Thursday, October 7th, 2004

September's survey asks for your views on developing new product ideas, current account interest, second mortgages, easier access to universities and working to capacity plus the quarterly trends questions. The trends charts from the responses to the regular quarterly questions, analysed by size of firm and sector, can be accessed from the UKBB home page.

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  • About the respondents

    164 respondents were drawn with the following population characteristics:

    Sector
    Production & Manufacturing Distribution Services Total
    25.6% 7.9% 66.5% 100.0%


    Turnover ()
    < 1 M 1M-3M >3M Total
    69.5% 20.1% 10.4% 100.0%


    Number of Full-time Employees
    1-10 11-20 21-50 51-100 100+ Grand Total
    55.5% 31.7% 5.5% 3.7% 3.7% 100.0%


  • Survey Findings

  • A number of evaluation toolkits have been developed, particularly over the last five years, to help assess whether potential products would be likely to be commercially successful. Many of those providing services to innovators or considering investment in innovation, such as banks, venture capitalists, those awarding development grants, companies considering taking a license, use this approach to help make their decisions. The September UK Business Barometer (UKBB) Survey asked whether panellists use such a technique in assessment of new product ideas that they are developing. In the parallel UK Business Advisers Barometer (UKBAB), Advisers were asked if formal evaluation tools were used by their clients to assess the potential of their new developments.

    The Survey found that 15% of UKBB respondents already use an evaluation tool, while 46% do not. The question was not applicable to 39%. UKBAB respondents said that 9% of their clients used one, but 73% do not. Only 18% of UKBAB said the question was not applicable.

    When UKBB respondents are designing new products or production processes, 19% are highly or moderately highly likely to use external advice, while 25% are unlikely to or will never do so. Again, this question was not applicable to 32% of respondents.





  • Continuing the theme of using external advice, the Survey asked how much easier access to universities would benefit businesses. Advisers were asked how much their clients would benefit from easier access to universities. One third of UKBB respondents believe that easier access would benefit their businesses highly or relatively highly, while 46% of UKBAB respondents also believe that it would benefit their clients highly or relatively highly. A further 24% of UKBB and 25% of UKBAB respondents think there would be some moderate benefit.





  • The Competition Commission's Report on the Supply of Banking Services to SMEs was published in March 2002. One of the main findings in the report was that the four largest clearing banks provided 86% of banking services in the UK and that banks were not competing on price because, inter alia, they were refusing to pay interest on current accounts. In the September UKBB Survey, we asked if respondents' banks are paying interest on positive current account balances, and found that 54% now have this facility.

    For smaller businesses, debt tends to be a preferable way to raise finance rather than issuing equity (see August UKBB Survey, Question 3). Often the only practical way to achieve this is by using the family home, either through a second mortgage or by securing a loan by using the home as collateral. The September Survey found that 12% of respondents have taken a second mortgage on their house to fund their businesses in the last three years. The UKBAB Survey asked how common Advisers believe that this is, and 47% responded that it is common or very common. A far higher percentage of UKBB respondents, 29%, have used their house as collateral on a loan. This practice was also thought to be even more common than taking out second mortgages, by respondents to the UKBAB, with 71% saying that it is common or very common - a more detailed breakdown is given on the UKBAB website, www.UKBAB.ac.



    Capacity utilisation is currently running at over 90% for 35% of UKBB respondents, compared with 31% in February 2003 when we last asked this question. A corresponding reduction was shown in the 70% - 89% utilisation bracket, with the lower levels of utilisation remaining virtually static.



  • Constraints on business due to both skill shortages and lack of finance have eased back on average during the last quarter.

    Businesses with turnovers of 1M - 3M experienced increases in constraints due to skill shortages, as did to a lesser extent, businesses with turnover of over 3M. Constraints due to lack of finance eased most among firms with turnover of 1M - 3M.



    Constraints due to low market demand increased most in the middle turnover, 1M - 3M range, although constraints in the higher, over 3M range actually lessened. On average there was a very small increase.

  • Average growth in the last quarter continued to increase at a slightly lower pace than in the preceding three quarters, but within this, companies with turnover of between above 3M expanded faster while those with 1M -3M turnover grew the least quickly.

    Overall, respondents expect very little change in the rate of increase in the next quarter.





    Listed below are extracts from feedback received in Survey BB76 September 2004.

    Comments are listed under sector headings.

    Views expressed are those of individual panellists and may not represent those of the University.

    Production and Manufacturing

    University contact is KEY to my business and indeed my relationships with SOUTHAMPTON and PORTSMOUTH Universities is good. The DOORS are already open!

    Capacity constraints may apply to only part of an operation with the rest working below capacity. An average utilisation can be misleading.

    Business Services

    Your question about Universities is too general to provide a meaningful response from most small businesses. The way you have asked it is indicative of the Neanderthal thinking about 'third leg' services in the University sector. So is the name of the HEFCE funding stream associated with it. Massive wasted potential here.

    Business is tough, we've grown in staff from 8 to 14 in the last 12 months - that kind of step is not easy and if anything our own inadequate management skills may be our biggest threat in the coming months.

    Re university expertise. It is my experience, trying to work with 2 universities in the East midlands on a technical product development, that despite having departments that purport to share the "Excellent Expertise" with commercial companies, their practical help and assistance amounted to zero. The main fault? Well, from my perspective, they have no understanding of, nor wish to engage with, enterprising commercial companies. Let me give you one quote from a member of staff, "Well, the academic staff are REALLY busy, you know, and the DO have their OWN research projects that are very time consuming." Well, thanks for sharing your expertise, University of ********.

    Universities should be doing market research and innovation development and selling it to fund their own growth

    I have recently been in the USA and it seems evident that business confidence in manufacturing industry is on the upturn after a torrid period following 9/11. This may offer improved opportunities for the export of supplies to US manufacturing companies. We consult with business and perceive that, in many cases, SMEs do little to plan and cost the introduction of a new product. We value our links with academe but often find that researchers are not so interested in the real world !

    Other

    Life gets faster every day, more paperwork, less quality time. Was 52 yesterday, and feel ancient, and feel like moving on from the Care Business, where I've been all my life. Morale sinking!