Jun 23

Budget 2010 – what was all the fuss about then?

Corporation Tax, National Insurance, VAT, budget 2010, tax No Comments

This was never going to be a sweet budget (If a budget can be ’sweet’) but it was being trailed as little short of a 4-limb amputation – “will the last person to leave the country switch the lights off please”.

And then when it comes, well – surprise, surprise, it’s not so bad after all. I realise that’s an old political trick but it still leaves people in a bit of a panic for the period between the announcement of the budget and the budget itself.  What we’ve ended up with is a bit of a compromise between the aspiration of the Liberal Democrats to ease the tax burden on the lower-paid and the desire of the Conservatives to cut the deficit.

The Chancellor recognised the Lib Dem’s aspiration to raise the personal income tax allowance to £10,000 by increasing the personal allowance by £1,000 to £7,475, giving a basic rate tax payer a tax saving of £170 per year.

Other tax cuts demonstrated the Conservatives’ desire to encourage business. The threshold at which employers pay National Insurance contributions on employee’s salaries was raised by £21 per week and Corporation Tax is to be cut to 27% next year and by 1% each year for the following three years.

To pay for these tax cuts, VAT is to be increased to 20%. This represents an increase in the cost of goods and services of more than 2% and will obviously affect the whole nation. The increase would have been a shock had it not been expected.

As also predicted, the rate of Capital Gains Tax (CGT) is to be increased, but for higher rate tax payers only and to 28%, rather than 40%. The 18 per cent rate will continue for low and middle-income savers. The increase was possibly less than expected because some experts predicted that an increase to 40% would actually result in a short term loss of revenue for the Government, as people would be discouraged from selling investments.

And the 10 per cent CGT rate for entrepreneurs will be extended to the first £5m of qualifying gains, up from the current threshold of £2m.

The Budget also saw the introduction of a levy on banks, raising £2bn per year when fully implemented.

There are also some spending cuts.  Public sector employees earning more than £21,000 will have no pay increase for the next two years; those earning less will have a flat pay rise of £250 in each of those years.

There will be an accelerated step towards an increase in the state retirement age to 66, and various benefits including child benefit, tax credits and housing benefit will be frozen, capped or reduced, but the child element of child tax credit will rise by £1560 above inflation next year.

Many people reading the budget proposals will just feel relieved that it was no worse. The two proposals that will affect us all are the increase in VAT and bringing forward the rise in the age of retirement.

Of these, it’s the VAT increase that is going to affect us all immediately. However as a consumer I have to say that when we had the VAT drop it didn’t really have much effect on me, and I suspect this increase will also have little psychological effect. As a business there was a bit of an effect with a ‘buy now’ mentality creeping into people just before the reduced rate ended. Following on from that, by announcing the increase won’t take place until next January it should bring another mini-surge in consumer activity before the end of the year so people save on the tax increase.

By the time the retirement age change takes effect we will be used to the idea. Benefits are to be cut, but it’s a case of a little bit here, a little bit there, so none of the cuts are likely to cause a huge public outcry.

Business needs to make sure it takes advantage of the breaks that are on offer from this Budget.  There’s an increase in the capital gains tax threshold for those entrepreneurs making money on the sale of their business; there are some opportunities for new business to have a National Insurance holiday on the first 10 employees they recruit and there are cuts in corporation tax, with the small company rate cut to 20% next year.

Keep calm and carry on!

Apr 14

Hands up if you’re already sick of the election

Election, Live TV debate, Media, Newspapers, Politicians, Uncategorized No Comments

I am.

It’s only been going a week and already it’s totally dominating all the news media. Yes I know that the right to vote is serious and we should carefully consider who to vote for after listening to their policies, but that’s not what’s happening at the moment.

I don’t tend to watch the tv news much, so my exposure generally comes from the radio and online news feeds. For the news headlines we generally get things like:-

“X party said they were going to do this new scheme, Y party said it’s not new and it’s rubbish, and Z party said X was rubbish for introducing it and Y was rubbish for saying it was rubbish”.

The actual policies and parties talked about change from day to day but that’s essentially what we get.

Alternatively if you tune in during some sort of interview it takes about 2 seconds to work out which party people are from by who they are slagging off. If things have gone well the Government tries to claim all credit for it, and the opposition say that anyone could have done it under the same circumstances; if things have gone badly the Government will say they were a victim of circumstances and the opposition will say that it was all the government’s fault. I find this emphasis on the negative incredibly boring, and it makes the whole political process meaningless.

Yesterday there was talk about how upset ‘Dave’ was at the death of his child, and then for balance the reporter mentioned that Gordon had also suffered a similar tragedy. It goes without saying that the death of any child is unspeakably tragic, but for this to be brought into the political campaign (whether by politicians or the media) just makes you start to query how low it can go.

