As we begin 2012, the economic outlook is somewhat mixed depending on which think tank, economist or business owner you talk to. If you are Robert Peston, however, the world is a very gloomy place and we are all doomed!

We can’t get away from the fact there is a level of uncertainty with the economy – just look at the eurozone. That saga will play into the hands of the Euro sceptics who are gleefully saying "I told you so", but as just over 50% of UK trade is with the EU, the future of the Euro and the EU as a whole will have a direct impact on business here at home.

Looking at the current worldwide economy and the various impacts it can have on the UK is another breakfast meeting all together. So let’s look at the situation we find ourselves in at the moment.

The Government is forecasting the loss of 700,000 public sector jobs between 2011 and qtr 1 of 2017 in addition to the MOD positions that will also be lost. This does not even take into account the loss of private sector jobs – just look at what is happening on the high street with Blacks Leisure, Past Times, Peacocks to name just a few. Then there are established businesses who are culling large numbers of staff – look at Lloyds and RBS Group.

Despite these rather worrying looking statistics, the Government has stated that it wants private enterprise, and that includes new start up businesses to be the power house of the British economy to forge growth in the coming years. Not surprising when you consider that SMEs (or companies employing less than 250 people) account for approximately 60% of the workforce and 50% of GDP.

To this end the Government has set targets for getting NEETS (Not in Education Employment or Training) into self employment through the Enterprise Allowance Scheme, as opposed to collecting Job Seekers Allowance. It has also put its weight behind the Startup Britain Campaign that is currently promoting self employment to a much wider adult audience.

Such activity is backed up some Barclays statistics which has estimated that nearly 480,000 businesses were created in 2011, which is a record, with self employment now standing at the highest level relative to total working population for 75 years.

This confirms historic data that shows during recession and tough economic trading conditions, more people look to self employment/starting their own business than in boom years. So why would that be the case?

These days there are plenty of TV programmes that present the image that setting up your own business is an achievable prospect, and given the risks of being employed at the moment, setting up your own business now appears less risky than staying with an employer.

For example, I started my working life in Guernsey where the notion of being made redundant did not feature for me as I was building a career with a well respected international firm.

However, I left in 2001 to start building a career in London, but within six months was facing redundancy as the company I was working for decided to relocate to Cardiff – lovely city, but one hell of a commute from Colchester. Thankfully I walked into another job a couple of weeks after picking up my redundancy pay, only to watch the owners of that business beholden to the whims of the insurance syndicates who underwrote the insurance agency where I was the senior underwriter. For a couple of years I wondered whether there would be a job in January as the syndicates often left it until late on the 31st December before agreeing terms. They played hardball because they could.

In that situation it appeared risky to me to remain with that employer, as technically I faced redundancy from year to year, so decided to set up Paper Mountain Solutions with my business partner in 2004. Now times were quite good in 2004 and people thought we were mad to be starting a business – there were jobs to be had and I was fairly well paid with great prospects – why would I throw that away? It was all a perception of risk, one that we thought was worth taking.

Anyway I digress slightly, but I suppose it was relevant to the perception of risk. The increase in start up businesses in the market place will undoubtedly affect everyone in this room, whether directly or indirectly. Firstly let us look at professional services firms.

Despite the Government’s desire for the private sector to become a major part of the recovery of the economy, it seems odd that they would withdraw support from the likes of Business Link and Enterprise Agencies. Now people have strong opinions on Business Link and some were very pleased to see it go, but in its place are volunteer mentors, a call centre and online presence.

So it is to the professional service firms that we often see these new start up businesses turning as we provide the necessary support functions for what they need. But how will we cope with the increase in numbers?

- Create or strengthen the start up offering, or

- Develop strategic alliances to deliver the desired results

The former will be the more expensive option in a market place where new business owners are reluctant to part with hard cash, whereas the latter provides the best of both worlds where you maintain your core competencies, remain close to the start up to deliver fee earning work when they can afford it, yet work closely with partners to achieve mutual benefit.

Statistics show that a start up business that receives hands on support in the early months and years is much more likely to succeed. With practical guidance from professional services firms who have ‘been there and done it’, the risk of making those early mistakes can be reduced significantly and lead to a solid business from which to grow.

The media continue to be quick to point the finger at banks for not lending money, but more often than not no business case is made to warrant such lending. We can’t return to the laissez faire lending seen pre 2007.

Yet with the right support from a professional services firm, sound business plans with relevant assumptions can be drawn up to justify any request for finance. Armed with the information and knowledge that these new start ups have proactive experienced business support to help them achieve their desired goals on hand, should greatly improve their chance of securing that finance. Is that right bankers?

But what of those businesses who are not professional service firms – and are therefore perhaps in competition with new business enterprises?

We are seeing new entrants to the marketplace across all sectors, as people who have taken redundancy or been unemployed have decided they can do it on their own. They feel they can take on their old employers at their old game and do it better. Then again I felt like that when I was an underwriter.

In some cases you would have thought there were barriers to entry, yet the service sector has an uncanny knack of unlocking the global market to having anything made or produced anywhere in the world. Take printing for example; we heard last week in the news that Polestar was under threat in Colchester. I am aware of a number of firms who are print managers – essentially they find who can print the work for their client at the best possible price and commission that work accordingly, and Eastern Europe is a key destination for that kind of work – it is emailed over and then shipped back to the UK for onward distribution. The same is happening with manufacturing.

Existing players, though, have their own advantages; a historic view of the trading landscape and buyer preferences and trends; contacts and expertise through their time in business; experience about what works and what doesn’t. The survivors, or those that emerge from the current recession strongest will be those that meet their competition head on, understand the strengths and weaknesses of both positions and innovate to best advantage.

I started this talk about what the outlook was like for 2012, and from where I am standing it is looking pretty good. The majority of our clients finished ahead in 2011 compared with 2010, and some of those clients deal with the construction and catering industries. Our feeling is that there are some very good times ahead, and as every good optimist should believe, there are always opportunities out their to be explored, you just have to get out there and look for them.

To get in touch with Paul Smalley, and to find out more about the outsourcing services offered by Paper Mountain Solutions, click here.