No Longer Grim Up North
It’s a good day to run a business in the North.
Of all the businesses announcing figures in the last two days, the Northern businesses have cleared the table.
Bentley: Record sales announced. Pets at Home: New stores announced. Morrisons: Increased sales. Booths Supermarkets: 3% rise like-for-like. JD Sports: Increased sales, now announced acquisition of Blacks. KPMG North: Revenue increase. ShopDirect: Sales Increase. ….even legacy Northern-at-heart business, Rolls-Royce Motor Cars have announced record sales.
Contrast that with the woes of Blacks, La Senza, Hawkins Bazaar and even the poor & flat performances from Debenhams, GAME and M&S.
So is the north rebutting the economic gloom? Or is the economy not as bad as people (you can choose to exchange the word ‘people’ for ‘media’, ‘Robert Peston’ or ‘Rachel Reeves’) think and keep telling us?
Macro indicators are ‘OK’, and equities in particular are holding up really quite well. The FTSE-100 has risen 14% since October’s low and is now 4% higher than early 2008. Factor in UK & US equities performance against Euro Zone and Emerging Market and the performance looks yet stronger (both down, 33% & 23% respectively).
Equities are back as an attractive investment proposition: OK, a 3.5% dividend yield isn’t breaking records – but it is almost double that being offered on 10 year UK Govt Bonds. (and businesses with a strong balance sheet and good revenues are arguably a safer long-term bet than bonds of highly indebted governments?)
Equities aren’t the be all and end all, far from it – but if they keep performing, maybe even the Robert Peston’s of the world might start to feel, and be a little less gloomy.
So back to the Northern performance. Why is the North seemingly shining? Yesterday’s Business Desk / DLA Piper / PwC State of the Market report made for interesting reading (report can be found here).
Two-Thirds of businesses expected turnover to increase in 2012. Crucially for a Head-Hunter, the number of businesses expecting to increase staff number has increased by 250% on a year ago to just under 40%.
Even funding is becoming less of an issue – two-thirds of Northern businesses believing they have adequate access to finance to cope with economic pressures.
Even the Private Equity market has bounced back with significant increases in transaction numbers and overall transaction values – 2001 seeing a 5-fold increase in transaction value compared to 2009.
Contrast that with the plethora of gloom coming from elsewhere in the country – today’s Chamber of Commerce national findings that ”Britain’s limp recovery is grinding to a halt” a prime example, portraying a picture of gloom. EuroZone crisis being a key blame, with funding and concerns over unemployment coming closely afterwards (in stark contrast to the NW survey findings above).
I’m a proud Northerner currently sitting in a hotel in Westminster, London; and spending two days a week down here. I call it missionary work, but it is also interesting to observe the North/South split, particularly in attitude. I’m reluctantly becoming a big of a fan of London – early morning runs along the Embankment, sampling the city scene – but getting to speak with random London business(wo)men is equally enjoyable, and enlightening. Despite success, good news and obvious wealth, the talk is all about macro-economic gloom.
So why? Why is the North, and in particular the North-West fairing so comparatively well? Part of it is hinted at in the final sentence of the Business Desk article. “Most private businesses in the region have set their sights on growth despite recognising that significant challenges lie ahead.”
Many northern businesses have just set their sights on ‘getting on with it’. As the straight-talking Entrepreneurial hero Scott Fletcher said “Recession? I’ve just decided I’m not taking part”.
It’s Attitude. Northern businesses are just ‘getting on with it’, not blaming everyone else. “JFDI” (Google it). The SME sector in particular is largely immune from the Macro-Economic environment. Fluctuations of 0.1% in GDP are utterly irrelevant to small businesses and even most large businesses.
Even ‘catastrophic’ 7% drops in GDP don’t really make a massive difference to the SME sector, so the smarter businesses are ignoring it and focusing on their own top and bottom lines rather than using irrelevant, pseudo-political macro-economic data as an excuse for their own short-comings, or inability to respond to challenges.
This attitude often results in less reliance on funding – taking the Shakespearian missive, “Never a borrower or a lender be”. Northern businesses are far more likely to self-fund.
But there’s more than just Northern Grit. The personalities in the north….the People. The south has some big business successful personalities: Alan Sugar/Theo Paphitis/etc but the north has a huge number of natural, down-to-earth, leaders, driving the SME sector.
The north is famous for strong, inspirational business leaders – right back to Titus Salt, but it is the plethora of entrepreneurial ventures, led by great modern leaders that are helping to really drive the north.
The respect for these leaders from their colleagues and staff is unique, the benefit to the businesses is enormous. Their personalities and leadership style breeds an empowered, motivating culture throughout the business – their prime challenge being to find the best talent to maintain that culture and not allow dilution as the business grows.
High Speed Links to the North
It is easy to see why national, and international talent is migrating north. Every sector has massive representation in the North, and increasing representation. The talent is following.
HS2 might be offering high-speed links to the North, but some of us are already here, 14 years (and £33bn) earlier.