Confidence - Is it returning?

Whilst the press has concentrated on expense scandals, and Mr Darling repays £700 of his claimed expenses, has the business world moved on?

For the last twelve months, following a downturn in sales levels, many of our clients have been working hard expanding their customer base and accepting that early sales are likely to be of low value. For several clients this investment is now starting to pay dividends as orders are gradually improving and delayed orders are released. Estate agents are reporting increasing levels of residential house sales although commercial property activity remains depressed.

So, is the economy turning? Is the increase in stock markets over the last quarter a reflection of a returning confidence?

The gradual recovery of the UK exchange rate is also providing some hope for UK importers. However, whilst the US tourist is probably still seeing a window of opportunity, the cautious US investor looking to snap up a UK corporate relatively cheaply must be starting to think about how long the exchange rate window will stay open.

So what do all these factors mean to you? Do you change your focus from cost saving to investing in the future? Do you invest in people or equipment in advance of the recovery? Do you look to acquire a troubled business or wait for it to die naturally and acquire the customers on the cheap? Certainly the message from the insolvency world is that their boom time is coming soon!

The key, as always, is a cautiously managed approach. The risks in the markets remain as high as ever and, in many instances, may be higher. The recent recovery felt by some people may not last, so be careful. You should also consider your current financing structure - is it able to cope with a surge in sales levels?

Remember, the risk of overtrading increases at the beginning of a recovery cycle as corporates run up large creditor balances and increase stock against banking constraints of reduced facilities put in place during the recession. The banking world is still very cautious and the funds are not readily available unless your proposition is of the highest quality.

We suggest you start dusting off those strategic grey cells and start to look again at your plans for the future. Given the number of restraints you will face in the coming months, it is essential that your plans are robust and working capital requirements have been addressed before you embark on new initiatives.

In summary:

• Revisit your medium-term strategic goals
• Apply a strong dose of risk management to your plans
• Move forward with a more positive attitude, but be careful of the minefields ahead
• Take advice on funding requirements

Speak to us about how we provide clear first class advice and guidance with a cautiously managed approach. Call David J Travis on 0161 245 1000 or email dtravis@clbcoopers.co.uk to arrange a meeting about you and your business.