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.

What do SMEs want from next week's Budget?

I've been asked to go on Business Matters on LBC on Sunday 6-7pm to do an SME surgery (helping SMEs with problems I assume) and to talk about what SMEs' want from the Budget.  Am working on some ideas for businesses like ours but it strikes me that, bar a complete revamp of the taxation system in the UK that removes the role of unpaid tax collector from the portfolio of all biz owners, I'm not sure what the Chancellor could do to make an immediate impact next week.  But am open to ideas......

Day 6 - 'Managing things at distance'

A four day weekend may well have helped us with our warehouse problems.  And it looks like our delivery company has done the decent thing and worked flat out over the period to sort out the issues.  As well they might given that we had to bung a couple of grand at their landlord to get the doors open.  (Who knows when we'll get that back!)  

Longer term it looks like they're going to have to go bust and re-appear as a warehouse management business with a man-and-a-van service tacked on to do local deliveries.  Then we can use a bigger, national provider for our needs without having to manage our own warehouse. 

We looked at this problem in the past.  It seems that the man-and-a-van can make a profit and big national services can.  But anything in between in this market just can't make money.  As ever it's interesting to get a look at other biz sectors and models.  And tempting to think that we could do better than the existing providers.  But so far we've always managed to keep the saner, less egotistical, side of that line.  Just because you think you've got the hang of one business model in one sector doesn't mean you can switch streams and be just as successful.

Day one - 'managing things at a distance' experiment.

I mentioned a few days ago that my biz partner was going away for 2 months.  See below.  Well he left last night and this morning he calls me from New York to say he's just had a call from the guy we sub-contract our warehousing and some of our deliveries to, to say that he's been locked out of his warehouse by his landlord for non-payment of rent.  We've been watching him for a few weeks but had got, what we thought were, some pretty watertight commitments and contingencies.  It's an interesting start to this 'managing at a distance' experiment.

Human Nature - The flaw in the capitalist model.

At the end of the business radio show I was on at the weekend, the presenter asked me the same question he always asks. "Are the markets going to go up or down this week?"  He was surprised when I said I thought they'd go down since things had been on a bit of a rally the week before.  When asked why, I think I said (and the podcast isn't up yet so I can't check) something about human nature taking it's tole.  My logic (which may be more post the event than during as is the way with live radio) was that traders, having pushed the markets up last week, would be feeling nervous that they might have over done it and would be cautious this week as a reaction.

It occurs to me now that this is more true than I realised at the time.  As it happens the markets do appear to have gone down a little this week.  But I'm not claiming any kind of soothsayer status.  (I wish!)  More the realisation that the biggest flaw in our current model is surely ourselves.  If computers, using pure logic (something they're not yet capable of in my opinion as we programme them) had full control of the markets we probably wouldn't be in the current mess as no computer could have been so blind to the over-valuations of the past 5 to 10 years.  As I understand it computers now fly our planes, and do so many tasks that we still kid ourselves humans can do better, because in fact computers make infinitely less mistakes than any human ever could.

It's very easy to get all '2001' or 'I Robot' on this topic.  But the more I think about it the more I can't wait for the advent of AI.  What a treat to have all our mundane tasks done for us (and how many of those are there for your average SME owner?) without having to think about them.  Leaving us to find other things to get our creative heads into........  oh!

Customer Feedback

I thought this was a helpful piece on the topic.

Leadership

It's a funny thing and a terrible cliche.  But the more amenable and flexible I try to be, the more unsettling it seems to be for the people I manage.  The more apparently ruthless and inflexible I get, the calmer they seem to be.  In my view they have an easier life and more control over their environment when I accommodate their needs and allow them to set their own agendas and time frames.  But they seem to find it unsettling.  

It seems to come down to good old fashioned boundaries.  I find it comparatively easy to provide boundaries for my kids but I don't see why I should treat my employees like they're children.  Are they mad or is it me?

