By Daniel Hunter

Economic performance has increased for Thames Valley businesses, according to the quarter 2013 Thames Valley Business Barometer released, with healthy results and solid expectations reported on both turnover and profit growth.

Almost two thirds (65%) of businesses surveyed have increased turnover in the past quarter compared to 46% in Q4 2012. Just 47% of respondents in Q4 predicted that their turnover would increase so, for many, expectations were surpassed. Profitability was also up for 55% of respondents (versus 42% in Q4) and expectations for Q2 remain buoyant.

Two thirds (67%) of businesses across the Thames Valley expect turnover to increase in the next three months, with more than half forecasting further increases in profitability. Just 4% anticipate a decline in turnover and profit next quarter, a reduction from 8% in the Q4 Barometer.

But in terms of overall sentiment and economic confidence, Thames Valley firms are showing greater caution. Nearly half (49%) felt that economic conditions were now flat versus 40% in the Q4 Barometer. Q1 Barometer performance indicators however demonstrate that the Thames Valley does appear to be bucking the trend against the somber UK growth forecast for 2013, which has now halved (to 0.6% from 1.2% in December).

Hiring intentions in the Thames Valley also appear strong with greater optimism reported for the next quarter. Almost nine in ten businesses have increased headcount or held steady in the last three months; a further 45% expect to recruit in Q2 2013, suggesting a continued positive movement for Thames Valley employment levels.

When it comes to gaining finance, there was a mixed bag of opinions. While there was no real change seen in the availability of finance from previous Barometers, 14% of respondents are now finding the availability of finance easier compared to just 4% in Q4.

A slightly increased proportion (18%) are finding finance more difficult to come by (versus 12% in Q4). Working capital is a concern for nearly a third (29%) of all respondents who are keeping a close eye on cash flow, and more than a quarter (27%) report that a lack of funding is restricting their ability to grow and manage their business. For the majority however (65%), it’s not a major impediment.

“Broadly speaking, this Barometer is a cause for optimism for Thames Valley businesses. The overall results have indeed become more positive with the actual output and profit expectations for the businesses in our sample proving strong and still above those of companies elsewhere," Simon Brooker, Partner and Head of BDO in the Thames Valley, commented.

The Q1 Barometer also includes in-depth profiles of Thames Valley businesses Hewland Engineering, Erento, ByBox, Imago and Camp Hopson, who share perspectives on their own performance during the last three months, the key challenges they face and the prospects for the Thames Valley region.

Simon continues: “Our Barometer interviews reveal that funding continues to be a hot button in the Thames Valley and those businesses that are planning to seek funding are looking at a wide range of options. Respondents reported they will use retained cash and bank debt in equal measure, and the reliance on bank debt is expected to increase. There is also an expected increase of those looking for either private equity or venture capital funding."

Paula Elliott, Managing Director, C8 Consulting concludes: “SMEs and the mid-market are the engine room of the UK economy and it’s clear our region’s businesses are very willing to play their part by investing to help kick-start the economy. It’s also clear however that more must be done in the long term if businesses are to truly drive economic growth and job creation. Availability of finance and funding is key and the Government really must meet and support these needs if we are going to help drive the Thames Valley economy forward.”

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