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Robert Bain: Entrepreneurship historically endemic in the north-east

Robert Bain, of Hall Morrice.
Robert Bain, of Hall Morrice.

A new year is usually a time for optimism but, following the tribulations the economy has endured since March 2020, many firms are just looking for 2022 to be a year of stability.

For some business owners, this year will see them continuing a fight to remain solvent.

Others will be more focused on recovery and exploring the landscape for trading following Brexit.

Recovery begins when we reach the pandemic finish line – and we’re not there yet.

Now the safety net of state support in the form of job retention, bounce back and Coronavirus Business Interruption Loan Scheme grants, as well as VAT deferral and rates relief for some sectors has been largely removed, there will no doubt be some businesses facing make or break time.

These firms may also be facing sectoral staffing shortages, disrupted supply chains and rising fuel bills; along with either a move to hybrid working or the safe reintegration into the office of teams who have worked from home for almost two years.

In addition, we may all have to face yet more waves of new Covid variants and the inevitable business disruption this will bring.

Crunch time for some firms

The first half of the year will undoubtedly be crunch time for some businesses that were reliant on government support to offset the drop in revenue they experienced due to trading restrictions.

Recovery begins when we reach the pandemic finish line – and we’re not there yet.

One-fifth of UK-based small and medium-sized enterprises surveyed in summer 2021 predicted recovery would take 18 months to two years, pushing it into late 2022.

There are entrepreneurs out there now with pent-up creative energy ready to release.”

A further 20% predicted a three-year or longer timeframe for their recovery.

We live in a region which has shown resilience to economic changes through the centuries; a region of endemic entrepreneurship.

There are entrepreneurs out there now with pent-up creative energy ready to release.

And, while many investors are currently being conservative with their ventures, the big risk-takers are making it known they are on the acquisition trail.

There are myriad opportunities for the intrepid, and no more so than in energy transition and the shift from dirty to clean industry.”

The vast majority of businesses have been negatively impacted by the pandemic.

But there are some whose ability to work – and to do so with certainty and profitably – has not been affected, and they may even have prospered.

Professional services such as IT firms which suddenly experienced a wave of new business in the sudden move to homeworking are an example of this.

Meanwhile, leisure businesses that pivoted quickly towards offerings for those of us “captive” in our homes, delivering everything from food to virtual fitness classes, were swift to grab opportunities in the “new normal”.

Acquisition opportunities

Firms that have found the “Covid years” tough and, conversely, those that have fared well throughout are seeking opportunities to acquire other businesses as part of a revamped corporate strategy for growth.

Covid has shown such acquirers that physical location is no longer as significant as it once was, opening up the deal-making field further.

The pandemic has also made us all address our lifestyles and priorities, giving many business owners a new mindset to either create further opportunities or, in some cases, to exit.

Aberdeen and the north-east are better positioned than most.”

Serial deal-makers will be well aware of the importance of due diligence as part of any merger or acquisition.

There is now a new layer to due diligence – how has the pandemic affected an acquisition target, how much has it been propped up by government support schemes and what liability remains?

Sadly, part of the mergers and acquisitions landscape in the coming months will be an increase in distressed sales.

There may be no shortage of opportunities for the bold and brave.

There are myriad opportunities for the intrepid, and no more so than in energy transition and the shift from dirty to clean industry.

With skills and drive born out of decades of the oil and gas industry, Aberdeen and the north-east are better positioned than most to capitalise on this evolution.

Side hustles

The coming year may also see a slew of small business start-ups.

Simply Business has reported that nearly one-third of people surveyed were considering setting up a “side hustle” in 2022.

This is one of the success stories of the pandemic, with those starting a new business while they continue in other employment citing Covid as a prompt for them to reconsider long-term plans.

They also said they now had more energy and motivation to make up for lost income.

Many of these new businesses will certainly become full-time enterprises.

We started 2021 with optimism that the vaccines would give us all a route out of the pandemic.

That light at the end of the tunnel has been dimmed by a few obstacles along the way.

But we have entered 2022 with a hope that this is a year of stability and certainty, and look forward to a positive deal-making environment which shapes the region’s future success.

Robert Bain is managing partner of Aberdeen and Fraserburgh-based accountancy firm Hall Morrice.

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