Surviving the Eurozone crisis – a CEO’s perspective
The role of small and medium enterprises (SMEs) as the backbone of the European economy and their contribution to growth and jobs remain crucial in 2012.
In light of their importance, The Beginner recently sat down with the CEO of a UK-based SME to discuss his perspective on the eurozone crisis and survival strategies for his company.
Graham Mulholland is managing director and owner of EPM Technology, a Derby firm that makes carbon fibre parts for F1 cars. He says that many of their clients have faced financial difficulties in recent years - “Naturally this affects our business, whether it is the lack of repeat orders from automotive customers or sponsorship opportunities closing affecting our F1 customers”.
“We've asked for finance backing on six parts of equipment and it just hasn't come through. So we used our own reserves”.
Figures from the Bank of England showed that total net lending from the five main UK banks fell in every quarter of 2011. The figures also confirmed that the lending targets initially set out for small businesses were missed. Many SMEs thus missed a growth opportunity simply because they were not able to access financial possibilities at more opportune times.
Mulholland further believes that a return of market confidence is vital for economic recovery. Without appropriate measures to restore lost trust, the situation could become dire - “If confidence continues to be challenged, however, we will have more and more growing problems.”
In order to help SMEs gain access to credit, the UK government plans to launch a credit easing programme that will make 20bn pounds sterling available over the next two years. But Mulholland remains cautious, suggesting that the government should measure the offers made by banks based on what they have done in the past and transactions completed.
Mulholland himself has reshaped EPM Technology so that it is no longer as reliant on banks.
"In our case, we decided to work hard to clear all of our loans, take out all of our unnecessary costs, and start to measure the business daily”.
He adds that the company now focuses on their skill base and turned away customers who did not pay well or zapped all of their energy. In terms of lessons learned, Mulholland believes that it is vital to examine the situation from a realistic perspective and be very aware of your competitors.
On a more personal note he advises to “always remember your manners, never forget to enjoy what you are doing, and set yourself achievable goals”, - advice that could help boosting business confidence again.