Yes, I was listening to the radio as I drove in this morning. Oil prices have doubled, wholesale gas prices are up 7 fold, inflation is heading for 18%, interest rates are on the rise, strikes are rife and the rhetoric from the hopefuls for the Tory leadership seems to be confrontational. Well, that’s what I am hearing anyway.
When things look dark, I have a saying … “don’t worry, it’ll get worse!” It always makes me feel better.
I cannot do anything about any of this. I cannot exert any control over these events. All I can consider is the impact of all these on our business and how we navigate the current situation. That is where we can exert some control. We make judgements and take decisions. We will get some right and others wrong. That’s business!
I have some ration cards somewhere that were distributed when the petrol price almost doubled overnight at the hands of the Middle Eastern oil producers in the mid-seventies. Inflation and interest rates were worse in the early eighties, house prices were rocketing at the same time. Strikes and confrontation were the order of the day. We have been here before, and we will get through it. But it does provide copious amounts of media fodder especially when they can shout doom and gloom in every broadcast.
So, what can we all do to keep our businesses afloat? Every day we make decisions about our own costs and the prices we charge. Everyone seems to be struggling to get staff at the moment. It’s not just hospitality that carries that burden. We can decide to cut costs and reduce our marketing spend. That’s a possibility, but not one for us. We will continue to market our services, so that when the recovery begins, which inevitably will happen provided we have not been nuked by Putin, we are in a stronger position.
Back in 2008, at the height of the banking crisis, we bought another accountancy practice increasing our business by 20% overnight. In 2011 we bought another and in 2012 another. During those 4 years we increased the size of our business by 4 times, and all during a period of economic crisis. When so many people had battened down the hatches and reduced sail, we kept sailing hard. Alright, some of the sails got damaged in the heavy seas. It was hard sailing but there was always work out there to be gained. Yes, it was hard but the lack of activity by others in the market meant we did quite well in growing our business.
In difficult economic times, some businesses will go under, others will mark time waiting for better trading conditions while others will use their skill and nerve to sail on regardless. Now, it may be that some of these adventurers will founder but in all likelihood, even they will get back to trading and moving forward again.
So, there are factors at the moment that we have to take into account in everything that we do. However, the thing that concerns me most is the imminent changes to the tax system. Even here there are uncertainties. Will the proposed rise in Corporation Tax to 25% actually happen? Truss wants to cut taxes but maybe that will be for individuals. Will companies have to fund that in part, with Corporation Tax rates ringing even higher, The top rate of Corporation Tax, not that long ago, was 33%.
What about MTD for the self-employed? MTD for VAT is now well embedded into the tax system, but in April 2024 most small businesses will start making quarterly submissions to HMRC giving HMRC a quarterly summary of their trading to date.
Do you all have the software that you need to make these submissions? Do you want us to make them for you, so do we need to find more staff in an already tight labour market? What will that do for wage rates? Can we pass these additional costs on to small business owners already struggling in the current economy? Questions and more questions. More judgements and more decisions to be made. Is that not just where we are? But these are all decisions that are within our control if we choose to exercise control over our own destinies
I remember hearing that the best decision you can make is the right decision, and second comes the wrong decision. The worst decision is when you don’t grasp that nettle and you make no decision, leaving your fate in the hands of others. At least if you take the wrong decision, you can generally change your mind, once you realise that you got it wrong. And any successful business gets so many things wrong. But that’s fine. Learn and move on. You will be stronger as a result.
So, if you are unsure what to do next, go and make a wrong decision. You never know, it may turn out to be the right decision after all.
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Alan E Long
The Long Partnership