I don’t think I’m alone in finding the blanket media coverage of the whole campaign a real turn-off – it makes me disconnect from everything instead of listening to whatever message may be buried amongst the name calling. This surely must be the opposite of what is intended?

This time we’ve also got the added bonus of the live TV debate. That will be worth watching in the same way that the men’s downhill ski-ing is interesting – it’s all a bit tense but we’re really waiting for someone to have a crash. What we’ll end up with there though is that people will make their mind up based on the performance of one person in a high pressure artificial environment. The Americans have been doing these for years and I think it was one of the first ones in the early 60’s where Nixon effectively lost (to JFK I think) because he was sweating under the hot TV studio lights – which gave him the appearance of being shifty in his responses.

There’s little chance of that happening today  - the whole thing will be incredibly stage managed with each contender endlessly coached and rehearsed – there’s too much at stake for it to be anything else.

Whilst the televised debate may be entertaining, the likelihood is that people are going to form their decisions on each party based on the performance of one man over 3 TV appearances.  How does that leave local politicians though? They may be doing a great job but when Joe voter goes into the polling booth they are voting for the person on the telly who didn’t sweat, or who didn’t have a funny walk.

Answers on a postcard please…

I don’t have the answers to any of this. We should be interested in what politicians say but personally I’m not. If they repeatedly slag off the other side for everything they have ever done then we all know they must be lying.  It’s not conceivable that every one of them believes every thing that the other party has ever done is wrong – but that’s what they say. If they are lying about that then what else are they lying about.  None of this is helped by the massive media machine which is only interested in controversy – if they can twist honest comments then they’ll do so in the blink of an eye, as the resulting controversy creates more column inches or flashing headlines.

I suppose one answer is a media blackout on the whole election; all politicians give their honest opinion regardless of the party, and local MP’s represent themselves to local people. Don’t hold your breath though.

I’m calming down now – maybe I shouldn’t have so much coffee early in the morning….

Thanks for listening.

Mark

Jan 27

Business books that have changed my life

Small Business, business books, life changing books, running your business 2 Comments

Like a lot people who run businesses, solicitors are generally not trained how to actually do it – you go to college to learn how to be a solicitor but no-one tells you about how to run the business of being a solicitor. This is completely different to what it takes to be a solicitor.

I read an excellent book on this subject called ‘The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It’ – it’s got a website devoted to the subject, and you can read chapter 1 on the site. This isn’t really a book that’s changed by life but it gives a good insight into why I needed to read books on business.

There’s an old expression that you’re promoted to your own level of incompetency, which basically means that in a big business if you do one job well you’re eventually promoted and asked to do another job; if you do that job well then you’re promoted to another job, and so on. You’ll be continually promoted until you start doing a bad job – you’ve reached your level of incompetency and are unlikely to be promoted any more. Ironically you’re probably now doing the thing you’re worst at, and being paid the most for it (I was impressed when I heard about this one – tried explaining it to my daughter only to be met with ‘yeah, right Dad’ – kids can be a tough audience).

The E-Myth book works on similar lines – many people that go into business because they think they should turn the thing they love into their job – so a hairdresser starts their own salon, a pie-baking fanatic starts their own Pie shop (this is the example in the E-Myth book). The skills you need to make great pies are NOT the skills you need to run a business making pies – if you’re good at the business side then that’s a happy coincidence, but there’s no reason why you should be.

Well it’s the same for solicitors – the mindset for becoming a solicitor is not the mindset for running a successful business. Happily I’ve found that I really enjoy the business side of things but this is by coincidence, not design.

If you’re going to do something you’ve not been trained for you’re going to need help, and that’s where the books come in – I try and get all the help I can get. I’ve been on a number of courses on various aspect of business but mainly I’ve bought and read quite a few books. I thought I’d pick out a couple that I’ve found had the biggest influence on the way our business is run. We’re actually a partnership but I’m managing partner, so if I talk about running ‘my’ business then that’s not correct – it’s our business and we’re all running it together, but it’s part of my job to run it, and try and take us forward.

There are things you need when running a business that are incredibly important – cashflow, debt collection, providing good service and so on. Without doing all of these things right the business is going to fail sooner or later. However the things that have had the biggest influence on me haven’t been about any of those – they’ve been much more ethereal – about how you live your life and how you relate to other people. This doesn’t mean they are wishy washy – but they have influenced how I run our business. One book is basically a biography and the other has a title so famous that I knew the title before I found out it was an actual book.

Maverick

The first is “Maverick: the success story behind the worlds most unusual workplace” (I seem to go for books with long titles!).


This is an autobiography by Ricardo Semler, who inherited a business from his father when he was in his early 20’s and wanted to be a rock guitarist. It goes through all the mistakes he makes early on, working harder and harder until he had a lightbulb moment when he realized he was going to run himself into the ground if he carried on.

