Sunday, 9 May 2010

The people have spoken

The election has been and gone, and the country still waits with bated breath about who will govern in this forthcoming Parliament. This blog has no interest in the partisan politics of the past few months but has a great interest in the state of the economy and about the nature of the threats and oportunities that face our small retail businesses in the UK.

It is to be hoped that the outcome of the 'behind closed doors' deliberations between parties will eventually result in a stable government and, a government that understands the pressures that are already applying themselves to small businesses.

The most important thing for SME (small to medium sized enterprise) retailers is to be positive in your marketing and cautious in your expenditure. The need to control costs is paramount for those that intend to survive the coming weeks, months and years. Welbeck is willing to buck the trend amongst commentators in the world of retailing and to be honest in the appraisal of the situation. There is no point in following the advice of ccertain prominent figures associated with the British Retail Consortium and accepting that to face reality is to talk oneself into a downturn - we have already been there for many months already and it will not ease by hiding from the facts. What is essential is to measure the impact that a protracted period of fiscal constraint is likely to have on your own business (you can bet that the BRC members are doing precisely that!)

Consider the effects on your customer base of the probable reduction in the number of public employees - if your business is reliant on a customer base in which public and civil servants are a major factor, then it is probable that your trunover may be affected unless you change what you do. Consider the effects of increased pressure on your supply chain, especially if it is reliant on the UK or other nations where the fiscal pressures are most pronounced. Will the suppliers be forced out of business, will their terms alter unfavourably towards your business - have you checked to see if your supply chain can be made to work better for your business? Consider the effects of any increases in taxation on your business - VAT, Income Tax and National Insurance, Corporation Tax and taxes on fuels and commodities such as alcohol.

It is possible that none of these will have any impact at all on your business, but it has to be admitted that that is extremely unlikely. It does not mean that we all need to panic and run for the hills; it does not mean that we need to give up now ( a tough period in your own business is better than an even longer period on diminishing state handouts!). What it all means is that we all need to be extremely conscious of carrying out practical risk assessments on our businesses.

Take a look at your processes are they cost effective and achieving what you need them to? Look too at your supply chain - it's amazing how often SME businesses fail to negotiate, or even to look beyond the suppliers that they have used for years - now is not the time to base buying decisions on so-called personal friendships; personal friendships are for personal life not for business life.

It is sensible to review all of the costs in your business to ensure that the investment that you have is being made to work most effectively - question and challenge every expenditure and keep a close eye on the cash flow. That is not to say that you will not sepnd, that would be inviting a business death by a thousand cuts - you must still invest; invest in marketing (but remember to measure the performance of your marketing activities so that you repeat only those that give a good return on that investment), any business that fails to communicate with its customers will simply! Invest in your staff - that does not mean pay rises all round and taking on extra staff, but it does mean ensuring that they are performing to the best of their abilities and achieving what your business needs them to do. The investment will come in well targeted training, in building upon the skillsets that individuals have and in rewarding improved perfomances - even if only with a very loud thanks!

Welbeck will be watching the state of the High Street with extra interest during this period.

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