Still in recession or turning in Jan?

So things are worse than clever people thought (BBC). And the recent figures from my business support this as I wrote earlier about worrying signs. However a BT survey published this week says that 75% of SMEs think things are going to turn up in Jan next year! If I was writing this earlier in the week I might have taken some comfort from the BT report findings. But today, as Britain is confirmed into the worst recession since records began in 1955, I find it hard to be optimistic. October is always a low month for my biz but if this month finishes as it started I have to go back to Oct 07 to find worse monthly figures. At this rate all the growth we've managed to maintain in 2009 will be all but wiped out and whether this year finishes up or down on 2008 will be entirely dependant on the Christmas period. Like us, I'm sure that the SMEs participating in the BT survey have been investing in both technology and staff in the hope of being well placed for the expected recovery. And I quite agree with Digby Jones when he says that embedding technology in the heart of a business is vital to both future growth and current survival but unlike the BT SMEs, my worry is increasing not decreasing. We're lucky to have zero debt, a healthy market position, apparently weakening competition, good technology and great staff. But if October's figures are the start of a second dip, our recent investment could come to look rash. I hope I'm wrong.

October Blues

Amidst all the talk of green shoots and coming out of recession, my worst fears might be coming to bear. Our figures have an unnerving habit of being a very good indicator of things to come. Last October we saw a sudden drop in what, for two years up the then, had been a pretty steady growth rate. Since then things have been growing again, slowly but pretty steadily. Last month (Sept) would have taken a mini dive had it not been for one large export order and now Oct is starting very sluggishly indeed. In fact I'm currently predicting to sell less this Oct than last by about 40%! That's never happened to us and the old 'double dip' is starting to make a lot more sense to me now.

Steve Ballmer, CEO, Microsoft

I got to ask Steve a question this morning. Not everyday you get to speak to the CEO of Microsoft. In fairness I was one of many in a room in a posh hotel in London who paid to hear him speak. But still. His theme seemed to me to boil down to 'every thing's about innovation and hard work.' He implied that the 'automation of the everyday' was less that five years away and that it wouldn't be long before we would be designing a cars on massive touch screens that understood our needs and made the whole interface with technology transparent.

My question was how did he split himself between this sort of ambassadorial role and the day to day management of the corporation. He said he was only about 5% ambassador and that hands on work took up most of his time. I have to say I thought that figure might be a little low and may have been the answer his employees in the room wanted to hear. In fact I'd be quite disappointed if it were true. Surely the role of a modern CEO is to be out there most of the time, leaving a competent crew at home to innovate and work at the business, bringing back useful nuggets and thoughts as appropriate. Steve gave everyone his personal email so I might challenge him on his answer away from public gaze.

Radio Show

Am doing some preparation for an appearance on Business Matters in LBC 97.3 at 5pm today. The thing about phone in shows is that you never know quite where the audience (or the presenter!) are going to take you. But as I scan this weeks business pages there seems to be distinctly conflicting signals for SMEs.

Banks are clearly starting to get caught between the Chancellor putting pressure on them to re-start lending to SMEs from the huge pots of public cash that have been thrown at them and the spectre of bad debt on mortgage lending that seems to be coming over the hill. So guess what? The banks are sitting on the cash just in case. So SMEs, don't expect much in the way of ease of access to funds in the near future. We'll see if today's pressure on the Bank of England to keep the cash taps flowing makes in difference.

Meanwhile, unemployment seems set to rise sharply and it's going to hit the under 25s hardest. For an SME like mine that may not be the end of the world as it suggests the main breadwinners will still be OK and hence able to buy things like table tennis tables. Looking from the perspective of my day job however, Camden Town is very reliant on young people. Then again youth culture tends to thrive on youth unemployment, so who knows how that will play out. Either way I wouldn't want to be coming out of Uni with big debts at this point in time unless I was one of the few who already had a good entrepreneurial zeal ready to take advantage of the undoubted opportunities out there if you know how to exploit them. This weeks announcement of a £1bn fund to help young people find work shows how worried the government are.

