What’s impacting the technology sector?
The UK’s technology sector is thriving. Worth about £184 billion, the sector is growing 2.6 times faster than the rest of the economy and employment is high. Being innovative by nature, technology businesses rely on funding to succeed in developing products for today’s markets and those of the future.
Technology business sector advice services
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.
“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
Is your technology business structured for success?
Stephen Hemmings – Technology sector specialist
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
Smart data advantage
Many technology businesses own valuable data providing insights into key markets and consumer behaviour. Turning this information into Smart Data can deliver a significant competitive advantage and is integral to the development of AI systems, machine learning and the Internet of Things.
Technology businesses may be eligible for tax relief to offset their expenditure on R&D activities. The relief available including R&D tax relief and the Patent Box regime, can be complex to calculate in some areas and businesses often benefit from professional advice.
The UK’s technology sector is reliant on skilled workers from overseas and its ability to source talent from the EU and other parts of the world will remain important in the future. As well as sourcing talent globally, UK technology businesses should invest in talent development and retention strategies within their own organisations.
Investing in innovation
The UK is the fourth most innovative country in the world, according to the latest Global Innovation Index, and the Government’s Industrial Strategy is aiming to increase spending on R&D by 2.4% by 2027. For technology businesses, it is important to take advantage of Government-backed networks and programmes whilst developing a strategic plan and practising strong working capital management. This approach will improve access to the finance needed for R&D activities.
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 (Management Buy in Finance) and EIS funding, or looking at options including government and LEP (Local Enterprise Partnership) innovation grants, and crowd funding.
Technology businesses can be more prone to cyber attack because they own large amounts valuable data. As early adopters of new technologies, which have not yet been fully commercialised, this data is likely to have significant value.
Businesses may also be more vulnerable to attack, due to the widespread use of apps and collaborative working practices, which can make data protection more challenging.