Businesses as the acupuncture for local regeneration

A funny thing's happened in my street. A row of pretty dilapidated shop fronts that has blighted the area for all of the 10 years I've lived there, is starting to finally change. And the reason seems pretty simple to me. It's because of Julie. Julie took a risk, a calculated one because she's not stupid and did her research properly, and it's paid off. Now, having run a small deli for a couple of years she's just opened a cafe next door. And guess what? It looks like the boarded up pub in the same road has been taken over by a gastro pub chef!

In my day job, we're desperately trying to regenerate Mornington Crescent. And though the council are being very supportive and we've even discussed doing something with the public library down there, the biggest problem is the guy who owns two burnt-out buildings on the High Street's refusal to do anything with them and the effect these are having on the area.

My point is that it's actually the businesses in an area that can make the real difference to somewhere. And if they get their intervention, or acupuncture, right the whole area can benefit - or suffer. So shouldn't we be targeting sensible businesses in order to support them in the right circumstances? If only we could find them..... See earlier post.

Web TV - Old into New

Went to the launch of something called Policy Review Interactive last night. A political gathering more than anything else given some of the attendees/speakers (Ed Vaizey MP and Derek Draper) and its location in Millbank Tower, previous home to the UK Labour Party now the base for Conservative election planning. Ironic?

Policy Review is an interesting biz in that it draws heavily on the conference work of its parent company Neil Stewart Associates (NSA). [I was once the publisher of Policy Review Magazine and worked for NSA so I have some insight into the biz.] Neil's premise is that the time is now right to start making money from digital content of this type (mainly speeches from public policy conferences). He's a successful biz-man so I have to assume he knows what he's talking about. And it appears that there are many public sector professionals who will pay £150 to see or hear a conference they couldn't attend for £450. But it seems to me, forgive me Neil, that this is old biz thinking imposing itself on new biz models. I may be wrong and maybe it doesn't matter as Policy Review will generate more interest in the conference biz, so job done. But I think I still see a lot of existing businesses trying to tack web apps onto their existing model, when surely what we've learnt to date is that you need to start from scratch when doing biz on the web isn't it?

Mummy & Daddy Months

I've just come back from a posh policy document launch at the Commonwealth Club on parental leave. I was invited because I'm now a "leading SME blogger" apparently. (Which reinforces my point about the lack of online 'traffic' amongst SMEs.).

The Equality and Human Rights Commission (EHRC) wants things like 'Daddy Hours' and 'Mummy Hours' and generally worthy, not to mention well thought out, initiatives to help parents spend more time with their kids.

I'm actually quite a fan of this. Where do we expect our low crime society and high emotional intelligence work force to come from if kids of all ages aren't 'raised right'. But I have a few questions.

What about teenagers? I have two and they need loads of help and attention and are far less predictable, and therefor able to fit into a working schedule of any kind, than toddlers and babies.

Isn't the cost off all this going to end up on the shoulders of biz one way or another?

And mostly, isn't this another example of us trying to 'have it all'? I learned today that fathers spend double the time with their kids than was the case in the 1960s, which has to be a step forward and evidence that we're progressing. I also learned that non-parental childcare is expensive and this can put a huge burden on parental relationships. No shit! But somewhere in all this I can't help but feel that we're trying to convince ourselves that two full time working parents has no impact on the kids. And that if we can just throw a bit more money at the problem it'll work out just fine. Raising kids is the only really important thing most of us do in our lives. It's also exhausting, stressful, expensive and once you've started your life will never be the same. Maybe we need to own up to these facts and stop trying to pretend that it won't change our lives forever and accept some of the difficulties, like reduced income and thereby lifestyle, that can go with making hard choices.

Where are all the small biz people?

As my friend Surreal McCoy so eloquently suggests in this cartoon, it's quite easy to feel that blogging has become a little pointless. There are various media reports to help confirm this and Twitter has of course become the latest darling of the self-conscious, but I still suspect that there's a place in all this for small biz people to share our pain and wisdom. I just haven't found out where you all are yet. SMEs are supposed to be the back bone of the UK economy now that financial services has imploded. So why aren't we seen or heard other than through the big beasts like the CBI, IoD or BCC? Do any new small biz people really make use of these organisations or are they the mouth pieces of the big and established players?

