2020 is already proving an opportunity for new beginnings; the start of a new decade in which to do business with a sense of certainty in place.
Undoubtedly the Welsh economy, like other parts of the UK, faced significant headwinds in 2019 but has emerged out the other side with ambitious objectives in mind.
Our monthly Business Barometer analysis, which measures business sentiment across Wales, provides a reliable litmus test of current economic conditions. Notably, we’ve already seen an uptick in business confidence at the start of 2020 – January’s reading marked the most positive outlook in six months – promising green shoots to build upon in the year ahead.
The medium-term certainty provided by December’s general election outcome has undoubtedly played a major part in that improved outlook. However, there are clearly more tangible reasons to explain why the businesses that mothballed their growth plans amid the comings and goings of the last 12 months are reigniting them.
Public sector backing
The government’s cross-border Western Gateway initiative, launched in November, was met with some concern but has provided a new platform for greater collaboration between business and universities – as well as funding which will undoubtedly benefit the region’s start-up community. Businesses in key hubs like Cardiff and Newport are also set to see improved connectivity as nearly £750million of new investment begins to be rolled out to progress the delivery of the South Wales Metro.
Further north, the North Wales Growth Deal is taking shape, with its first investment projects due to get off the ground in 2021. Meanwhile its visitor economy continues to boom and is the subject of a new £60million five-year government plan to turbo charge existing growth.
Clearly, the public purse is backing Welsh businesses and putting the conditions in place for them to thrive. With this in mind, it’s vital now more than ever that firms are able to seize the opportunities presented to them and plot a course for the year and, indeed, decade ahead.
Key to putting growth plans into effect, of course, is having access to finance and understanding how different types of finance can aid expansion.
For example, businesses capitalising from our growing visitor numbers might currently be planning how best to manage spikes in demand during upcoming half-terms and the vital summer trading period. Invoice finance or asset-based lending would help here.
Invoice finance works by unlocking cash currently tied up in outstanding customer invoices, allowing the release of up to 90 per cent of the value, typically within 24 hours. Meanwhile, asset-based lending allows businesses that have capital tied up in stock or property to use these assets to access cash.
B2B firms, on the other hand, might be more focussed on issues such as managing relationships with new international trade partners brought about by Brexit. In this eventuality, something as simple as being prepared with a letter of credit can help open up new revenue streams.
Looking to the future
Every situation is different, but it’s clear that firms need to invest in order to drive growth and realise their ambitions. We pledged up to £1.1billion of support working alongside Welsh firms last year. We aim to do the same in 2020 as we offer the tools and tailored guidance to help deliver on their ambitions.
As we look ahead to more certain times, plans are already in place to energise Wales’ core industries and deliver the civil infrastructure needed to boost economic growth. With the right advice and investment behind them, now is the time for the nation’s SMEs to seize their opportunity and build for a positive decade ahead.