Business analysis: The green, green shoots of recovery
Tuesday 02 November 2010
As a former Royal Navy submariner who worked for the investment bank Goldman Sachs before joining his wife’s family’s garden centre business, Shaun Lewis probably has a wider perspective then most.
While acknowledging that the immediate aftermath of the collapse of Lehman Brothers was a terrible time, he believes that there is a lot more confidence in the business community and among consumers than economists and other commentators believe.
It is a measure of his own confidence that the family business - Dunscar Garden Centre in Tarelton, between the Lancashire towns of Preston and Southport - is currently embarked on a £400,000 expansion programme. “We reckoned that July of last year was the bottoming out of the recession. We decided that we couldn’t wait for the recession to end. We had to drive ourselves out of the recession,” he explains.
And in the year since the decision to expand was made sales have indeed risen strongly - by about 20 per cent. The past few weeks have not been as good - a result, Lewis believes, of fears about what would be in the much talked-about Comprehensive Spending Review. However, now that its contents are known, he expects some return in confidence.
This appears to fly in the face of the assertions of those predicting that the spending review could help bring on a double-dip recession. But Lewis is not alone: recent research in the north-west surprised commentators with its findings about the strength of businesses in the area, he says, while a survey for the utility price comparison service Make It Cheaper found that small business confidence had increased over the past six months.
The report, published in October, quoted 76 per cent of small businesses describing their current outlook as either stabilising or brighter, compared with 58 per cent in that position six months ago. A survey of Make It Cheaper customers also found that 18 per cent of business owners or managers believes that the business outlook for the current financial year was the brightest it had been for five years – up from nine per cent in April.
Jonathan Elliott, managing director of Make It Cheaper, said: “It’s refreshing to know that small business confidence is returning in such a big way... There is a clear can-do attitude from those that have already adapted to survive and are running much leaner and more efficient businesses than before.”
Lewis knows all about adapting to survive. The garden centre business - which had been in the family for more than 60 years - suffered as much as anybody else in the wake of the financial crisis of last 2008, although it had already started to see sales drop off sharply in the spring of that year. “When the banks were collapsing in the autumn of 2008 we were worried that we would be the generation that would screw it up,” he says.
Although they only had to make one person redundant, he and his wife had to tighten the business substantially and take over some of the shop-floor duties themselves. However, this turned out to be an advantage since it brought them closer to their customers.
What they have learned is that people have reacted to the economic downturn by - as might be expected - being more careful with their money. They have stayed at home and invested in their houses because they have often been unable to move due to stagnating house prices and difficulties in obtaining mortgages. Such observations led to an early part of the expansion being the opening of a cookshop selling home furnishings and dining furniture.
Equally, Lewis is not convinced that the widely-reported enthusiasm for growing vegetables that developed in response to the “austerity Britain” rhetoric will be sustained. Some people will get the bug for having their own fresh produce and enjoy the feeling of getting back to nature, but others will take the view that perfectly good food at competitive prices can be obtained for much less effort, so he is not banking on that as the way ahead.
Instead, he is looking at ways of expanding into other related areas, such as selling country clothing. “We want to become less reliant on gardening,” he says.
Nor, in these uncertain times, is he looking too far ahead. Whereas in the past, businesses might have planned for the next five years, it is hard now to look beyond two years. But he is optimistic about this period – and hoping that the expansion will help raise sales from the current approximately £1.2m a year to £1.5m a year in that time.
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