Contemplations on busyness …
January has been a busy month at Ortus and thankfully it’s showing no signs of slowing down. We’ve had a record number of loan completions which is brilliant and given our healthy pipeline, we’ve brought forward our recruitment plans with a new member of the team starting on Monday.
We were always hopeful tthat 2014 would start strongly, and the level of activity within the leisure industry seems to be booming which gives us lots of new opportunities to explore. This has also got us wondering what factors are causing this change. Like everyone, we’ve heard the positive news that unemployment has fallen to 7.1 million – which inevitably means that people have more money to spend on leisure activities. However, as the fall in unemployment is relatively recent, it can’t really explain the sustained activity in the sector. Two reports help to give some indication as to why things might be improving.
Firstly, the leisure industry experts Christie & Co released their 2014 Business Outlook which confirmed that the hotel, pub and restaurant sectors are enjoying a prolonged recovery. The year 2013 saw a 3.3% increase in pub sale prices, with hotels and restaurants enjoying 5.7% and 4.7% increases respectively.
Just as importantly, Christies reported that the number of pubs being bought as pubs (as opposed to residential conversions) increased by 67%, suggesting that buyers are seeing them as viable businesses rather than just development opportunities. One could argue that this is being driven by a marked increase in experienced operators and entrepreneurs returning to the sector.
Of course, this is really positive news for a bridging lender like Ortus which services clients buying and growing leisure businesses. It’s also vital that clients have longer term solutions available to them.
In this respect it is interesting to read a report from the British Bankers Association (BBA) confirming that banks are far more willing to lend than many small businesses think. According to the BBA, only 37% of small businesses planning to apply for finance believe they will get approval from their bank, but in fact more than 66% do. Furthermore, of the rejected clients who appeal, 40% are successful. Getting the message to small business owners (or prospective entrepreneurs) that it’s worth making that loan application is one of the BBA’s key strategies for 2014.
The cynics amongst us will say that the banks are simply being compelled to focus on businesses since the Funding for Lending scheme was changed to exclude individuals. However, if the BBA prediction that 270,000 companies could benefit is even close to being accurate, few will be complaining.
For Ortus, this combination of factors explains a lot. The leisure industry is attracting quality operators, rising employment means the economy is increasingly able to support a decent level of discretionary spending and banks are now willing to provide small businesses a longer-tem exit from their bridging loans.
No wonder we’re busy.