Thursday 23 August 2012

Austerity or fiscal stimulus


The jury is still out, although it seems clear that the current Chancellor appears to favour the former.  

As I type this, a survey from the Institute of Directors (IoD) has just been released, which is critical of the Chancellor’s ‘belt tightening’ policies.  Sadly, the IoD members conclude that the country will still be in recession at the end of 2012. 

Whether that will be the case remains to be seen but as the Labour PM, James Callaghan, admitted in 1976, additional spending only worked by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment.  At the moment both of those factors are just about under control and no one wants them rise.

Much of the capital injected into the banking system through quantitative easing has ended up there – with the banks…which has increased their capital base significantly.

In spite of claims that lending has increased, small businesses are still not getting the funding they require.  A recent Bibby Financial Services survey suggested that less than one in ten small businesses succeeded in gaining finance from their Bank. Could it be that banks are not lending because they have hidden liabilities?

Unfortunately the whole economical situation is extremely complicated.  But without funding for business where can the country find an impetus?  Rather than pussy footing around, shouldn’t the Government step in to sort out the banking sector once and for all.

Posted on behalf of Advisor Angus.

Friday 10 August 2012

Going for gold


What fantastic success from Team GB!  If there’s one thing we can learn from the Olympics it’s got to be the concept of commitment.  I don’t know about you, but I’ve been struck by the lengths that athletes go to in order to achieve their goals.  There are no half measures!

I guess business is much the same.  If you’re committed to your business idea you’ve a much greater chance of success.  But there are important considerations that no amount of commitment can replace.  Sadly, for every business that succeeds there are many others that don’t.  ‘It seemed like a good idea at the time’ is on many a business tombstone.  Here’s my checklist for evaluating your business idea.  It’s not definitive and I’m sure you’ve got other thoughts, so let me know!

-           What’s different?
           You have to compete on something, be that price, quality, delivery mechanism, etc., etc.  It’s hard to find an original idea but it needn’t be hard to out-do your competitors.

-           Is there a market?
            What seems like a really cool idea to you might not have the same appeal to everyone.  Before you start selling hand knitted cat cardigans make sure there are lots of pet owners out there clamouring to buy them!! 

-           Where are your customers and how you will reach them?
            Amazing though it sounds, many people just launch into a business without doing any research.  You might get lucky, but you probably won’t!

-           What price will you charge?
            If people can get the same elsewhere for less, they will.  If your price doesn’t cover your costs and leave a profit margin, you’ll fail.  ‘Simples’ as the meerkats would say!

-           How will you grow?
            If you are a one man (or one woman) band that’s fine, but you’ll soon reach a ceiling beyond which you can’t take on any more work.  Is that your plan, or are you aiming to be the next Richard Branson?  Knowing if you are going to grow and if so, how, should be something you consider at the outset.

-           Where are your knee pads and helmet?
            In other words, how will you protect your idea?  Your intellectual property is often the most valuable business asset you have.  Ask how easy it is for others to steal your idea and get legal advice on how to protect it. 

-           And finally….do you have the commitment of an Olympic athlete?
            Starting a business is hard work.  It will have more lows than highs, especially in the early days, and there will be times when you wonder whatever possessed you to be your own boss.  Do you have the attitude, skills and, most importantly, the commitment to make it work?