04 04 2014
As from 1 April 2014 the Competition Commission is being taken over by the Competition and Markets Authority (CMA) and will assume the consumer functions of the Office of Fair Trading OFT concurrently with Financial Conduct Authority (FCA) who will hold the law powers in relation to financial sector activities for over 50,000 applicable consumer credit regulation firms.
As from 26 April 2014 new lending rules will be applied as a framework for lending when the Mortgage Market Review (MMR) comes into full effect. For all types of regulated mortgage contracts, lenders will be looking for the ability of all borrowers to afford the loan at both the current rate and, additionally, if there were rate rises. It applies to staying with the same lender; repayment methods, further advances, part or full redemptions and equity transfer, as well as considering a new lender and non-bank mortgage lenders subject to risk-based capital requirements and liquidity risk management controls. Using detailed scrutiny, this advice driven model in essence focuses on responsible lending and affordability assessments.
‘The more organised you are and the quicker you can get to the point of exchanging contracts, the less time there is for movement in the market.’ Although we haven’t seen it recently, apparently gazumping is on the rise.
And …. crazy prices continue….
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What’s Growth Got To Do With It?
Fact: Businesses are the closest to consumers
When there are concerns about consumers (pretty much a full time occupation for the business owner) those concerns translate to any concerns about the long term outlook – there is a connection between business’ consumers (customers) and forecasts of upward trajectory – it’s the running a successful business fundamental – there are few who ever take their eye away from concern, or never have a long term outlook aim of upward trajectory. And, it’s a fundamental applied to before the 2008/09 crash and during the recession; and it will continue to be for as long as there business owners running successful businesses – healthy economy or not.
Do moderate improvements in economic data mean moderate improvement in the intentions of business? Is it upward trajectory time?
Without getting into the nitty-gritty of different indexes and surveys; or differing business sectors’ economic pressures, aspirations and challenges, it seems with the notion of being in a bad BUT improving place there comes an ability to pull out ideas that had been put away for a lengthy hibernation. Published data which kick-started the New Year continues to seemingly remain optimistic for the near future; there’s an encouraging, in general positive, economic outlook as we enter what is (for some) the final part of Q1 territory and for others the exit of Q4.
Business owners want to grow but without adequate support and resources and a healthy strategy….?
Ever the proud wearer of my sceptic’s badge (I’d like to think held firmly in place with balanced thinking), from my perspective and the conversations I’ve had with small business owners (not just in this Q1, or the last Q4, but anytime), any louder platforms’ (media) increased frequency to the noise surrounding economic outlook can skew perception of reality. A recent ‘telling’ strategy is when something gets more headlines than banker’s bonuses during bankers’ bonus season. Compared to past usual headlines at this time is there any wonder I question if something is lying deeper behind the new kid on the headline grabbing block, when, what for some seems a recent conversation is a common conversation for others? Independent businesses’ talk about the long term outlook never stopped because it’s not a recession that’s dangerous – it’s the recovery that’s dangerous.
So, I’m with the guy who said ‘if you’re too open minded your brains will fall out’, as is the business owner (the one I mentioned before filtering concerns, taking aim at upward trajectory for long term outlook with one eye whilst using the other to watch the customers) , the one who isn’t under an illusion about the reality of reality.
Weigh up all the variables and strategize
A common strategy which can support a business in aiming for upward trajectory is to remove (if there are any) some of the profits which, considering the aim of business is to make a profit and that successful businesses are seen as profitable, seems in conflict. However, this isn’t the ‘removal’ of profits in accountancy terms (relating to any drawings or deferrals), this strategy is about responding and managing a business in a balanced manner by not letting it get stagnant. The long term outlook and potential growth is planned with balanced expansion, is sustainable, allowing margin for ‘error’, uses a combination of internal finance (reserves used reservedly) and raising external (bought in) cash flow products, equity funding or business loan as working capital finance.
Those who have implemented this are likely now enabled to feel encouraged by their strategy. And, those who remained stagnant might want to swap cynic’s badge for sceptics; pin a sign of caution with cautious optimism.
To be able to calculate a trajectory
Investment in a business has to be balanced, resources and facilities for growth have to be factored in at the right time; placed for opportunity and shrinkage buffering. Put some sustainable working capital with a pro-active business owner, whose willing to pop a few of their pounds back into capital expenditure and you have a business that understands interdependency.
