wealth generation in helping the UK to grow beyond the recession. Stunting that growth will consign us to the economic doldrums for a decade or more.

NECC will continue to assist companies exploring new markets via its wealth of international trade services and the Go Global campaign which is run jointly with The Journal.

It is only by rolling back the boundaries of global trade that we will exit the downturn at pace.

Sarah Green, regional director CBI North East

As we usher in the New Year, the latest figures suggest we can say farewell to the official recession with 2010 marking the beginning of a tentative road to recovery and an election year. With an unstable economic and political environment, it is absolutely critical that business within the North East has a strong voice. We at CBI believe we can deliver this and are focused on ensuring we deliver effective lobbying on the issues that matter to business, including restoring public finances, ensuring a competitive tax regime, securing UK energy supplies and fighting the continuous legislative burden. Recession, does however, force innovation and change, and in the North East we need to ensure we are pioneering. In areas such as the low-carbon economy we are well placed to do this. Let’s hope 2010 brings an announcement on manufacturing the Nissan Leaf electric vehicle in Sunderland , further progress on developing large-scale manufacturing facilities for off-shore wind turbines, as well as further development of the bio-technology industries of Teesside.

Kevin Rowan is regional secretary of Northern TUC

2010 can get off to a great start with my team, Barrow FC, going one better than they did at this stage of the FA Cup last year (going down to a narrow defeat in the ‘Boro’) and turning over Premier League Sunderland at the Stadium of Light on the 2nd of January.

Someone once said “never waste a recession” – meaning learn to do things differently. The year ahead offers a return to some fundamental priorities; good quality work, developing the opportunity for everyone to participate, tackling poverty, inequality and poor health and thinking about the financial system that underpins this all.

The emerging low-carbon industries could offer some quality employment in what everyone would describe as good work, the speed with which the region can grow these jobs could be the determining factor in the scale of the sector here and the opportunity to truly lead the world in a green future.

The North East remains plagued by low participation rates, health inequalities and poverty, but is also in possession of some excellent practice in measures to enable people to get into and progress in work. In hoping to tackle the aftermath of recession not only will we need to maximise the development of new employment opportunities, we will also need to see we are the very best when it comes to enabling local workers to access and benefit from these opportunities.

Finally, I hope the region is once again the focus for discussions of the finance world, as on top of the excellent Jeremie initiative for providing business finance, this region provides the base for a re-emergence of mutualism as the basis for banks and building societies focused on supporting communities, not pandering to capital.

Joe McLean, football finance expert and partner in Grant Thornton in Newcastle

As the transfer window opens in January many fans will be clamouring for their clubs to spend on big name signings in the pursuit of trophies, promotion to avoid the risk of relegation. Many fans, and indeed some clubs, overlook the fact that a football club is a business which will not survive unless it lives within its means. Balancing football glory with financial discipline is often an alien concept to fans hungry for success, but two of our North East clubs have had to face this hard fact and the challenges it poses, following relegation from the Premiership last season. Both clubs have had to sell players to cut their wage bill and bring it into line with the reduced income generated in the Championship.

Despite a smaller player pool and failing to appoint a famous name manager, Newcastle United is enjoying success on the pitch. The club has stabilised its finances and it will be interesting to see whether the lessons learned with limited resources will be forgotten as fans cry out for money to be spent in the transfer window.

Some clubs will inevitably gamble their long-term future by short-term spending and this may prove to be their downfall if the gamble fails. There is increasing evidence that more clubs are deeper in debt than before and spending on transfers will ad to those debts.

Concern is mounting that the debt burden will worsen in 2010 as interest rates start to return to higher and more normal levels. Those clubs that are able to match spending to income will be best placed to face this challenge in 2010.

Sarah Taylor runs Newcastle-based travel information firm Urban Digger

With a downturn in the economy comes a number of opportunities for small businesses. Hiring super-talented people is often difficult because they already have a job. But in a poor economy that is not true – companies have exploded and many people have been laid off, even the stars.

