Buyer demand outstrips number of UK homes for sale during November

House prices in the UK are predicted to continue to rise in 2014, according to the Royal Institution of Chartered Surveyors (RICS), which released its UK Residential Market Survey on Monday.

The independent, representative professional body said that the amount of homes coming onto the UK market in November this year did not meet increasing buyer demand. A further 59% of chartered surveyors predicted that prices will continue an upward trend, rather than drop back over the coming three months. This is said to be the highest reading since September 1999, which indicates that the higher demand and lower supply is having an impact on the housing market.

According to the RICS, house prices picked up sharply in November 2013, with a net balance of 58% more respondents reporting price growth, up from 57% in October. Each region in the UK reportedly saw property prices rise for the second successive month. Some areas of the UK that are struggling, however the results of the RICS survey show that regional markets are now responding to government incentives and positive economic news.

Despite the lack of housing stock for sale, the number of property transactions is increasing and during the three months to November, the average number of homes sold per chartered surveyor amounted to 20.6, compared to the same period in 2012 when the survey respondents were selling just 15.9. The RICS added that a net balance of 76% of surveyors expect sales levels to increase in 2014.

Simon Rubinsohn, RICS Chief Economist, stated: “It’s no secret that the housing market is on the way up and prices are surging ahead in many parts of the country. The Bank of England’s recent decision to withdraw the Funding for Lending scheme – which allows banks to borrow more cheaply and pass the benefits on to mortgage applicants – could well have some impact on the number of people able to purchase a home. Although the improvement in wholesale and retail funding markets may mean the impact on mortgages is relatively limited.

“One thing we are very concerned about, however, is the lack of both new and existing homes coming on to the market. As the Chancellor pointed out last week, housebuilding is on the up, but it is rising nowhere near quickly enough to make up the shortfall that has built up in recent years. If there is not meaningful increase in new homes, the likelihood is that prices, and for that matter rents, will continue to push upwards making the cost of shelter ever more unaffordable.”

The RICS regulates property professionals and surveyors in the UK and other sovereign nations. Its members are Chartered Surveyors and are entitled to use MRICS after their names. The organisation also provides education and training standards, protects consumers with strict codes of practice and advises governments and business, as well as providing expertise in matters involving fixed assets, including but not limited to land and real property.

JCB to expand operations in Staffordshire and create 2,500 jobs by 2018

Construction and agricultural equipment manufacturer JCB announced on Friday that its planned investment of GBP150m, for expansion of operations in Staffordshire over the next five years, has been welcomed by the Chancellor of the Exchequer, George Osborne.

The maker of the JCB iconic yellow diggers added that it expects to create 2,500 jobs by 2018, which will add a further 7,500 jobs in the UK supply chain. According to the company, a recent Oxford Economics study found that for every 1 JCB job, there are 3 others in the UK supply chain. The global company employs approximately 6,000 people in the UK and is said to contribute GBP1.4 billion to the British economy.

Major road improvements to the A50 near Uttoxeter, Staffordshire, announced by the government this week, are expected to reduce congestion on this vital transport link, making it easier for JCB to transport inbound parts and materials and improving the outbound movement of finished products to the JCB global dealers network. According to JCB’s chairman Lord Bamford; companies such as JCB can plan ahead with confidence, knowing that the road network will not constrain business growth and future investment.

JCB’s planned investment is reportedly the largest in its history and includes a brand-new purpose-built 350,000 sq. ft. factory for JCB Cab Systems in Beamhurst, near Uttoxeter, replacing a smaller facility in Rugeley. The new factory will also enable JCB to in-source production of cabs, currently made by third party suppliers in Europe. JCB will also expand its production operations in Rocester with an additional 126,000 sq. ft. of manufacturing space to increase hydraulic cylinder production.

Also, JCB Earthmovers and JCB Compact Products operations will be expanded with a brand-new, purpose-built 220,000 sq. ft. factory on the Harewood Industrial Estate in Cheadle, Staffordshire, while existing JCB Finance and JCB Insurance offices in Rocester will be relocated nearby to new purpose-designed, high-quality office accommodation at Harper Meadow in Denstone. All the projects are subject to planning consent from the relevant local authorities in Staffordshire.

In addition, the company said it will provide a new in-house training facility for JCB staff, which will be run in conjunction with key universities to support apprenticeship and graduate training programmes.