With general business conditions continuing to be up and down, investing enough to fill the holes without constraint enables a business to operate and continue its transition. Its takes away being powerless and can look away from the headlines and far enough ahead to think about growth.
Image credits: Mike Krzeszak, Dell Inc., Lisa @ Sierra Tierra Article credit: Copyright SUF 2014 ©
03 03 2014
The banking industry has seen a rise in consumer confidence for two years in a row, according to a new survey of 32,000 banking customers in 43 countries. The study around the world showed confidence increasing most in India, followed by Saudi Arabia, with confidence falling the most in Ireland and Spain.The survey showed 60% of respondents aren’t planning to close or move their accounts, which, according to Ernst & Young highlights that this isn’t necessarily because they are confident that they are with the right provider, with some respondents stating they a change would be too difficult or time consuming.
“Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors“.
According to another global study the Arts, Entertainment and Hobbies market sector was 60% more competitive January 2014 compared to January 2013 and Financial Services 60% more so, whilst Sports & Recreation was 121% less competitive in January 2014 compared to 2013 in relation to digital advertising
The three months to February saw a highest level since 1998, in the Confederation of British Industry (CBI) quarterly Service Sector Survey. Optimism indices for consumer services (including hotels, bars, restaurants and leisure) rose to their highest level amongst 139 companies and at the quickest pace since 2005.
The ONS has confirmed the UK economy grew by 0.7% in the Quarter with business investment rising by 2.4% from the previous three-month period and rose 8.5% from a year earlier.
The BBA (British Bankers Association) has said that mortgage lending was 38% higher in January than a year ago and ‘continues to rise compared to a year earlier’. It is widely expected that the Bank of England will raise interest rates by the end of next year, with an inevitable knock-on effect on mortgage rates.
Finally, not certain if this is a record or not but Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago with total losses since its bailout now drawn level with the £46bn put in with 81% stake, in 2008 and The Co-op Group’s losses for 2013 are expected to be greater than £2bn, by far the worst in its history.
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03 02 2014
April sees the MMR (Mortgage Market Review) come into force including waves of change around affordability rules. Those lenders who haven’t already implemented increased affordability checks will do so, as part of applicant stress testing and scrutiny.
Claims made for tax relief on plant and fixtures within property using capital gains, will alter after 1 April 2014 where allowances have been included in a Fixed Value Requirement or Disposal Value Statement.
Finance Bill 2014
From draft legislation there will be changes to the taxation of partnerships and pension tax relief additionally, (not yet published) capital gains tax on the disposal of certain properties by non-residents.
NHBC Standards are changing rules relating to ventilation and heat recovery, fireplaces and chimneys, with design life of timber retaining walls being part of clarifying technical requirements.
LFB (London Fire Brigade) is to charge businesses £290 for call-outs if they attend more than 10 false alarms in a 12 month period in response to a vast amount of wasted time spent attending triggered automatic fire alarm systems.
(No connection to business or finance whatsoever) Simply Interesting for some
F1 will see V6 Turbo engines instead of the 2.4 litre V8s – engine recovery is going to the rear wheels where there will be harder compound tyres of lower nosed, heavier, single exhaust cars .
Image and Article credit: Copyright SUF 2014 ©
Pollex’s Up! Time Thief
Where is the human Pollex situated?
First day away from the office and, blessed crackers, I was exposed as a lazy thinker… I’d have to Google that one… I had no idea
Thinking takes practice - When it comes to cramming certain facts, I’ve never managed to hold the map of routes that circumnavigate burning midnight oil. Although even if I’d realised that higher intelligence (and by that I’m not referring to myself) isn’t insurance against the necessity of putting in practice, I’d still have skipped school in favour of seeing Bowie live. By the time I was a parent I hadn’t even given a thought to parenting needing practice so, as a naive parent, ‘kinaesthetic learner’ was welcomed as enthusiastically as child given a puppy for Christmas and now, thanks to the Great God that is Google we’re all one click away from information overload …. and exposure to more lazy thinking.