Office space has become more affordable as landlords seek to fill empty spaces and advertising is cheaper as company’s down-size on their marketing budgets. It is certainly a good time to put negotiation skills into practise.

The banks are opening their doors for business again with new initiatives to support start-up businesses. Having recently changed our own banking to HSBC, the level of personalised service is impressive to say the least.

In my opinion, this is a very exciting time for new businesses, and there are some incredible start-ups around with huge potential. With the arrival of the Jeremie funds in January and new programmes for early-stage businesses such as the Difference Engine, North East start-ups have every chance of success.

I am excited about the year ahead, for my own business and for those of my peers who have shared in the roller-coaster ride this last year has taken us along. Having confidence in your ideas and the determination to succeed really can get you through the tough times. I look forward to seeing what the New Year will bring.

Herb Kim, chief executive of Codeworks, which represents the North East’s digital technology sector

Social media played a huge part in 2009 with Twitter reaching £97m ($155m) worth of capital funding directed at progressing them towards becoming financially viable without restricting their growth. In 2010, I see the biggest changes will be in collaboration between smaller companies, further development in software as a service (SAAS) and a social media slow down.

The progression of online collaboration tools such as 37 Signals BasecampHQ will enable smaller businesses and freelancers to collaborate and communicate effectively and give them the ability to go for much larger contracts.

SAAS could see yet another fruitful 12 months. In the digital technology profession we are now starting to see SAAS as the norm and expect for it to be that way. Cross-platform software that you use on your laptop, home computer or mobile telephone is now ordinary and enables most people to achieve some sort of workload on the move.

A social media slow down in 2010? Really? It may well happen, just not in a general sense. Social media is now ingrained in everything we do, we communicate using Facebook, Twitter and other social media tools, but in 2010 we will grow past the hype. For the past three years we have been talking about Twitter being the “big thing” and in the next twelve months we’ll see the hype reducing with more talk on the impact of businesses using social media well.

Jonathan Grubin is a 18 year old online entrepreneur from Newcastle

This time last year, I wrote that 2009 was going to be about getting Live Newcastle and other projects, including SendSocial.com, off the ground. I managed to lay some good foundations last year, and I’m looking forward to growing both businesses in 2010. We have ambitious growth plans for both – hopefully launching the Live Newcastle concept in other cities, and taking SendSocial.com global.

As the economy begins to pick up, people’s confidence will no doubt return, and it will be interesting to see how this impacts what I’m doing. I was never really hit by the downturn, but maybe I’ll be able to capitalise on the upswing! This has been my first boom-bust cycle, so things will no doubt continue to be a steep learning curve.

I’ve learnt that you can’t really plan for a year, so I’m not going to try and make any bold predictions. All I know is that I’m going to enjoy working on the businesses – and university (not so much the work) – and continue meeting some really interesting and dynamic people, both in the North East and in London.

Pauline Osborne, is Federation of Small Businesses (FSB) regional chair for the North East of England

There is without doubt a growing gulf between the high street banks and the small business community and the FSB fear that, through lack of access to finance, our members are being inhibited in their efforts to survive, grow and prosper. To further compound matters, larger businesses are taking longer than ever to pay small businesses and failing to adhere to the Prompt Payment Code endorsed by the Government. We feel that 2010 needs to be the year when both the banks and big business reconnect with small and medium enterprises that play a critical role in the economy, accounting for 99.9% of the estimated 4.8 million private sector enterprises in the UK.

The FSB would like to see more alternative sources of finance provided locally such as through ONE North East, the Regional Development Agency, or through local councils and Post Offices. This would increase the choice of finance on offer to business owners, therefore enhancing their prospects of survival and helping them stimulate the economy.

Small businesses are further being crippled by larger companies who are failing to pay invoices within a sensible time frame. Larger organisations must be given a loud and clear message that they must stop using the recession as an excuse to use small firms as a source of credit.

It is clear that both the banks and larger firms need to enter 2010 with a clear New Year’s resolution, remembering that small businesses are not just merely part of the local community – they are the local community and should be treated as such.