JCB added that its projected growth in machine output from Staffordshire factories will be supported by an increase in production of components from other UK factories, including engines from JCB Power Systems in Foston, Derbyshire, along with axles and gearboxes from JCB Transmissions in Wrexham, North Wales.

UK’s 0.3% GDP growth in Q1 welcomed by business groups

Business groups have given a cautious welcome to the announcement this morning that the UK has avoided a triple-dip recession, with the economy growing by an estimated 0.3% in the first quarter of 2013.

The increase was higher than expected and John Cridland, director general of the CBI, said it confirms the organisation’s view that 2013 will see real growth. After the pick-up in the services sector, the economy now needs a recovery in manufacturing output in the coming months, he added.

Cridland concluded by saying that the government must build on the emerging signs of confidence by getting behind Britain’s entrepreneurs and exporters.

David Kern, chief economist at the British Chambers of Commerce, pointed out that, although services output is now above its pre-recession levels from 2008, both construction and manufacturing are still lower.

“The main priority remains combining a realistic deficit cutting programme with policies that make it possible for the economy to achieve sustainable growth,” he said.

Meanwhile, Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, highlighted the fact that the economic challenges faced by the UK are shared by much of the rest of the world, particularly Europe, and are “hampering manufacturing’s efforts to export our way to growth.”

Chancellor George Osborne responded to the GDP announcement by saying that the figures are an “encouraging sign” although Ed Balls, the shadow chancellor, argued that the economy is only “back to where it was six months ago.”

In its preliminary estimate for the quarter the Office for National Statistics (ONS) noted that GDP was 0.4% higher in the first three months of 2013 than in the third quarter of 2011, which means that it has been broadly flat over the last 18 months.

The most significant contribution to GDP growth in the first quarter of 2013 came from services, and there was a smaller contribution from production. These upward contributions were partly offset by a decline in construction output.

Overall, the bad weather in this year’s first quarter is thought to have had a limited impact on GDP growth. Evidence suggests that the snow and low temperatures reduced retail output in January and March but boosted demand for electricity and gas in February and March, which resulted in higher output in the energy supply industries.

Five years ago, before the global financial crisis led to a sharp fall in output, the UK economy peaked in the first quarter of 2008. The lowest level was registered in the second quarter of 2009. GDP fell 6.3% from peak to trough, the ONS said. In the first quarter of 2013 the UK’s GDP was estimated to be 2.6% below the 2008 peak.

How to innovate to keep your business growing

Once you’ve got your small business established in the market, your thoughts are likely to turn to future expansion. One of the keys to successful growth is innovation, as evidenced by the dominance of the likes of Facebook, Amazon and Apple in the online/technology sectors.

Here are some tips on how to go about innovating within your own business.

Start small

There are many ways in which to innovate, but none of them are guaranteed to work. That’s why it’s best to begin by innovating in little steps, especially if you’re a small firm with tight margins to keep to.

One of the most common ways to do this is by tinkering with existing products and/or services. You can experiment with new features by launching revised versions of your current offerings and gauging the response among your clientele to see how successful they are, for example.

This approach can be much cheaper and less risky than simply launching a brand new product or service, which will require significantly more investment and effort to turn into a profitable venture.

Set specific goals

Simply aiming to think of a good idea at some point in the future is unlikely to yield much in the way of results. That’s why it can be useful to set a few goals when looking for ways to innovate within your small business.

For example, you could lay down a deadline – “I need to devise a mock-up of a new product by the end of next month” – or an end point to your thinking, e.g. a particular cost saving in a specific process, a target market for a new service, etc.

Collaborate

Brainstorming with other people is often a great way to come up with new ideas. Whether you set up a one-off session or make this a regular occurrence, meeting with your colleagues to discuss avenues for growth could generate concepts you might never have thought of on your own as the business owner.

Don’t let things like remote working and busy schedules put you off the idea; technology such as teleconferencing services for small businesses can help bring people from different parts of the company together to ensure a variety of viewpoints and ideas are put forward.

Take a risk

It’s important to remember that innovation requires a certain degree of risk-taking. The online giants mentioned at the start of this article didn’t get anywhere without breaking boundaries and really surprising people. While this doesn’t necessarily mean you need to take a huge gamble on a whole new market, it should provide food for thought when considering whether a particular risk is worth taking.

Of course, it’s easier to take a risk if you know what it will cost if you fail, so doing your research beforehand will certainly help. But this still isn’t guaranteed to lead to success, so it’ll still be on you as the leader of the business to make the right decision.