He then started to change the way he did things by getting his employees involved in the running of the business (this is a manufacturing business in Brazil) – for nearly 25 years, he has let his employees set their own hours, wages, even choose their own IT. The result: increased productivity, long-term loyalty and phenomenal growth. It sounds too good to be true and when hearing about his methods people often come up with reasons why it won’t work for their particular business.

There’s a lot of things that Semco do that we haven’t incorporated, but we do share the attitude of trying to be inclusive with our staff. It’s important to us to try and create a great place to work.

I went to a course a few years ago on running your business (this was for solicitors), and one of the lectures was meant to be on motivation. The speaker said there are two types of people in this world: There are those who believe that everyone is out to get them; that if they give people a chance they will swindle them, do them down, or generally ‘get one over’ on them. The other sort of person basically comes from the viewpoint that everyone is basically good; everyone starts out wanting to do a good job, and given the chance people will generally do the right thing. The speaker went on to say that both types of people generally get what they expect.

I liked this description and go along with it – and I feel it’s this attitude that underpins Ricardo Semler’s whole attitude to work. It changed my business life in that I stopped trying to think that I needed to have all the answers – usually people coming to me with a question already know the answer I should be giving. If I give them a chance they’ll tell me – if we disagree then we can at least talk about it, and the worst I’ll get is a different perspective on the problem.

The book is also well written, a good read, and funny in places – thoroughly recommended.

How to win friends and influence people
The Second book that changed by life is “How to win friends and influence people”. I’d heard the phrase so often through my life (usually as a sarcastic put-down to people who were being rude) that I hadn’t even realized it was a book. It’s actually one of the first self-help books ever written – being published in 1936. It’s sold 15 million copies globally which is probably why the expression has become part of our language.

In terms of a central message, the book is really about as simple as you can get. It gives basic lessons in how you should run your life. This probably sounds irritating – my first response would be that I don’t need someone telling me how to run my life thank you very much. However it’s actually just telling you things that work and things that don’t. None of it is particularly suprising and as you read through it, it makes simple sense. More importantly, if you try the things out then I’ve got to say that it really works.

The book is split into different sections – in fact the whole message of the book is really just those section headings – the rest of the book deals with giving examples people that have used these techniques and what’s happened to them. This is where the book fell down a bit for me – not the books’ fault – it’s just that the examples given were written in 1936. Things have changed a bit since then. In actual fact in relation to the lessons being written about nothing has changed – it’s just that seeing stories based in the 1930’s can sometimes make it a bit harder to relate to. Stick with it though, because it’s worth it.

As I was going through the book I started trying the out a lot of the things it said, and found that they were working. Also it became clear to me that the things the book talks about were not rocket science – they were things that every schoolchild should know about. The thing is that as we get older it’s easy to forget these simple lessons and the book is good for reminding us.

As an example, here’s some of the headings for the chapter on ‘how to make people like you’:-
1. Become genuinely interested in other people.
2. Smile.
3. Remember that a man’s Name is to him the sweetest and most important sound in any language.
4. Be a good listener. Encourage others to talk about themselves.
5. Talk in the terms of the other man’s interest.
6. Make the other person feel important and do it sincerely.

I found it made me re-evaluate how I was behaving – both in my business and at home as well. In terms of business meetings it’s surprising how successful things can become if you let people talk about themselves first and remember their name (which I am rubbish at doing – as someone tells me their name internally I can visualize my brain watching their name fly out of the other ear).

The title of the books says it all – if you follow the lessons in the book then you will win friends and consequently you probably will influence people. As we grow up and the world gets busier and a bit more scary it’s easy to overlook the value of just getting along with people.

In business terms though it’s probably more important than ever – so many people forget these simple lessons that by following the lessons in the book you will generally stand out from the crowd. It won’t make up for rubbish service or a lousy product, but all other things being more or less equal, people buy people, which can mean you get the business instead of your rivals.

I hope that these book recommendations have been of use to you – if you haven’t read either of the books I wouldn’t hesitate in recommending them both. If you’ve got recommendations of your own then please let me have them in the comments – always looking to learn something new.

Cheers

Sladey

Jan 6

HR Policy in Snow

Employment law, HR policy, bad weather, snow No Comments

Oh, the weather outside is frightful, But the fire is so delightful, And since we’ve no place to go, Let It Snow! Let It Snow! Let It Snow!


I love snow – I love playing in snow with the kids, I love sledging, and I even love driving in snow (yes I know, that one’s a bit weird). The problem comes when you’re meant to be at work.


I had a call this morning at 10 past 7 from my PA who asked what we should be doing as the weather looked very bad, it was still snowing, and the local bus service shut down yesterday (we closed our offices at 1 yesterday because of the bad conditions).


