I’ve got the brains you’ve got the looks…..

Back in the 80s the Pet Shop Boys banged on that “There’s a lot of opportunities, if you know when to take them, if there aren’t, you can make them”.

It is easy to think at the moment that opportunities are in short supply but talking to Henry Camilleri of independent financial advisors Camilleri Associates this morning at a breakfast seminar organised by Clydesdale Bank, it was interesting to hear that he has used the current wave of redundancies by major insurance and investment firms to increase his network of experienced financial advisors. As he said, the chance to bring on board some highly talented people that would not normally be available to him was too good to pass up, and has enabled him to add some weight to the strategy that he has set out for himself to improve his business in 2009. This was one of the points we made in our recent SMART presentation so it was good to hear of a practical example.

The topic today’s seminar was ‘Doing business in a slowing economy’ with Terry Irwin of TCii Strategic and Management Consultants, a common enough theme perhaps, but the point that companies need to get back to the basics of financial management in order to survive and thrive in the current market bears repeating again and again. Our hosts Clydesdale Bank also made this point in relation to the fact that their parent company National Australia Bank is currently one of the few banks that is relatively unscathed by the current banking turmoil. Terry Irwin believes that we should hit the bottom of this recession during 2009, with some small signs of recovery starting at the end of 2009 or beginning of 2010. Given the speed that the economy is unravelling, I would agree with his assessment about reaching the bottom, but would suggest that businesses adopt the advice of the Pet Shop Boys regarding opportunities in order to plot their own course to recovery outside of any general economic improvement. Henry’s actions above are good start along this road.

Enterprise Zone strikes a chord

Leafing through last Sunday’s Mail on Sunday newspaper I was interested to see how many articles on pages 66-67, the “Enterprise Zone” struck a real chord with what we are looking to achieve in 2009.

Pride of place went to our good friends at BCMS Corporate who had their “refreshingly different approach to selling companies” and their current successes in what conventional thinking would have you believe was a difficult climate for buying and selling businesses featured in this article. A very SMART business in our view.

Not so encouraging however was the news that 38% of small businesses do not expect to survive 2009 because of the downturn. Commenting on the survey carried out by Financial Mail and its sister site thisismoney.co.uk, Nick Palin from the Forum of Private Businesses said that he believed that the survival of many businesses will depend on the banks, who he maintains “are often still bracketing all small firms as high risk despite pressure from the Government and the small business lobby.” Banking relationships are crucial and are something that we will be covering in a presentation to Surrey Chamber of Commerce members on 3rd February in Shepperton (booking details).

Interestingly though, according to a report on a survey by Tenon Recovery, businesses that have been trading for between five and nine years are most likely to benefit from opportunities in the downturn. 37% of companies in this category say the economic downturn has provided opportunities for their business, including “taking clients from competitors, purchasing assets and stocks at a good price and increasing their client and customer base compared with only 29% overall”.

The basic message from these Mail on Sunday articles remains that existing SMART companies will continue to prosper, but equally it is not too late for companies to get themselves SMART to give themselves every chance of not only surviving but thriving.

2012 and all that

There may be doubts as to whether the Chancellor’s VAT stimulus is the best way to get the economy going, given its consumer focus rather than business one, but there is another massive injection of cash taking place targeted directly at businesses that should have them salivating.

I refer of course to the 2012 London Olympics. To investigate these opportunities further a couple of us pitched up to a briefing held at Lords Cricket Ground (it’s a tough life etc…..) run by the London Business Network. There we listened to speakers from the London 2012 Forum, UKTI and even the British Columbia Ministry of Technology (I am sure I don’t need to tell you that the 2010 Winter Olympics are taking place in Vancouver).

Case studies were also presented and it was worth noting that it is not just businesses that are involved in construction and sports services that will benefit. Examples were given of small local florists and catering companies who have also won contracts.

One other point that emerged from the Lords briefing was that Olympic and sporting opportunities should persist long after the flame has been put out on the London games due to the transferable skills that will be gained in the infrastructure and support industries. There are world and regional championships being held on a frequent basis that could provide business opportunities for those that keep their eye on the ball.

I am sure that SMART businesses have already registered with the opportunities website but for those that have not quite got round to doing so the link is below.

London 2012 Opportunities

Alastair has spoken

Tuesday

So Alastair has spoken. I am not going to go into the economic or political significance of his “mini budget” beyond noting that he appears to have taken a sizeable gamble, which if it fails could lead to considerable difficulties for the UK economy in the future. However there are a number of measures which will directly impact on our clients, both present and future, some of which are discussed below.

Firstly credit where credit is due. There are many things that will benefit small and medium sized business, as long as they actually do what they say on the tin. These include the small business finance scheme, the loan guarantee facility for small businesses who export, the possibility of negotiating flexible payment of tax liabilities in cases of hardship, empty property relief and the ability to carry back some business losses for up to three years. The delay in the increase in the rate of small business corporation tax and the deferring of proposals to tackle so called income shifting are also very welcome. We at Orchard will certainly be looking at how our clients can benefit from these measures.

Regarding the centrepiece of the Pre-Budget Report (PBR), the temporary reduction in the rate of VAT is particularly good news for those that cannot recover input tax such as charities, public sector bodies, health and education, and er banks and insurance companies. For other businesses there will be the administrative hassles of changing systems, prices and catalogues, especially in retail which is in the middle of its busiest period and where there is already selective discounting taking place. Indeed if I were a SMART retailer, rather than cutting prices across the board, I would the use the VAT cut both on targeted price reductions i.e. as part of the price element of my marketing mix and to squirrel some cash away.

However all businesses, particularly those working in the business to business sector will need to be mindful of the cash flow impact of the VAT reduction – firms that had budgeted VAT at 17.5% should now adjust their cash receipts downwards to reflect the new rate of 15%. This could be a useful argument to deploy if you are looking to agree a payment plan for taxes with HMRC.

The main sting in the tail going forward is the increase in NI rates for both employers and employees, which represent an extra cost and cash burden. However the impact of this could be mitigated by looking at flexible remuneration ideas such as share schemes and salary sacrifice options.

My view remains that it is confidence and job insecurity rather than cash that is the main break on people spending and it is not clear whether the measures outlined in the PBR will have an impact in this area. Clearly I hope for the sake of UK plc there is some positive benefit from all of this but I remain to be convinced. Meanwhile I would continue to urge businesses to follow the basic principles of financial management and look for the opportunities that are always going to be there for SMART businesses.

Antony on the road (4)

Thursday

My turn to be star attraction this morning, turning up bright and early at Ashford Manor Golf Club in Surrey to give a seminar to the Surrey Chambers of Commerce (http://www.surrey-chambers.co.uk/) on how to survive and thrive in the current economic climate. The seminar is based on our Orchard SMART programme which has been specifically devised for the current situation and which aims to focus clients on looking for opportunities whilst ensuring that they tighten up on the basics financial control and management. In addition to finance, the programme also addresses sales, marketing and people issues and it intended to help business for whom financial management was not so important in the good time but is now essential in the current climate.

More details can be found on our website but what was encouraging was the positive attitude of many of the businesses there to the current situation and the belief that they could be SMART enough to survive and thrive.