An economic approach to budgeting…

Poor George. After 57 minutes of huffing and puffing  he sat down to a universal – what? I mean, come on, what could the man do given the hand he’s been dealt? Frankly he should have saved himself the effort and just issued a press release. Shorn of all the political rhetoric it would have run to a page and a half and briefly outlined the key changes that were to be made.

Such an approach would obviously leave messers Flanders , Peston  and Robinson at a bit of a loose end (which is no bad thing) but would have better reflected the true impact of the budget statement on everybody – very little.

To be honest virtually all budget statements in recent years have had little or no economic impact. Either their contents had been leaked in advance, or had already been announced the previous year, or anything of real impact had been tucked away in the forests of press releases that were available from the HM Treasury website within seconds of the chancellor sitting down.

It wasn’t like this in the seventies. Then a packed chamber of MPs (there was no television or even radio broadcasting in those far off times) would hang on the chancellor’s every announcement, which were then relayed to a waiting nation by two of the three television channels available at that time (the children’s programmes being shunted to BBC2 for the day) by studio presenters and guests. 

Invariably booze and fags would go up and incisive questioning would extract from typical “working class” families the viewpoint that they expected to be worse off as a result of the budget. Oh well no change there then…..

It isn’t just politicians and pundits. People do like to make big things of budgets. Big corporates especially do, producing reams of paper incorporating three year visions and MBA techniques to produce a sizeable document that is often out of date by the time it is finished.

There are growing arguments that budgets are a tyranny that stifle business. They either prevent people seizing opportunities because they are not in the budget or encourage needless spending as people adopt a use it or lose it approach and spend what their budget says they should spend.

Rigid budgeting cultures can and do have a negative impact on businesses. However every business, whatever its size, needs a good financial plan both as a route map to where they want to go and as a tool for setting goals and targets. A plan that recognises the key profit and cash drivers of the business, and that can be easily and regularly adjusted to model different scenarios and that can quickly reflect changes in the business environment.

It therefore follows that if you do prepare annual budgets, you should adopt an economical approach in that they should be simple, be prepared with the minimum of fuss, be easy to understand and be able to be quickly updated. George, Ed, Vince or whoever please take note. It would save us all an awful lot of time….

Writer’s block…

OK it has finally happened to me. The deadline is fast approaching. I’m stuck! What the hell am I going to write about this week?

Quick, check the news to see what might affect small businesses, the driver of Britain’s, indeed the world's future growth according to the Prime Minister. Oh and my client base. Uprisings in the Middle East? Hmm. Good for them. Maybe. Clearly not good for oil and food prices, which will stoke inflation even more, which may put pressure on wages, which will cause interest rates to rise, which will deflate house prices, which will probably cause a dive in confidence and double dip recession…..

No don’t go there. Too depressing. Let’s be optimistic. That’s what is going to get us out of this mess. Too many people are talking the economy down. The uprisings will probably sort themselves out and oil prices will fall back. Life will pretty much go on as before. Well for those of us in Britain maybe. Possibly not for those people living in Egypt. Or Bahrain. Or Libya. Or……..

Maybe I can write about some Client activity? (Please note. Capital letter for Client. Very Important People) For many of my Clients it is budget time. That means updating business plans and strategies in the light of current economic conditions. An opportunity to look at strengths, weaknesses, opportunities and threats. A chance to dream about what might be possible, and then turn it into something that is. 

Can we still grow in the current market? Come on, we’ve only got 5% or so of the market. If we can grab another 1% that’s 20% growth. Surely if we know our market and clients, and do the right things properly we can achieve that, regardless of what is happening in the Middle East. Or elsewhere for that matter. Reason to be cheerful – part one.

(Perhaps we might feel confident enough to take somebody on. Perhaps one of those thousands of public sector employees that will become available in the coming months. Although if we do we will clearly be in the minority …)

How about some of the people I have read about or listened to recently. People like entrepreneur Victoria Wills who had a dream, pursued it, made it happen and lived to tell the tale in an amusing and witty fashion. It is hard not to be inspired when hearing her story.

Finding time to attend such events is one of the major benefits of being a freelancer. Sadly too many employed people never get the opportunity to do so even though the benefits in terms of inspiration and confidence to go out and just do it could be immense.

But back to the point. How am I going to get through this writer’s block? Where am I going to get my 450 words from……?