Many Lancashire businesses are likely to face economic challenges throughout the early part of 2025.
Rising costs, including employer National Insurance (NI) contributions, are set to take effect from April and there is also growing global economic uncertainty related to the new US political administration, which is affecting supply chains.
In the North and Western Lancashire Chamber of Commerce’s Quarterly Economic Survey for Q4 2024, half of the county’s manufacturing firms reported a decrease in sales along with 28 per cent of respondents from the service sector. Employment intentions for the following three months were also affected across both sectors.
The nature of scaling a business often means investing in its future, which can increase a company’s cost base and compound this economic volatility. Two Zero has gathered the thoughts of three experts from Lancashire’s scaleup community for the first of two articles analysing key challenges and offering advice to help Lancashire scaleups remain resilient.
Rory Southworth, investment ecosystem manager – Fhunded, Lancashire County Council
What will be the key challenges for Lancashire scaleups over the coming months?
The current economic climate poses a significant hurdle for all businesses. With a sluggish economy, sales have become increasingly difficult to secure for many. This period of uncertainty requires businesses to be more resilient, creative and innovative in their approach to sustaining growth.
The adoption of new technology is one way to try and boost performance but can present its own set of challenges. For example, embracing advanced technologies, such as Generative AI, can help streamline processes and reduce costs, which is vital during economic downturns. However, integrating such technologies requires careful planning and management to truly maximise the benefits.
What is your advice to help scaleup businesses stay resilient through the current economic challenges?
Engaging with the wealth of business-to-business networks we have in Lancashire, and becoming part of the county’s growing scaleup community, would be my number one piece of advice. There are lots of events and fully-funded support programmes – many of which are backed by Lancashire County Council – specifically aimed at growing businesses, which can lead to new collaborative opportunities.
One thing we often hear from the successful founders who speak at fhunded events is that they went through a difficult ‘you don’t know what you don’t know’ phase before someone helped steer them in the right direction. In almost every case, the key bit of advice was a result of meeting someone at a networking session, hearing someone speak at an event, or taking part in a support programme.
Such peer-to-peer networks can also act as a true sounding board for your business, bring new thinking to the table, and help strengthen your resolve – something which is vital when times are tough.
Jane Dalton, director, Groundswell Innovation
What will be the key challenges for Lancashire scaleups over the coming months?
Very few industry sectors are on steady ground. The new normal is a backdrop of constant challenges – trade wars, shifting regulation and price pressure, all of this is on top of longer-term issues like skills shortages.
I would say the bigger challenge for scaleup owners though, is the one you have taken on as a business.
You’ve climbed the first mountain and survived startup territory. Now you’re at a plateau, looking at the next peak to climb. At this stage of business growth, you’re trying to set out solid foundations in all aspects of the business at once. It takes a lot of energy to do that, while keeping headcount to a minimum.
What is your advice to help scaleup businesses stay resilient through the current economic challenges?
- Be really clear on your core strengths as a business and how those strengths create value for different types of buyers.
- Collaborate and connect. It can feel alien to look outside when you’re trying to tackle challenges within the business, but sharing ideas with people in the same boat often unlocks advice, practical help and new ways forward.
Amin Kamaluddin, strategy and growth consultant, SK Growth
What will be the key challenges for Lancashire scaleups over the coming months?
Rising operational costs such as raw materials, components, energy costs and the impact of looming wage rate and taxation increases which take effect from the new fiscal year. For scaling manufacturing businesses, the rise in costs can present a financial challenge especially where a market pricing strategy is locked in and/or contractual commitments in place.
I recently read a survey by small business lender Iwoca which indicated that 42 per cent of business owners cite rising operational costs as a main concern, while 40 per cent are apprehensive about higher taxes.
These financial pressures can significantly impact profitability and growth trajectories. There is also the difficulty of accessing finance and investment during these challenging times which can inhibit growth and allow scaleups to thrive.
What is your advice to help scaleup businesses stay resilient through the current economic challenges?
It can be easy for scaleup businesses to adopt an outward view and cite the challenges faced. However, I advise scaleups to take a different approach and adopt an internal view with a lens of identifying improvements. This could include optimising workflows to streamline processes and reducing costs, improving efficiencies and increasing productivity particularly by getting things right first time.
Opportunities to improve and become resilient exist but they may require investing in upskilling your workforce or technology. It is also vital that scaleups pay attention to and monitor their financial health ensuring cashflow and expenses are under grip and control.