Is it back to ba­sics for busi­ness?

Things may be dif­fer­ent but they haven’t changed. Is it time to go back to ba­sics for busi­ness, asks James Pinch­beck, mar­ket­ing part­ner, Streets Char­tered Ac­coun­tants.

The Peterborough Evening Telegraph - - Etbusiness -

IT is still early days our new coali­tion govern­ment and whilst a num­ber of ac­tions have been taken, not least an­nounce­ments on pub­lic sec­tor cuts, it is prob­a­bly not easy for us to grasp the new or­der.

The elec­tion aside, and with ev­i­dence that we ap­pear to be com­ing out of re­ces­sion, it re­ally must now be time to get to the busi­ness of busi­ness. Some may be hop­ing for some sort of boom to boost their sales, prof­its and bal­ance sheet. How­ever, few sec­tors of the econ­omy are likely to see such a thing un­less they are in emerg­ing mar­kets or they pos­sess a sig­nif­i­cant com­pet­i­tive ad­van­tage. The pe­riod of eco­nomic pros­per­ity we en­joyed pre-re­ces­sion in the main was down to the UK’s un­prece­dented con­sumer spend­ing and high lev­els of pub­lic sec­tor spend­ing. With house­holds and the govern­ment look­ing to bal­ance their books and re­pay debts, the cat­a­lyst for a boom does not seem to ex­ist. With the ap­par­ent scarcity of liq­uid­ity in the fi­nan­cial mar­kets and at same time the in­abil­ity of those seek­ing fi­nance to demon­strate their abil­ity to ser­vice debt, this ac­tu­ally might be good thing as, over­all, it can of­ten be much eas­ier to fi­nance steady and in­cre­men­tal growth from work­ing cap­i­tal and re­tained prof­its.

What then does this mean for busi­ness? In a boom it is of­ten easy for even a badly man­aged or run busi­ness to sur­vive and pros­per. In the cur­rent trad­ing en­vi­ron­ment and what looks to be the type of eco­nomic con­di­tions we will have to op­er­ate in for at least a num­ber of years, it could be said only well-run and well-man­aged busi­nesses will sur­vive and pros­per. In essence though, the char­ac­ter­is­tics of what makes a good busi­ness do not change with eco­nomic con­di­tions.

For an es­tab­lished busi­ness the chal­lenges will un­doubt­edly in­clude the need to be­come more en­ter­pris­ing and en­tre­pre­neur­ial with the fo­cus now be­ing around op­por­tu­ni­ties to im­prove prof­itabil­ity through growth whether through new mar­kets, new prod­ucts, new pro­cesses and even com­peti­tor ac­qui­si­tion.

We may also see a greater fo­cus on busi­nesses look­ing more at sus­tain­abil­ity and fo­cus­ing on longevity as op­posed to short-term trad­ing. As part of a ro­bust econ­omy busi­nesses that build strong bal­ance sheets and sound fi­nan­cial man­age­ment tend to fare bet­ter over­all. As a re­sult, and given the eco­nomic en­vi­ron­ment we are in to­day, busi­nesses are likely to be look­ing to re­tain more of their prof­its, build up greater cash re­serves and, as re­sult, be­come less re­liant on ex­ter­nal sources of fi­nance for ev­ery­day work­ing cap­i­tal, per­haps even to fi­nance as­sets or other ex­pan­sion plans.

With the ad­di­tional threat of tax hikes, the years ahead will be a chal­lenge for us all but per­haps a re­turn to some sound busi­ness, even good old fam­ily val­ues, may help to en­sure the suc­cess of yours or the busi­ness you work for.

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