Why these 250 must be feted
If the region's top firms overcome the challenges ahead, they will benefit countless other businesses around them, says Richard Elphick.
I EXTEND my congratulations to all the top 250 local businesses that have achieved their eminent position in a most difficult market place, following a most challenging trading year.
Notwithstanding the top 250, every company that has survived this year has done incredibly well in fighting a broad front of reduced sales, over-cautious banking (and now having to understand LIBOR) – as well as a significant reduction in the values on the balance sheet (especially if your company owns property).
It is a brave economist indeed who might refer to green shoots of recovery being experienced yet, and brave again in anticipating when recession may end.
The real challenge for all the Top 250, indeed all companies, will be staying profitable next year as they enter a weak market weakened themselves by 2009’s downturn, and by then in an uncertain year largely focused on a General Election.
However, there are opportunities in recessions. Marks & Spencer grew sustainably during the 1930s Depression by offering quality at ultra-competitive prices.
Companies that are intuitive and creative with their strategies, and flexible with their plans, will do well. The difficulty for many of the top 250 companies is that their size can sometimes stifle flexibility and creative re-assessment of business, in the same way that it takes a while and a few miles to turn a supertanker.
This is much more easily achieved by small to medium sized businesses who have very streamlined and more singular decision making. The top 250 will have managed successful growth during what was a particularly long period of sustained growth.
However, will the Top 250 want to employ as many people ever again? Some of them will have crippling contributory pension schemes that are unsustainable.
Will they want to own property in the future as an asset on the balance sheet that can so quickly become a liability? How can they reasonably dispose of property liabilities in the meantime? Again, in respect of pensions, the perfect Self Invested Personal Pension with the asset of ownership of the workplace has swung in some circumstances radically from being a great deal to being a real debt.
Will companies ever grow into larger office or manufacturing space with high rent and service charge, or will they decide in the future to work more flexibly from home? Will more work be put out to contract? There is a danger that in the next year some representatives of the Top 250 will reduce in size and set strategies that contain the extent of their future growth, not wanting to be “bitten twice”.
Their success is, however, the absolute lifeblood of our region and its wealth creation. We want and need them to remain successful, and to continue to grow rather than to contract.
Each pays rates, corporation tax and national insurance. They employ local people, provide local services and goods and most will make corporate socially responsible donations to charity and good causes. Some of them may even have given you work as a supplier to them.
They are something to look up to and aspire to. So I urge you to review the list and make a mental note of who they are and what they do. Don’t worry about where they are in the league table and whether they are ascending or descending the list.
The point is, they are a regional success story and they depend on you as much as we depend on them. So, whenever you can, give them business and purchase locally, for if they remain strong, it filters down to all of us.
Richard Elphick is chairman of the North Eastern region of the Institute of Directors, and a director of _space architecture.