Plan in detail

Coming up with a great new idea to try is only part of the innovation process. Turning your concept into reality requires a lot more hard work and patience. One thing that can help is drawing up a detailed plan for the process, showing who is responsible for what and setting deadlines for each stage.

This will make it more likely that you’ll stay on track with your proposal, rather than veer off course whenever another seemingly fantastic idea comes into being.

The five barriers to business growth

According to UK Government statistics less than 20% of all companies achieve sustainable growth. Why is the number so low? What stops the majority of companies achieving growth?

Roderic Michelson is a company growth expert from Aralex Consulting. In his experience, working with both large corporates and smaller SME’s, there are five key barriers to growth. By ignoring these key areas you can be sure you will be in the 80% that fail to grow;

1. Unclear Value Proposition.
Is your product solving a real customer problem – technical or operational? Or is it just a nice to have? To achieve growth it must be clear what problem you are solving. Having determined exactly where you are bringing value to your customers, then it may be necessary to fine tune the features or the price. However without a clear understanding of why your customers would want your product or service, tweaking is irrelevant.

“These sound very basic, but in my experience this area is the main reason a company fails to grow, and by tackling it you can make a huge difference in a very short time-frame.” says Roderic.

2. Owner and management team capabilities.
People start companies for different reasons. However, all entrepreneurs share common psychological traits: a desire for independence and getting things done, persistence, fortitude and optimism. These are great assets but there’s another side of the coin: inability to delegate, competitiveness and unwillingness to listen, also come with the package.

Beyond a certain size the family atmosphere of a start-up company needs to give way to team leaders, stronger delegation and clear processes.

When a company hits the milestone sizes of 6, 20 and 50-70 people, it is up to the entrepreneur to decide whether they want to grow further or stay in the “lifestyle business” size. A positive decision to grow requires change and is usually challenging for both the original team and the lead entrepreneurs. Quite often the initial teams are unfit to take the company further.

Failure to make a clear decision can leave a company floundering with a lack of vision and no clear direction. And failure to recognise when help is needed can consign a healthy company to its death bed.

3. Marketing.
We live in an over-marketed world. So marketing must not be left to chance. Start with the basics. Who are your customers and why are they buying from you? What is your Unique Selling Proposition? Which media are you using to reach out to them? Most companies are using 1-2 channels only. But there is gold to be mined in using multiple-media approaches and fine-tuning your message that will be of interest to your ideal customers.

4. Insufficient funding.
Under-funding is not just a significant contributor to business failure, it’s also a barrier to growth. Even if your business does well, there’s a need to invest in growth: more marketing, more stock, more materials, more salespeople … the list goes on.

And with growth comes the cash-flow-crunch problem as you have to pay your suppliers before your customer pays you.

So how do you work the Cash Conversion Cycle? First you need to calculate the actual time between paying your suppliers for inventory and stock and the time you get paid from your clients. Even an average number of days will be eye-opening. This will show you the number of days your working capital is tied up and unavailable to invest further.

If you do only one thing then let it be a vigorous focus on shortening your cash cycle. This will release cash so you can invest in growth.

5. Poor Sales Management.
An essential issue that entrepreneurs and managers need to track is the sales pipeline. Is there enough new business? Will it come through in a month, three or six months? This should be done in a very systematic way.

It is easier to do in a smaller company where things are more open. As the company grows decision-makers become more removed from sales and visibility deteriorates sharply.
Working on pipeline visibility and planning can not be emphasised strongly enough. It is a vital activity not only for growth but survival as well. The longer the sales cycle, the more critical it becomes. Ignore this aspect at your peril. Without a clear picture of your pipeline your growth will be sporadic at best and in the worst case – non existent.

The good news, just by tackling one of these five barriers you can make a significant difference in the short term, but to achieve long-term, sustainable growth, all five areas need to be tackled and diligently maintained.

Local economies increase UK business growth

Stephen Agar at Royal Mail said: “It is encouraging to see how certain areas are experiencing focused and localised growth. We expect this trend to become even more evident over the coming months as businesses new to an area start to use the services of local suppliers.”

LOCAL ENTERPRISE HOTSPOTS DRIVING BUSINESS GROWTH
Royal Mail’s latest Business Barometer highlights the emergence of existing enterprise hotspots that are delivering business growth on a local level.

This study reveals that Lincoln tops the league for business growth with a 2.08 per cent increase in the number of companies trading in the city.

Over the last six months, 109 new businesses have started up in Lincoln. 57 existing companies have chosen to move to the city. This takes the total number of active businesses in Lincoln to 8,000.

