Stephen Hemmings – Technology sector specialist
Technology businesses by nature are innovative, have high-growth potential, and are experiencing a fast pace of change and fierce global competition. However, the challenges linked to decreased technology spending, industry convergence and shortage of talent are complex and often mark the difference between success and failure.
Technology business sector advice services
“Menzies provided, audit, tax and company secretarial services to SFW. Their work was always to a very high standard and we found them easy to work with. When we sold the business Menzies provided significant help during due diligence and completion activities. They were highly responsive, particularly, when we had last minute requests for assistance and were thoroughly professional. I have no hesitation in recommending them.”
Steve Elliott – Director SFW Ltd
We advise finance, fashion, marketing, clean tech and property-related technology businesses, in particular. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice.
GOING IT ALONE IN A TRANSIENT ADVANTAGE ECONOMY
A step-by-step guide for tech entrepreneurs
Although technology businesses are innovative by nature, fending off fierce global competition can be a risky and costly process. Without the finance required to develop their product or service, and get it market ready, they could end up being little more than a flash in the pan.
Securing the finance needed to invest in product development can be a huge challenge, but it is not the only one. It is also important to make sure the business is structured correctly to take full advantage of any cash being invested and to de-risk its activities as far as possible. Getting the basics right in terms of cash flow management and accurate forecasting is essential.
Key challenges for the technology sector
Knowledge and innovation is essential for creating sustainable advantage but the UK only spends 1% of GPD on R&D, compared with Germany’s 2%. Clusters of technology companies are expected to strengthen the market through efficiencies and cross-fertilisation of innovation. Further competitive advantage will come from the consistent protection and exploitation of intellectual property, or from collaboration, consolidation or the acquisition of businesses.
Technology skills gap
The ability to source and retain people with requisite skill sets to drive forward a fast-moving, innovation-centric business remains a problem. The common issue cited is a lack of indigenous talent, coupled with strict immigration laws, although the expansion of the Tier 1 (Exceptional Talent) visa to the tech sector is an excellent step in the right direction.
Big data v Smart data
Technology businesses have spent vast amounts capturing, storing and analysing data of all kinds (“Big Data”) in order to glean potential insights into markets and consumer behaviour. However, the level of input required to glean valuable insights has often proved counter-productive. Recently, the focus has shifted to using intelligent algorithms to extract signals and patterns and thus capture more qualitative and useful data (“Smart Data”). Companies who fail to invest and move with the times on this issue may find themselves at a competitive disadvantage.
Data ‘breaches’ or ‘leaks’ can have a significant adverse affect on the reputation of a digital business. Recent US research estimated that the average cost to a company of a serious data breach was $3.5 million. The incidence and cost of cyber crime is likely to continue to rise as more business functions move online.
With the rapid rise in ‘offshoring’, the continued perception (if not the reality) is that the Asian markets can develop and maintain everything faster and cheaper.
it has never been easy to fund the long delay from having a great idea through to prototype and then commercial exploitation, and a funding gap still exists. Companies need advice in securing the right funding at the right stage, whether that be trade finance, stock finance, private equity, MBI and EIS funding, or looking at options including government and LEP innovation grants, and crowd funding.