Lovefilm and Chutzpah

Now, according to media reports following the latest consumer pricing index release by the Office of National Statistics, certain things are doing well in recession. Yesterday I mentioned Agent Provocateur, today I learn that Lovefilm is bucking the downward trend. Slightly ironic for me in that when my biz partner and I first started down the road of setting up what we run today, our initial idea was to bring a postal DVD service to the UK. We wrote the biz plan based on what we'd learnt about a company called NetFlix in the US. Having thought long and hard we decided that if we went down this road, as soon as the idea took off we'd get blown out of the water by someone like HMV who had a ready supply of product, relationships and infrastructure. How wrong we were. Lovefilm must have started from the same(ish) base as we were planning to and look them. What seemed to be the difference was they had the balls, bravery, chutzpah and we didn't. It's all too easy in retrospect to see this and we all know that it's easier to get stuff wrong, and go bust, than to hit the big one. But each time I notice stories like Lovefilm I get a little braver inside. Fortune is supposed to favour the brave. But it ain't half scary.

Agent Provocateur says sales up

This story made me smile. I like its counter-intuitiveness. But do we conclude from it that in a recession the number of people having affairs goes up or is it that people are spending money on themselves and their partners as it's a) cheaper to stay home and b) no one can afford to get divorced?

And what does that mean for businesses?

Commercial Property Agents

They're as useless as the rest of the estate agent profession. My experience today with Christo & Co in Kentish Town demonstrated this all too well. I walked into the office and was looked up and down and treated as if I was interrupting their important discussion. About what?! In a recession are we? Only after I'd left my card, which happens to have the words Chief Executive on it, and was walking out the door did they show any interest. I hope the downturn wipes them out, along with the rest of their profession and something more helpful and user friendly takes their place.

WWGD

Having taken a 'concerned' view of all things Google in a recent blog I now find myself recommending what can only really be described as a disciples' guide to the phenomenon. Jeff Jarvis's book is filled with thought provoking ideas for anyone engaged in the frontier world of business online. If you're trading online or thinking about it, I'd say you have to read this. Alternatively you could just read Buzzmachine the blog from which the book is derived. The only reservation I have about making such a recommendation is the risk that others will use the ideas and become my competitors. But, as Mr Jarvis might say, that's not good google think.

UK SMEs not on blogging-line

I keep digging around trying to find fellow biz owners and runners who want to share their pain and stories but surprisingly they don't seem to be on-line. Just the long list of (forgive me) non-business people trying to give advice to people who are actually doing it.

I know Business Link are trying much harder these days, especially now their funding cut has been put back due to the recession, but to my mind talking to their agents is like taking to an MBA pre-graduate who's never actually had a job never mind run a biz.

So where are you fellow sufferers out there?

Online Sales up 13%

So, according to the BBC, despite the downturn online sales are up on 2008. This is true for our biz, though getting closer to matching last year each day it would seem. But it's heartening to hear that we're part of a trend of sorts and not an aberration.

Adwords and Google Everything

Our business is almost totally reliant on Google Adwords. We occasionally slap an ad in a relevant magazine but, as per the old adage, we've no idea how effective it is. With Adwords we get to see the effects directly and truthfully I can't see how old fashioned advertising dependant businesses, including newspapers and commercial radio and TV, are going to survive without drastically changing the way they do things. So here are two questions I'm mulling over.

1. Are we as a business becoming so comfortably dependant on Adwords, and thereby Google, that we're forgetting the basic rules of business by not diversifying in some way? I have no answers to this one yet.

2. What sort of new income streams can conventional (non BBC) media outlets turn to? On this point I have some initial thoughts. Suppose journalists and presenters don't get paid by the newspaper or station but instead run blogs and forums that interact directly with the audience beyond conventional print or airwaves. They make their income from advertising on said blogs and are so directly incentivised to interact with the audience. One immediate concern might be that the best way to get advertising onto your blog is via Google Adsense. Which brings me back to question 1.

Turnover, Gross and Net

I'm constantly amazed at how often, apparently sensible, people get these three things confused. I was asked recently what happened to the large profits our biz makes. This person had looked at our turnover and decided that pretty much all of it was spare cash to blow on fast cars and designer clothing. Their question seems to contain the hint that they felt someone with such wealth should dress a little better. On another occasion it became apparent that someone we work with on a profit share arrangement, thought that after his 15% had been paid to him we got to spend the remaining 85% on luxury items. So for the record here's what happens in our biz.

We make about 20% gross profit before expenses. When we've taken off all the running costs we're left with around 8% of our total turnover. From this 8%, we pay 15% of it to the guy on profit share and put aside 22% from what's left for corporation tax. Then we look at what we think the cash flow needs of the biz will be over the coming period and put that aside and finally we see what we think we should put away for a rainy day into reserves. If there's anything left over we might pay ourselves a dividend but often don't for fear that something will happen we haven't thought about. I'm happy to put numbers into this if any one's interested but I hope the point is made. What's interesting is how often I seem to end up explaining this to people. Is it really only people who run their own businesses who really get it?