A local test for globalisation

So my biz partner is going to the US for 6 weeks.  He's got stuff he needs to sort out over there and the biz has got to the stage where our very able team of four should be more than capable of running the show while he's away.  There's a limit to what I can do to help, given my other commitments, and he will be able to work remotely, though the time difference means he won't be around until 4pm UK time.  So this really will test just how robust our enterprise has become.  In theory, with modern communication and the fact that two of our team work on France full time anyway, it should work perfectly.  But I have to confess to being a little nervous.  Will let you know how things develop over the coming weeks.

Different kinds of business - Plus Ça Change in the Music Biz

I spent a very enjoyable day yesterday with Tony White, a music producer in Dalston who explained some of the vagaries of the music business as it is today to me.  And like I seem to find everywhere I look, there are some hopeful signs in amongst the seemingly endless gloom.  Sure the music biz is not what it used to be, a cash cow for major labels and publishers and successful song writers.  But music is still being made and, here's the interesting bit, sold.  Apparently certain genres, dance for instance, are still producing international hits that generate sales.  These are mainly via download and the artist is increasingly the main link in the chain.  Artists who manage everything from writing to recording to touring to sales are able to make a decent living when previously this was often only possible with the aid of music biz infrastructure that the labels could provide.  So music's becoming a niche product where singer/songwriters produce a lot of material for a smaller market but make more margin than they could have dreamed of under the label system.  Bit like it was before the '50s then?

SME Listeners

Am trying to prepare for James Max's Business Matters show that I'm going be doing tomorrow on LBC Radio.  It's amazing how all the biz stories I come across are either related to big political issues or big corporates.  There really is very little space for SME issues in the main coverage.  (A theme of mine.)  Yet we keep hearing how important the SME sector is to the economy now and surely a large part of the audience for a show like James's will be small biz owners.  But where are they in the news or even online?  Just think of all the taxi drivers for a start!  

Quite like this point from 'I could be the Governor of the Bank of England' about UK manufacturing.

Will it buy us a boat?

This is a phrase my biz partner and I use to mean, "are we doing more than paying overheads, wages, suppliers and taxes yet?" i.e. did we make any money for ourselves?  And laughable though it sounds, it is surprisingly easy to forget.  You can be so busy running your business that you forget to check if you can feed yourselves.

Now I know it's also very easy to decide how much you need to earn, take that out of the business, then wonder why your going bust.  And though I've seen it done several times, it's stupid.

So how do you move from keeping your head above water and paying your staff to the excess wealth that everyone who doesn't run an SME thinks you're making already?  How does one move out of the corner shop, so to speak.

The honest answer is I don't yet know.  But having got our business to the state where it will just about run itself without generating much in the way of dividends, this is the next important question to which we shall address ourselves.  The truth is that I have no real desire for anything as opulent as the picture above suggests.  But if you can't create a modest pension for yourself from your endeavour, what are you in business for?  Thoughts and ideas, most welcome!

What does SME stand for?

I've been asked this a lot in the last week.  Apologies for the lazy use of acronyms.  It stands for Small and Medium-sized Enterprises, i.e. Small Businesses.

There are various definitions of what constitutes an SME.  But things that stand out for me (and show just how vital we are as a group to the UK - especially now) are that; 

• "out of a total of 4.8m UK businesses, less than 1% were large corporations (i.e. over 250 employees)"
  
• "the majority of the [UK] workforce is employed by SMEs. Statistics [] show that out of 4.7 million businesses in the UK, 99.3% were small firms with fewer than 50 employees, and 0.6% were medium firms with 50-249 employees."
  

So where are they and why is their voice always drowned out by the 1%?  We all know the answer is time and resource but if ever there was a time for government to make an extra effort to tip it’s ears towards the SME community….

Biz Rates not going up by full 5%

So the Chancellor has decided not to implement the full 5% rise in business rates due to come into effect today. Hooray!

Couple of points that occur to me.

1. isn't interesting how little coverage this event has got today. I know Obama and the G20's a really big deal but it's not easy to find the story on the BBC web site half a day after the announcement.

2. what made him do it at such short notice? gulp!