If previous experience is anything to go by, none of this will come up during the show today and I'll be making up answers on the hoof. Which of course is half the fun!

June saves the year

It's been a while since I posted. The main reason being that things with the business have been down. Whilst the first quarter of 2009 was up 10%, April & May were way down and it looked like the recession was finally catching up with us. Then came June! Turns out June's been way up on last year and we're now back on track for a small level of growth for the first half of the year. Result! Plus we've taken a few biggish decisions in terms of re-allocating staff and changing our commission structure which we hope will bear fruit in the next half of the year. I promised by biz partner I'd buy him a case of wine if we made £1.5m turnover this year. That would need around 40% growth in the next six months. Not impossible and I'm more worried about loosing the bet now than I've been in last three months. Will keep you posted.

Old school v new world

One of our main suppliers told me today that we're the No1 online outlet for their goods in the UK.  So they sell more of their product through us than anyone else.  Gratifying to say the least.  What he also told me was that our competition couldn't work out how we'd done it.  Which I have to say shocked me a little.  To my mind all we've done is sell competitively priced goods via a well laid out, easy to use, web site and provided good customer service by employing good people to answer the phones.  Any problems we have we try to be fare and we try and automate as much as possible.  This is not rocket science.  Yet it apparently mystifies some of our competitors.  Is that because they can't use technology to help themselves or employ good people?  Or are they just too old school and penny pinching to notice the world has changed?

Our figures may just be beginning to show signs of slow down

As April draws to a close I suspect that for the first time in 2009 we'll be down on this time last year.  The good news is we're out of the first quarter, during which we were up 10%, which means that the least profitable quarter is over and we're still here.  So baring major catastrophe we're not going to lose money this year. But I feel a degree of concern as I study the current figures and compare them to last year.  Is this the beginning of the start of our pain?

The Bank of Essex

This could be interesting.  A local council setting up it's own bank to help SMEs.  I can't help but think they'll find the hoops they have to jump through, in order to actually start lending, too difficult in the end.  But credit where it's due to Essex Council for being prepared to try.  And allocating money where it's mouth is.

Budget and SMEs

As the dust begins to settle on yesterday's Budget and various headlines seek to portray the event in a way that appeals (or gleefully horrifies) their readership, I'm struck by a glaring omission. Whether the budget was an "attack on the rich", the "death knell of a dying government", "a class war divide" or a "trap for the Tories" it doesn't appear to have been much help for SMEs.  True, most SME owners fall well below the £150k threshold for the 50% tax rate or the restrictions on pension tax relief but that's not much to sing about. I suspect that the strategic investment fund for struggling businesses will be eaten up by big biz (who represent 1% of businesses in the UK) and will involve huge amounts of red tape which SMEs have no capacity for. Maybe some of the support for the unemployed will help us employ people we wouldn't otherwise be able to afford, but I'm not hopeful and suspect the potential accusations of exploiting cheap labour (which may be true in some cases) will stifle the scheme as it has in the past. So we carry on as before. We carry on employing 50% of the UK work force. We carry on being the "engine of growth". And we carry on taking the real risks in this economy, without a safety net, and hope in vein that someone notices how important yet unheard we are. 

Business Matters and Local Taxation

On LBC Radio yesterday I had a most enjoyable encounter with Dr David Kuo and James Max. We talked about the budget and offered bits of advice to callers, some details of which can be found on the Business Matters blog.  However one thing sticks in my mind.  During a discussion on business rates David made the point that biz rates are roughly apportioned according to demands on local services.  So a bigger premises would have more need for refuse collection etc and would therefore pay higher rates regardless of turnover .  Whilst this is true in theory, in practice only around 5% of the rates collected is retained by the local authority, with the rest going to central government.  Which to my mind makes it just another form of biz taxation.  A point I wish I'd had the wit to make at the time.  But live radio doesn't allow for retakes.