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There has been much talk in December 2013 and January 2014 on the slow, but steady, improvement in the economy and most recently the sharp fall in the unemployment figures. But who and what is the cause of this? The government in the past three years has spent much time and money on start-ups (for example the start-up grant/Tech City in London) but groups such as the CDI are calling for greater recognition of the unique challenges and successes by MSBs and recognition for their own distinctive contribution to the steady growth.
A recent survey by Vistage ‘4 Months of Economic Confidence Gives SMEs High Hopes for 2014’ found that 73% of its members are positive about the constant improvement of the economy with 72% of these companies planning on recruiting more staff due to 80% preparing for a surge in sales expectations over the next year. The next few years will prove exciting for MSBs and their new position in the UK economy. This recent survey compliments the CDI opinion in December 2013 that MSBs are generating 23% of private sector revenue. Between March 2010 and March 2013 these businesses created 185,000 jobs (a 4.1% increase compared to just 1.9% by large companies and 2.8% by SMEs).
John Cridland (CDI’s Director General) stated in December 2013 “up and down the country MSBs are major local employers in many cases helping to offset public sector job losses during the down term”.
Lord Livingstone announced in January 2014 that he will write to all MSBs by the summer, inviting them to use the knowledge of the UKTI in regards to exporting. MSBs are encouraged to use UKTI’s support to increase their exporting and trading abroad. Lord Livingstone said “mid-sized businesses have the potential to be economic power houses for the UK economy, creating jobs and growth for all regions of the UK”. Mostly this opinion is based on the approach and success of Germany who currently exports 25% of all exports outside the EU compared to just 17% for the UK. Although this opinion does not perhaps take into account the many differences in the countries including, for example, in banking and business loans for MSBs in Germany (local banking, backing local businesses) and the huge conglomerates controlling the UK banking sector and therefore business lending.
However the recent push for UK based manufacturing by the government and the search by UK companies for new technology and products has led to increased collaboration with third parties in the research and development process. As always though, such activities can lead to increased risks if commercial interests are not properly protected.
In preparation for these new developments all MSBs should ensure all contracts and licence agreements relating to these collaborations create the best possible financial outcome on commercialisation over the next few years. It is important to ensure that before collaborating on research and development with external (and often international) third parties you have a watertight confidentiality agreement in place protecting any technology behind the innovation. Areas such as IP management, tax planning and corporate structures should be properly thought through and advice taken to ensure a worthwhile commercialisation after so many years of investment.
Phillipa Hobbins, Solicitor, Clarkslegal LLP
Tel: 0118 960 4654
The only book available that deals exclusively with such companies