I am writing this on the day that Rishi Sunak becomes UK Prime Minister. The last few weeks have seen some extraordinary scenes. Has it been a failure of the democratic process? Possibly, but every system has its weaknesses. What will the next few weeks and months bring? I don’t think anyone would like to predict that so we will just have to wait and see. We will be steering our businesses through uncharted waters without any map or even a weather forecast. What’s new!
Isn’t it nice to get back into the cosy world of business where all you need to worry about is turning a profit to support you, your family and your staff and their families? It’s all very predictable. At this point, you are probably wondering if I have finally lost my marbles but let me explain.
Over the last few weeks, months and even the last few years, the political landscape in the UK has been stormy and outcomes unpredictable. We had Brexit and all the drama around that. It was not going to affect the UK economy but clearly has. There is the independence question. Where will that end? PMs come and go. If you ever watch proceedings in the House of Commons, especially PMQs (Prime Minister’s Questions) it is clear who currently has the best script writers, but fundamentally it resembles an episode of Casualty or East Enders, neither of which I ever watch by the way. There is no one with vision who has the charisma and political weight to lead the country through the current storms. So on that front, we are b******d.
Now, if you look at where we are in our business lives. You have either started your own business or bought one. We have done both. You have a product or products and or services to deliver. You may employ staff. We have over 40 now. You have to set prices for your products or services, and you have to deal with customers. You need to record what you have done and pay your taxes. You know and understand that you must make a profit and that means setting realistic prices which is interesting to say the least in periods of high inflation. But overall, although there is a lot to plan, decisions to make and actions to implement, it is nothing that someone 100 years ago would not recognize. I accept that they would not recognise the technology, but they would absolutely recognize the fundaments of what you do every day.
- Value creation – You need a product or service that someone values and is willing to buy from you.
- Marketing – You need to tell people about the product or service so that they are interested to learn more.
- Sales – You must persuade someone to trust you enough to put their hand in their pocket and pay you money.
- Fulfilment – You and your customer each have something that the other wants and values and you agree to exchange, money for goods or services. But both sides must value and appreciate the outcome. You must facilitate the delivery of the product or service
- Finance – Is the income greater than the outgoings? If so, you can continue to trade. However, is the excess sufficient to compensate you for the time and effort that you must commit to the business. Do you have a more profitable and stimulating use of your time and energies, the supply of which is limited.
Nice, simple, dependable, predictable processes. Once you have mastered the fundamentals and given that you are all highly intelligent grafters, there is no economic storm that you cannot navigate. Note that I did not say it would be easy. A life in business is a tough life, with many difficult decisions and any number of sleepless nights. But it is your ship, and you are at the helm. What more could you want?
As we steer our businesses onward, what fiscal headwinds can we expect from Rishi Sunak as we navigate our way out into the open sea. Wouldn’t it be nice to have a weather forecast. What will Rishi do that will slow our progress or indeed blow us off course.
I am pretty sure that the rise in Corporation Tax is here to stay, and that alone is so damaging to many small and growing businesses. Will the Health and Social Care Levy make a re-appearance, perhaps with a different name. Will Income tax rates rise? Possibly not because the freezing of personal allowances and the tax bands has increased the tax take significantly. Will the rate of Capital Gains Tax go back to being at your marginal tax rate, with many of the reliefs paired back or even removed. Will the present tax exemption on the sale of your home be restricted so that homes at the top end (just like Rishi’s London home) would be subject to Capital Gains Tax.
Wouldn’t it be nice to have a crystal ball? Mind you I heard someone say last week that if you live your life by a crystal ball, you learn to eat ground glass. Something to chew on!
Now, go out and make a profit, no matter what the economic or fiscal conditions, not because you want to but because it is essential for your business to survive.
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Alan E Long
The Long Partnership