Why bother problem solving by exploring ideas when there’s so much ‘knowledge’ readily available? - In business I’m sometimes as guilty as the next in giving out (accompanied by involuntarily inside mouth biting) ‘well… it depends’. The reason is (usually) simple: something is beyond my control; I have to surrender to an, in effect, legion of androgynous troopers, who waiting on the doorstep – ‘outside forces’. For as frustrating as it can be (for all parties), I can’t always give a definitive black and white determination. But, just as I’ve experienced sufficient to realise that time is of the essence in business, I’ve also come to recognise, you’re going to have a hard time if a job isn’t done properly. Hence, I have a more frustrating time when a person emits (often with side of the mouth chew to infer they’re giving thought), ‘well… it depends’ as their camouflage for sitting on the fence – time wasting.
Ground control to Major Tom… Can you hear me Major Tom?
Sometimes it does depend.
Without balanced thinking, pros and cons are useless - Take marketing for example. As each trend, strategy, plan, and measurement, expands, increases, decreases, the general shift becomes, as with each element of a business’s evolution, more complex; especially when (like you and me) the customer factored in to the ROI is increasingly savvier in using online search for information, solutions and comparison. Then take what is now an elemental marketing platform, the website. Every business owner will have their own opinion about the notion that a business without a website is said to be non-existent. A website for some is easy entry into marketing, for others it can be too difficult to even consider, different perspectives, both derived from a ‘thinking’ process relevant to itself. However, the value judgement of ‘thinking’ resides in the overview, which is measured by considering the positive points of having a website and the negative points, or lesser positive. When something hasn’t been tried before, or experience tells of mistakes, messy experience, or similar, the ‘thinking’ balanced viewpoint might go along the lines of ‘it might be worthy of more information for further consideration’.
When thinking isn’t practiced surely it goes the way of any unpractised skill, meaning it can’t be put into operation from experience. Using the analogy of the well-practiced acrobat with an ability to rotate many hula hoops, all at once, quickly enough to make the hoops look as one – that’s what a Venn diagram of the scope of my service business’s crossovers would look like (elements overlapping one another, plus elements overlapping with other service businesses) - just as other business owners’ Venns will have overlaps for how and what they operate. I don’t know about you, but for me it’s difficult to want to only direct my attention to the interesting bits of my business. The way I try to manage this tendency (and maintain direction) is to think about the decisions I have to make …. and make those decisions. And, as I don’t like to limit my thinking, the information I need mustn’t be limited or biased….
The point is, it’s not only the information that’s important. We all want a derivative black and white determination AND at the same time choice, alternatives to consider. The route of least resistance means that we don’t get distracted, decisions can be made quickly, time won’t run away further than it already has. Searching amongst constraints to find hidden, unobvious, possibility and informed decision making takes thinking about (time) which (as the inside of my cheek will attest), on the occasions of forces being beyond my control, can be frustrating - But as, in my experience, confident responses aren’t guarantee of certainty. Saying ‘well…. it depends’ can, depending on where you sit, be fence-sitting or thinking beyond the most likely.
“You ask yourself not if this or that is expedient, but if it is right” – Alan Paton
Image credits: Celestine Chua, Kevin K, Marc Dalmulder, Jin.
Article credit: Copyright SUF 2014©
02 01 2014
The month of predictions is here… so while we get down to business…. here’s a roundup of what’s being said…
Disrupting Business – The Guardian
Interest Rates - FT.com
Manufacturing – BBC.co.uk
Opportunity – Express
Food – Independent
Housing – ibtimes.co.uk
UK Economy - BBC.co.uk
Image and Article credit: Copyright SUF 2014 ©
Businesses Break Up All The Time - Not Always for The Right Reasons
There are some get-togethers of which I’m partial to.
But, unless the invitation is from nearest and dearest, sometimes there can be a palaver of what bottle to take (are these folks wine buffs…?). For those I know better I’m usually safe in the knowledge that providing the label looks interesting, never mind the contents (don’t judge me) and, therefore the opportunity to reconnect at a family gathering is usually safer ground….. Auntie Sue can always be relied on to admonish Uncle Joe for one-too-many beers (in her unique one-too-many wines way)…. and there’s always a younger family member providing general distracting entertainment in demonstrating the latest `how to wriggle away’ from Auntie Sue’s lipstick enhanced hugs.
Over time there’s been a noticeable change synonymous with some gatherings.
