All the nasties……?

Oh dear. It seems that one in four small business owners are so depressed by the state of the economy that they want to give it all up and revert back to being salaried employees again. Apparently they have lost their enthusiasm for being the boss and crave the relative stability of working for somebody else.

Yes, frustrations with increasing regulation are being blamed, but I tend to think it is the constant worry about where the cash is coming from to pay suppliers and wages and the efforts involved in trying to win new orders and deal with ever more demanding customers (i.e. the travails of everyday business for which the buck stops with the business owner) that is the real culprit. No wonder eyes are cast enviously towards the idea of a no risk monthly payment into their bank accounts that enables them to leave their work at the office when they go home every evening.  

Make no bones about it many of these business owners did extremely well during the boom years of the last decade. Equally they have had to dig deep into their pockets over the last few years to keep their businesses afloat during the downturn. Therefore their trepidation at the prospect of another year or more of austerity is understandable.

Of course risk free salaried work is also not what it used to be. There is a noticeable increase in the number of job adverts that quote an OTE (On Target Earnings i.e. minimal salary plus commission) figure rather than a fixed salary. Or what were once jobs with a wage, such as van drivers, are now “self-employment” opportunities. The business owners who remain are clearly looking to shift the performance risk back onto their employees, much as many big employers have been shifting their pension risks for a number of years.

It seems that now the good times have well and truly gone and the banks are no longer handing out money without due care and attention, the attractions of running and growing your own business for lots of hassle and uncertain reward are diminishing rapidly.   

This ought to be of real concern to a Government that is relying on the private sector to take up the slack of job creation now the public sector jobs bonanza is over. Therefore it seems an odd time to focus on the excesses of capitalism, as represented by unjustified executive pay, rather than what can be done to really support those brave enough to take on the responsibility of building a business in a financially responsible way.

At its best capitalism provides motivated imaginative individuals with good sustainable business ideas the freedom to get on and create wealth and jobs. We need to be careful that the justifiable attacks on nasty capitalism that are being indulged in at present do not crowd out the benefits that the nice version provides.

Happy Holidays……

This is a great month to be an employee. Maybe not such a great time to be an employer. Possibly disastrous if you are self employed. Two long weekends in quick succession mean that for some people taking three days annual leave will give themselves eleven days away from work.

Funny things holidays. The Germans love them. The Americans don’t. The Japanese do but don’t take them. It’s often argued that we don’t have enough in the UK and therefore one extra one to celebrate the nuptials of William and Kate should be welcomed.

I have read all the legal bumf about whether a holiday actually has to be given for the Royal Wedding or not but in reality you’d look a really mean employer if you did not give it with the consequent impact on staff morale it would have.

In a salaried office environment such as say a government department holidays can be absorbed and the impact of the extra day minimised. For an SME trying to stay afloat and dependent on every working hour the challenge of coping with that extra day is that much greater.

Fortunately most employees will take the holiday and then work doubly hard to ensure that the business does not suffer. It is this unwritten commitment that is the backbone of many businesses, which is the main reason why the raft of employment regulations tends to grate so much.

Ah well, like it or not, it’s there so make the most of it. For those of you who celebrate it, Happy Easter, for those who don’t have a good break.

The future is bright, the future is risky…..

Last week’s media was full of a survey that 20% of the working population fear for their jobs. This was naturally presented as a problem and another probable sign of imminent double dip recession.

Actually I want to turn this around. 80% of people in jobs obviously feel secure then. They believe that they are likely to remain in employment. In how many other countries of the world does this percentage of the working population have the luxury of knowing where their next paycheck is coming from? As you can see statistics can be used to make any point you want.

Naturally the figures above only tell part of the story. A number of people in employment obviously do feel insecure. However there is another group of people who know what insecure really means – people who are self-employed and/or running their own business. These have increased rapidly in number over the past few years as traditional employment routes become harder for many to follow.

A pattern is emerging. Things are changing. The old rules don’t apply anymore. Risk is becoming an increasing factor in people’s lives, even those who don’t seek it. This a complete reversal of the post war political and economic consensus (as I look at it that looks such an outdated term – for those that are not sure which war I mean it is the second world war). Uncertainty is back.

I can personally identify with this. Having gone down the freelance route I know that there is a big mental adjustment to make once that monthly salary no longer hits the bank account with metronomic regularity.   You have good times. You have not so good times. You deal with it and manage it. You learn to be flexible and organise your life and finances accordingly. Same as if you run your own business.

Young people are certainly learning this lesson. Get a degree and get a good job? End up with a large debt and no job at all more like. Job security? What’s that? Pensions? Don’t make me laugh. More and more of them are rejecting the secure employment lifestyle (assuming that they can find it) that their parents aspired to. They know that in order to survive in the future a new attitude is required. 

Post war British government has been based around de-risking life by introducing a wealth of social and employment protections. However life isn’t like that anymore. Risk is something that has to be recognised, embraced even, and managed. The next generation is starting to learn and adapt to this. And this ultimately has to be good for Enterprise Britain.

Cadbury and some "flakey" logic…..

“We can run this better without you!” “No you can’t!” “You want us on the cheap!” “It’s a fair offer!” “Isn’t Isn’t Isn’t!” “Is, Is, Is!” “Oh OK, we’ll pay a bit more then.” “Oh fine we’ll accept.”

And thus another “hard fought” takeover battle limps to its predictable conclusion. A victory for market driven capitalism and an injection of new ideas and energy into the UK economy, or a sad case of yet another key British company being sold into foreign ownership with the inevitable consequences for jobs and investment?

I will leave that for you, dear reader, to decide, although the opposing viewpoints are well presented by John Stepek of Money Week, and Alex Brummer of the Daily Mail.

What I would say is that whole Cadbury issue has been a sideshow, and a symptom of the post war British focus on job preservation over job creation. Of Cadbury’s 45,000 odd employees, less than 5,000 were based in the UK. Whoever had owned Cadbury, it is unlikely that this number would have increased significantly, and it is more than likely that it would have declined over time.

The UK needs to create over a million new jobs if it is to get back to the peak employment levels of 2007-2008. These new jobs are not going to come from businesses like Cadbury. Aside from the public sector (which for obvious reasons is not going to go on a recruiting spree anytime soon), the only way that we are going to get what is in effect an exponential increase in jobs is by developing high growth entrepreneurial companies providing goods and services to growth markets.

To be fair, the government often makes the right noises about creating the right environment for such businesses, but sadly as it is easier to regulate and dabble in showcase schemes, than create a cultural change, that is what tends to happen.

However, we have to accept that the economic conditions of the noughties are unlikely to return, and that if we want to get back to the levels of confidence and prosperity that we enjoyed during that period, then we need a business culture where concerns about takeover battles such as Cadbury take second place to the real issues surrounding job and wealth creation.