How to spot the signs of an economic upturn in your business

Emily Aitken, executive director of new media business development agency, Wired Sussex, outlines the ten signs to look out for

As we enter 2004, predictions of an economic upturn abound. The 3i European Barometer Index, for example, measures private companies' confidence in business, political and economic climates. The Index posted a distinct rise in Q4 of 2003 – the first time the result has been positive in three years.

This is backed up by UK economic consultancy firm, Experian Business Strategies, which believes that: "The recovery should gather momentum in 2004, with expansion at 3 per cent, a healthy rate after three years of below-trend performance." *

However, as any business owner knows, it can take time for global trends to filter down to your individual company. So how can you be confident your firm will witness a similar revival?

New media business development agency Wired Sussex believes there are ten signs that clearly demonstrate a return to economic prosperity. So read on, and if you can relate to more than five of the points below, you can enter the New Year with the confidence that things are on the up!

Read the signs

In isolation, the following signs would not necessarily herald better times, but in combination they are a powerful signal of economic growth.

1. Venture capitalists start investing again – In 2002, worldwide investment by UK private equity firms fell by 11 per cent as confidence in the global economy dropped like a stone. ** As the economy picks up however, VC confidence will grow and firms will begin to receive the funding they deserve.
2. IT spend rising – During a downturn, IT spend is one of the first things to be reduced as firms don't want to risk investing in costly upgrades. However, leading IT publication IT Week believes that: "2004 will see a return to traditional patterns of IT spending, even if the shackles of return-on-investment justification…remain." ***
3. More companies undergoing initial public offerings (IPOs) – A stable economy is a vital factor in successfully completing an IPO, and over the past couple of years news of such deals have been sparse. As the stock market has stabilised over the past few months, however, the financial pages have once again begun to carry stories of firms undergoing this process.
4. Trade sales increasing – Hugh Campbell, director at GP Capital, comments that: "During a downturn, the number of mergers and acquisitions conducted drops as firms concentrate on their core competencies. As the economy improves, corporate spending becomes less prescriptive and companies look to increase their rate of growth through strategic deals."
5. A surge in new business leads – No one would deny that the past couple of years have been tough, with leads drying up to almost nil. However, this has started to pick up during the last few months of 2003, as companies return to employing the services of third party firms.
6. Old clients returning – There can't be many companies that can say they haven't lost, or put on hold, accounts over the past couple of years, due to financial problems at the client's end. When accounts such as these are reinstated, it demonstrates a return to fiscal well-being for both parties.
7. The recruitment market picking up – The slew of redundancies over the past couple of years has made people nervous of leaving their current position, for fear of not finding another role. This has begun to change, however, and the recruitment market is seeing more movement than in recent months, as well as an increased quality of applicants.
8. On-the-ground optimism – When people at trade shows and meetings across the country start to speak about the future in more positive terms, it's a sure fire sign things are looking up.
9. New magazines launching in your niche area – This demonstrates increased advertising revenue and activity, which should be reflected in the fortunes of individual businesses.
10. People smiling on the train! – This is the one true sign that people are feeling more secure and positive.

Conclusion

As you can see, there is a lot of evidence to suggest that 2004 will be a more profitable year for the majority of businesses. This will be welcome news to those firms who have struggled through the past few years, waiting for the light at the end of the tunnel.

If you truly want to take advantage of the upturn, it may be worth visiting your local support agency. They will be able to give you advice in areas such as marketing, finance and business development, to help make the most of your business.

For more information on how Wired Sussex can help you, explore this Wired Sussex site further.

* Experian Business Strategies economic update, May 2003
** Martin Veitch, IT Week, 24 November 2003
*** BVCA Report on Investment Activity 2002