There seems to have been less proud moments of proffering re-introduction to offspring last seen in a pushchair and now sporting full exhibit for Movember, and more (when enquiring about other halves) looking to the floor, feet shuffling and announcing ‘…. we’re separated/separating’. Any awkward moments of bringing the wrong bottle or giving flowers to an allergy sufferer are insignificant by comparison to these cues.
A breakdown isn’t always obvious.
Much the same process as a business’s breakdown, when connections no longer work, visible signs aren’t automatically noticeable. Broken connections in long-term life relationships have a commonality with businesses breaking down, easily going unnoticed amongst other pressures, communication is the first to be let go of. Only last week I spoke with a business manager who hasn’t seen the businesses owner on the premises for over two years! With no obvious reason, the manager concluded (and I agree) the ‘relationship’ between owner and business was over (also manifesting as ‘relationship’ with owner and staff straining at the seams).
It’s a shock.
Any business owner drifting away from a ‘relationship’ with their business is like leaving a baby unattended – in short, risk is left unmanaged. A symptom of realisation is anger. And, just as someone might be prepared to spend time looking at the situation, the ball has started rolling. They might be ready to take action but quicker than expected, third parties have entered. Realisation’s anger is fuelled by a compounding realisation of the reduction in informed decision making prospects. Adding frustration fuel to anger, the unwanted third party intervention is necessary as damage limitation, both parties want to take decisions but the anger often gives out confusing and conflicting information. With increased animosity…. a vicious circle starts, to which the only benefactor is ironically all too often the cause: Wasted time.
Is the end is inevitable?
With compromises, adjustments have in their core unsettling processes; some people come through their experience tired, others stronger. Much as looking to the floor, feet shuffling and announcing ‘…. we’re separated/separating’ can be followed by pointing to a baby covered in lipstick kisses ‘and that’s our new offspring!’ The business owner might be re-affirmed that being an employee isn’t an option.
Mitigating the blow.
We’ve all had shocks of one form or another which in hindsight can sound easier to have come through than it actually was. But, by acting upon the realisation of something not working, the blow can be lessened, leaving time for revival. A conclusion usually starts with re-evaluation (and wound licking) – No matter how awful the realisation is that either a relationship within a business is breaking down, or that the relationship with a business is breaking down, the sooner it is acted upon the sooner the effects can be mitigated.
Carry on or act upon the realisation.
Connections in the breakdown of long-term life relationships have a commonality with businesses breaking down.
Image credit: NinaZed Article credit: Copyright SUF © 2013
02 12 2013
To sustain or grow business, owners need to continually invest; However, 2013 has maintained a vein of general turbulence for business… with a finale to the year (unless something else turns up before Big Ben’s midnight striking in the New Year….) on the heels of the Co-Op’s disgraced former Chairman’s scandal, culminating in RBS being accused of deliberately wrecking viable small businesses to make profit.
My concern has always been for those businesses that were indulged by their banks, like spoilt children at a party; overeating and over-excited to the point of bursting. Then, needing support, (often feeling sick) they’d return to the bank for assistance – Only to find themselves overlooked and thrown out of the ‘house’. Good viable businesses and so-called zombie business equally hit – Any who have spoken with me over the last decade will know that the RBS story is very old news. And now, earlier than the 2018 target, the Bank of England has been asked to review its powers over the banks’ balance sheets – the Leverage Ratio – to rein in risk-taking banks.
With access to finance via traditional bank funding still having barriers, businesses have done well to keep their heads above water. So will the 2014 opening of The British Business Bank offer some innovation as an institution? Or will dependence on its infrastructure Velcro it to the various other Government initiatives which have had little impact in their contribution to accessing working capital or asset purchase?
2014 will be interesting to watch as a juncture to continued ‘extreme’ risk aversion. The Banking Reform Bill (in the House of Lords) with its measurements to ‘improve’ bank governance is to come into effect. One element proposed to enter the Bill is the criminal offence of ‘reckless misconduct in the management of a bank’ (should a senior banker’s behaviour fall below that which could be ‘reasonably expected’). That could be an interesting one – We all run our businesses in the belief that we’re doing the right thing at the time (to run our businesses) and, banks being businesses will probably counter the same argument. Which, considering the few spot-the-differences in the 5+ years since the financial carnage, there’s probably plenty of time for those at high levels to haul this one around before any movement is seen in the management culture of those lofty level bankers.
Analysis Paralysis 2014?
Image and Article credit: Copyright SUF © 2013