The Service industry accounts for about 78% of the UK economy overall and about 50% if transport, education and public administration are stripped out of that.
Of course the term ‘industry’ is a little misleading as that 50% is really made up of a variety of industries such as:
- Creative & new media
- Financial and professional services
- Hotels and restaurants
- Real estate and renting activities
- Transport, storage and communication
- Wholesale and retail trade
There has been much said from the coalition government about an export led recovery and the re-balancing of the economy towards manufacturing. Certainly Britain should both export and manufacture more, but the two are not necessarily linked as the service industry can offer lucrative export opportunities just as well as manufacturing.
The problem with services as against manufacturing, is that the concept of a service export is more difficult to understand. If a business sells widgets to the USA there is a clear transaction there – parts go to the USA, money comes to the UK. However, with services, as the point of delivery may never leave the UK, it is more difficult to envisage it as an export. A good example is tourism which is a major export industry for the UK: when visitors come here to stay, they bring money from abroad to pay for services delivered here. Another example might be in the creative industries and the recent film Gravity. This film had two American stars, but was 95% produced here in the UK using USA money – this is an export.
The UK has a great deal of expertise which can be exploited by expanding overseas. Certainly our financial and professional services are very highly regarded and the example above shows this also applies to our creative industries. Great Britain has the highest internet use in the G20, almost double the developed market average. A report by Boston Consulting Group in 2012 used figures for 2010, which put the G20 average internet economy at 4.3% of GDP and the UK at 8.3%. This was projected to be 12.5% of GDP for the UK in 2016 with the G20 average only moving up to 5.4%. To put this in perspective the US figure was 4.7% in 2010 and projected to be 5.4% in 2016. This high internet use in the UK gives us expertise and a knowledge advantage which can be exported and is just one example of many areas open to exploitation by savvy investors.
For investments there are therefore some great opportunities in services and at A2Z Business Brokers we have seen these opportunities grow over time. We have also seen the more complex arrangements in service industry investment and business sales grow.
For some service industries, investment or handover is easy. If someone is buying, or investing in a hotel it easy to encapsulate what is being handed over. The service being delivered in a hotel is very much about the property and the place. Over time the personnel are interchangeable – training will be required, but the individual learning curve does not need to be too steep.
For others the problem is more difficult. In a professional services business a buyer will be buying the technical expertise of the personnel involved in addition to the client base and the corporate knowledge base. This is much more difficult to encapsulate and the personnel will not be readily interchangeable as their replacements with the right skills will be much harder (and more expensive) to find.
It is in these more complex arrangements that the expertise and experience we have at A2Z Business Brokers really comes to the fore. We help sellers, buyers and investors understand what is salable and what is for sale. Furthermore, we help in devising investment, sales and purchasing road maps allowing both parties to fully envisage the deal in question and how it will be safely and confidentially transacted and completed. We also support everyone along that road.
The service industry is still expanding and there can be some great export opportunities ahead with our service business brokerage support. Why not get in touch to see how we can help you sell, buy, or invest in a service business.