Gap between business winners and losers widens, claim accountants BDO

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A clear division will emerge this year between UK businesses able to take advantage of growth opportunities and those left behind to fight it out in difficult markets, according to international accountancy and business services firm, BDO LLP.

The latest BDO Industry Watch report, compiled using independent research from the Centre for Economics and Business Research (Cebr), forecasts a marginal increase in the overall number of business failures over 2012-13, with growth prospects for businesses in all sectors increasing as the economy begins to recover. 

But the widening gap – between companies poised to exploit export markets, grow online sales and differentiate both product and service – from those whose fortunes are dependent on the high street and cautious UK consumers – will set the stage for a two-speed recovery, claims BDO.

Shay Bannon, business restructuring partner at BDO, said: “There are real growth opportunities for UK companies, but the current two-speed economic recovery is more distinct than ever. Do not expect the economy to bounce back in the short term – and in the context of this ‘new normal’, businesses cannot afford to simply wait it out.

“Businesses that develop innovative products, distribution channels and a strong customer proposition will gain significant competitive advantage – irrespective of sector. Those who do not respond to the new normal are at greater risk of falling into difficulty.”

According to BDO, technology, media and telecoms (TMT) will be the sector to watch over the next 12 months, with cutting-edge firms outperforming the wider economy. TMT will continue to defy the challenging environment for UK businesses as technology becomes increasingly vital to success and growth in all industries.

Property and construction, leisure, and business services sectors, on the other hand, are continuing to experience difficult market conditions. 

Within the retail sector alone there are both challenges and opportunities, with disparities evolving between those retailers with a strong internet offer and those reliant on high street footfall, claim researchers.  

Momentum is swelling behind new mobile platforms that will make engagement with consumers easier and more efficient, and retailers with the ambition and technology – provided by the opportunistic TMT sector – are set to reap the rewards for their businesses, said BDO.  

A geographical split has developed in the search for growth as well and those setting the pace are looking east for opportunity, claim researchers. 

With uncertainty rife in the eurozone, and Asian markets predicted to grow by over 7% in 2012, those businesses in the UK looking to the Far East for growth prospects are expected to fare well, said BDO.  

The manufacturing sector, in particula,r has benefited from a hat-trick of a weak pound, ongoing weak interest rates, and falling inflation and commodity costs to return to positive growth territory in early 2012. 

BDO forecasts those businesses in the sector able and willing to adapt products to new overseas markets will continue to get support from a weak pound.