When I founded Craig Corporate in 1985 the challenges facing privately owned and managed businesses were great. Even without the pressures brought to bear by the global recession, the challenges facing businesses today are even greater. Of all the changes over the last 25 years, in my view the five below have had the biggest impact on business. However, as with many challenges, the opportunities afforded to those who master them can generate tremendous rewards.

Competition is global

The seemingly unstoppable rise of the internet, and ever increasing standards of products and services delivered from companies based in developing economies, means there has never been greater competition for locally grown private companies.

For our clients who have asked us to help them understand their place in this new global marketplace, they have found various opportunities to pursue:

• By focusing on what they can do better locally than their global competitors (i.e. providing a personal, high quality, and quick turnaround service) they have been able to move up the value chain and improve profitability. At the same time they have cemented relationships and made it more difficult for their overseas rivals to displace them as suppliers
• They have been able to sell products into the markets being created in developing economies, benefiting from the potential gained from greater internet access worldwide as well as the demand created by rising standards
• For undifferentiated products where they have found it impossible to compete on price while producing locally, they have developed offshore manufacturing capability and joint venture arrangements to maintain market share and financial performance

Markets change faster

The growth in technology, the media and globalisation has meant that once thriving markets can disappear seemingly overnight and new ones can spring up just as fast. For an example witness the rapid fall of the CD at the hands of iTunes in recent years (not to mention the sad passing of vinyl at the hands of the cassette).

However, this also demonstrates that although markets can change, the fundamentals behind the products which create them persist for far longer. No business can rely on selling whatever it is they happen to currently produce, through whichever channels they happen to currently utilise. We challenge our clients to look outwards to what their current customers want, how they want it and where new customers can be found. By doing so and embracing the pace of change in the marketplace, I believe company’s have more opportunity to steal a march on their competitors then ever before.

Business regulations are more complex

There has been an explosion in business related regulation over the past 25 years, covering every aspect of business life: from company formation to the conduct of Directors’ when a company is facing insolvency.

However, this complexity has bred significant opportunities for many of our clients, and not just for those in the legal profession:

• A mastery of the relevant ISOs has given many of our clients a significant edge in the tender process
• Firms who have invested in understanding how the various regulations apply to their industry can sell their expertise to competitors
• The organizations we work with who we’ve helped develop the right legal structure can minimise their tax liabilities and efficiently exploit new markets and opportunities

Employees have greater expectations

As businesses become more complex and we move towards the so-called “knowledge economy”, attracting, motivating and retaining key staff is vital. Companies are being ever more creative in their efforts to achieve these objectives in as efficient a manner as possible, and those who are ahead of the game are the ones who will retain the best people.

By way of example, in recent years we have helped several client’s to incentivise their employees though share ownership. This can be a very successful way of both motivating staff and ensuring their long-term commitment to the business, and can be achieved through a through a variety of employee share schemes. They also have the added benefits of minimising the financial input from the employee and the tax liabilities on both the company and employee.

Finance providers are more sophisticated

Lenders and investors of all kinds have moved away from their traditional informal investment appraisal approach, towards sophisticated systems and procedures to vet and then monitor the companies in which they hold a stake. This has inevitably made it harder to obtain funding without committing significant resource to the provision of quality information.

Our fundamental belief that management information is key to business success helps our clients to thrive in the current environment:

• By investing in sound business planning, financial control and performance monitoring and being able to demonstrate these to funding providers they have access to both greater amounts and cheaper sources of finance than competitors
• By moving beyond the provision of information “for the bank” and using quality management information to inform their internal decision making processes they can greatly improve the financial performance of their business

It is my belief that our original concept of “hands on” assistance in Business Management, Corporate Finance and Tax, provided by dedicated professionals, remains just as relevant now as it was 25 years ago.