A manufacturing survey has revealed that businesses are planning significant investment, after several excruciating years of standing still.
Yet there are pitfalls to sudden and fast growth, as Serena Humphrey, founder of finance training company the f word, explains here.
The latest figures released this week show that manufacturing is growing at its fastest rate for almost 20 years.
What’s more, it seems to be consistent, with orders up on the past six months.
Other news this week tells us that, finally, retail has some good news too.
Like-for-like sales in August are 3.5 per cent higher, with reports of increased consumer confidence, and less anxiety about job security.
This is all fantastic news for Northamptonshire’s businesses, large and small.
However, there are many dangers for expanding firms, particularly when the past five years have been an exercise in basic survival.
Latest figures show that insolvencies are on the rise, and the word around Northamptonshire’s business community is that many are seeing clients already struggle with cashflow difficulties – as a result of growth.
It may seem odd, but it happens because many firms used their cash reserves, if they had any, to get through that dreadful time in 2008 and 2009.
Having been on tick-over since then, they now have nothing in the kitty to fuel their expansion.
Growth can be a risky time for a business that hasn’t planned for it, as it will eat up cash quicker than anything and put an incredible strain on every aspect of the operation.
This is because it means having to invest in many areas of the business in advance of being paid.
It might include ordering extra stock to meet rising orders, increasing payroll costs or a lengthening list of debtors.
Without proper planning of where the necessary cash comes from, companies may find they have nowhere to go.
As well as the obvious financial issues, growth puts a lot of extra pressure on staff, management, and customer service – areas that can start to cause real damage in any business.
It can’t be assumed that the bank will help either.
The business needs to be strong enough financially to get bank funding. After years of stagnant growth and falling profits, this just won’t be the case for many companies.
Northamptonshire’s ambitious new start-ups won’t necessarily have the experience of working through a gruelling and prolonged recession, so may not have the honed financial skills they will need to keep control as they grow.
It’s incredibly important that these companies get the help and support they need, to keep a new generation of businesses afloat.
So although it’s great news that growth and recovery finally seems to be here, let’s make sure the growth is planned.
Northamptonshire’s companies need to be right on top of their numbers, forecast exactly what growth is going to mean for them and work out how to fund it, before cash flow becomes critical.
After all, it’s the recipe for the city’s economic resurgence.