Swansea follows Lincoln in the business growth league with a 1.84 per cent rise in active businesses. Sunderland and Durham are a close third with 1.83 per cent growth. Ashford is fifth in the table with a rise in active businesses of 1.82 per cent.

NORTH EAST CONTINUES TO ATTRACT BUSINESSES
Business growth is most prevalent in the North East. Of the top ten cities attracting business, four are based in the region: Sunderland (3rd), Durham (4th), Middlesbrough (7th), and Newcastle upon Tyne (8th). Collectively they saw 500 new businesses launch and 113 move into the cities. This supports wider economic analysis[i] in recent months suggesting that as public sector employment shifts into the private sector in this region, it will become a real hotspot for start-ups.

ROMFORD LEADS THE WAY FOR START-UPS
Romford is the fastest growing town for start-up businesses. In the past six months, 103 new sites were established. This represents 1.96 per cent of all businesses in the town.

Second in the start-up league is Durham, where the number of new companies represents 1.87 per cent of all the businesses in the area. It is followed by Swansea and Middlesbrough where 1.81 per cent of all businesses were established in the past six months. Sunderland is fifth in the start-up table where the figure is 1.7 per cent.

The Royal Mail Business Barometer is published every six months and looks at the number of businesses that have moved location, have recently started up or have opened a new site, as an indicator of economic activity across the UK. It is collated using the Royal Mail Business Movers File and Royal Mail Business Changes File.

INVESTMENT DRIVES LINCOLN GROWTH
Investment has fuelled the growth in Lincoln’s business population, making it the UK’s number one UK hotspot for firms moving into and starting up in an area.

Simon Beardsley, chief executive of Lincolnshire Chamber of Commerce, said: “Business growth in Lincoln over the past six months has been driven by significant investment.

“The city has secured a £25 million investment in the city’s Waterside Shopping Centre, Lincolnshire County Council has won £450,000 of European money to build new offices, and transport links have improved with direct train links into London and the building of a £20m east-west link road through the city.”

He added: “Lincoln is a beautiful city to live and work in and this investment makes it all the more attractive.”

One such start-up that chose to use Lincoln as its business base is Cecy Ctyles, a tailor-made ladieswear designer. Originally from Tanzania, Cecilia Nyamizi Mwenda (21) started designing clothes while at the University of Lincoln and registered her business in 2008 at her parents’ home address in Leicester. On graduating Enterprise@Lincoln gave her a bursary, set her up with an office in the Sparkhouse Studios, business training, and importantly helped her to engage with the local business network.

Cecilia said: “I love living and working in Lincoln. It’s a great city and I have met some really interesting people. In my building alone, there are graphic designers, a theatre production company and language services.

“Through Enterprise@Lincoln, I have been able to engage with local fabric suppliers, photographers and models and wouldn’t want to work anywhere else.”

New Models Boost BMW’s Demand, Earnings, and Growth

BMW 1 Series: A Sales LeaderThe world’s most popular luxury car brand has seen its earnings skyrocket on the back of global demand increases and an exciting new lineup. BMW‘s profits for the second quarter of 2010 are some of the highest in years – a full six-times increase from the same period last year. The auto manufacturer has pointed to increased demand and greater consumer spending for the success.

BMW are one of the world’s most acclaimed luxury car brands, enjoying buyer loyalty throughout both Europe and many Asian countries. With developing markets like China demonstrating a new interest in luxury automobiles, many of BMW’s less popular models have found a new market in overseas destinations. The revised 5-Series vehicles saw the most sales growth in 2010.

Close to 400,000 vehicles were sold worldwide throughout the quarter – an impressive figure for a luxury car manufacturer in an unexciting world economy. Automotive journalists have pointed to BMW’s new 1-Series and revised 5-Series design for the success, claiming that the less expensive compact car has opened BMW up to new buyers, while the new sedan has boosted mid-level sales.

The German automotive company also owns British marquee Mini, luxury brand Rolls Royce, and a series of other small vehicle manufacturers. The bulk of BMW’s earnings came from domestic and EU sales, although areas such as Taiwan showed extensive sales growth. The group has released a statement claiming that they are already planning for greater growth and profit in 2010.

A favourite of executives, BMW was one of the world’s most profitable automobile firms before the financial crisis of 2007. With the economy slowly improving, the German luxury automobile maker is aiming to push its sales back to pre-crisis levels while introducing a redesigned model lineup.