Mid-month slow down or start of the slump?

Maybe Friday 13th gives an added piquancy to the usual mid-month slow-down. Maybe this is the real start of the slump. Whatever the cause, each time I look at the sums they take on greater significance at the moment. All businesses see periods of relatively slow activity all the time but right now it's really hard to take them in ones stride.

Quantitative what?

Do any small biz people believe that Quantitative Easing will help them in any way? I think I get the idea. You make money cheap and banks will lend it more freely. But as far as I can tell there's a heavy dose of human nature at work in the behaviour of our illustrious lending institutions at the moment. When something is in short supply and you're worried about how much of it you're going to need in the near future, you get your hands on as much of it as you can, as cheaply as you can, and horde it for as long as you can. So, as before, if SMEs need credit they're going to be in trouble. And nothing HM Treasury or the Bank of England do will change this Darwinian situation until an appropriate number of weaker businesses have gone under.

Businesses that have no debt and low costs should be fine in the long run but have no incentive to expand right now until the storms look like they're passing. In the meantime we mend nets and hold tight.

Small Biz support doesn't get small biz.

I'm trying to find a decent forum for people in business to talk openly with each other. Not some patronising Business Link type service, somewhere where the sort of conversations my biz partner and I have can be played out with a wider audience. Anyone know of such a thing?

Where has all the money gone? A question I can't answer.

I was having dinner with our accountant last night and after we'd conducted our business, my long-travelling biz partner succumbed to jet-lag and fell asleep at the table. So the accountant and me started the inevitable conversation about the recession. (His biz, not surprisingly, also fits my developing theme of businesses doing OK in the current climate by the way.) We covered the usual bases and then he asked the question I haven't yet been able to answer. Where has the money gone?

I started down the usual route of 'toxic assets' and 'value that never was' and 'securitisation' when he stopped me (to be fare, as a chartered accountant he knows more about this stuff than I ever will and I was probably being patronising) and asked again, where has the money gone? His point was that someone sold said sub-prime house to sub-prime borrower who defaulted, but the money from the original sale didn't disappear. As he developed the theme, I started to see his point. Every share, bond or house that has depreciated in value was bought and that purchase money didn't disappear from the system. It may have changed hands a great deal and many people will have lost and gained but, like energy, it hasn't actually disappeared. Has it? Having worked in banking (never as a banker I hasten to add) and being a bit of a know all, I find it disturbing not to have some sort of an answer.

I recall from various bits of FS training the expression 'slushing round the system' used to depict the phenomenon of money that changes hands but never leaves and which fits with my mate's point. And despite the 'end of the world as we know it' views coming at us like machine gun fire, there must be certain unalterable factors at work in any system and maybe this is one. I'm sure Robert Peston or Will Hutton will have an answer but I'm struck that, in all the acres of coverage, I haven't heard it yet.

What recession?

OK so only a fool would really be asking that question. But I posted a note today to say I'm recruiting in my day job and got a response from someone else saying they're doing the same. Our next shipment from China will be twice the size of previous ones. And I keep meeting people who say things are pretty good for them and their business. A boy could get confused....

Taking stuff for granted

So I'm walking, though the streets of North London, on my way to work this morning, chatting on the phone with my biz partner who's in a factory somewhere in northern China. He got there via Hong Kong and San Fransisco. Meanwhile I carry on in my day job sorting out the occasional fire in between meetings but mainly leaving things to our four valiant, part-time employees, two of whom work from their homes in France. And never once does it occur to me how extraordinary this is.

Is the competition dying and am I bad for hoping so?

I know I am! But it dwells on my mind quite a lot. We often talk about a potential Forrest Gump moment. [You may recall that in the film Forrest buys a shrimping boat but can't catch a thing until one day a hurricane takes out all the other boats and from then on there's more shrimp than they can handle and become rich off the proceeds.] So I keep trying to find out anything I can from suppliers about how the market is faring overall and see if I can't sniff out any gossip about our competition. Maybe there are other ways of getting this sort of information I haven't thought of....

Growth slowing down and media influence

So it turns out I was wrong about Feb. We ended up only growing about 1% on Feb 08 which pretty much confirms the trend started last Nov. That said, March has started well and we're through the worst two months of the year, and I can see us having a 2009 similar to 2008 which means no cuts in overhead. I seem to have a different take on things every morning and the daily news intake via the Today programme isn't always helpful. Try as I might to use it as one of many influences, all too often the media seem to dictate my sense of how the climate will affect our business far more than the figures before my eyes.