I hate this sort of question – because it’s a difficult one to get right – you can be over cautious and close the office unnecessarily (losing a day’s profits), or overly bullish and force people to come in and risk injuring themselves. Those are the thoughts that were flying through my head. Eventually my response was that whoever is asking those questions is unlikely to have left the house yet, and you can’t decide whether you can get to work by looking out of the bedroom window – it looked shocking round our way but once you get onto the main roads it’s fine.


So I thought I’d do a mini blog about the HR side of this – what you’re actually expected to do and what it’s reasonable to expect your staff to do.


The basic rule is that as an employee part of your job is actually coming in to work. So that means if we’ve got bad weather you should make an effort to try and come in to work. However making an effort shouldn’t involve putting yourself unnecessarily at risk of injury or worse. It’s a judgement call at the end of the day.


Here’s the legal bit:-

  1. If as an employer you decide to close your work then you’re basically shutting down production for that period – you’ll lose your production for that period but you’ll still have to pay your staff. You need to be reasonable in relation to this – if you’re under 10ft of snow then it might not be reasonable to stay open (but it will depend on the individual circumstances)
  2. If you decide (reasonably) to remain open then it’s down to the employees to stay at work or make their way into work. If they don’t come into work then on the face of it they could be in breach of contract – which they can resolve by:-
    1. taking it as holiday (provided they can take holiday at short notice),
    2. unpaid leave (if you agree to that),
    3. flexitime (if you operate that policy), or
    4. working from home (again if this is possible), or
    5. if you have more than one site, going in to a branch that they can get into (again this depends on their contract of employment/staff policy – for example their contract may require them to work at a specific branch only, but in these circumstances try to be flexible).

Here’s the practical bit

The legal position is all well and good but we’re dealing with real people here.


Policy - It’s a really good idea to be proactive here and set up a policy of what you’ll do in these circumstances – that way people know in advance what the position is (they may well have forgotten by this time next year, but if you make it available – on an intranet for example – then they can refresh their memory whenever they want)


Everyone - Try to consider ALL your employees – you may get pressure from ones who didn’t make it in – being overly accommodating to them may well be a slap in the face for the ones who did struggle in.


Dunkirk Spirit – try an encourage staff to pull together – seeing if people can help each other out with lifts, car-sharing etc.


Not too fast, not too slow – It’s important not to panic react and shut at the first snowflake (you won’t have a business for long if you do that anyway) but similarly don’t macho it out – staying open when it’s become dangerous for your staff is not a reasonable thing to do. You also have to remain flexible on this – the right decision at 10:00am might be the wrong decision at 11:00am – so keep an eye on things. On Tuesday by 11:00 it was atrocious round our way, but we decided to close at 1:00pm (as did most other businesses in the area), because from stories we were hearing, the main delays were being caused by gridlocked traffic and not the snow – leaving it another couple of hours gave the gritters and snowploughs the chance to get through.


Different people, different needs – It’s important to remember that people living in different areas may need to be treated differently – if you’ve got staff that work at a distance then they may need extra time to get home. It’s probably more relevant to consider the weather in their area though – this week we had people who lived at a distance getting home before those who lived just around the corner. However you can’t treat people differently on the basis of whether you think they are skyvers or not though – that’s a separate issue to be tackled properly and backed up with evidence. It may be that if someone can’t come in because of the weather but 5 people travelled past their house on the way into work then that may give rise to a disciplinary issue – on the other hand they may be a logical explanation such as child care issues.


Better late than never - If you’re an employee and you’ve made the effort to get into work, but get in late through no fault of your own you’ve fulfilled your part of the bargain – you’ve made the effort to get in. If however you decide not to make the effort then that time needs to be accounted for in one of the ways above (holidays etc). From an employers perspective it’s usually better to have someone in late than not at all.


Communication – this is key – if you’re an employee then keep in touch and let people know what you’re doing and why; if you’re an employer let everyone know who they need to contact (see below for ways of doing this)



What do other people do?

I know that the NHS and some banks have a standard policy that if you can’t get into your particular branch then you should make your way to your local branch. That may be no use to that branch at all – on the other hand it may well be that they really welcome the extra help

I’ve heard that our local branch of Asda this week were checking where their staff lived, and letting those who lived in difficult areas/far away go home early, while offering those who lived locally the chance of extra hours/overtime



What else do you need to think of?

It’s a bit like proper disaster planning – think of what you need to do but also consider how you’ll be able to do it. It’s all very well saying you’re going to shut the office but at 7:30 in the morning how can you let all the staff know?


Schools usually let the local radio stations know, but you’re unlikely to find the radio interested in the state of your business.


It’s firstly important to have home or mobile telephone numbers for all your staff – but then you need to store them in a way that you (if you’re the employer) can access from home.


An ideal way is to be able to text all your staff – on a practical basis you could text a small number of people who in turn text others and so on until everyone knows – this way no one person wears their thumbs out. An even better way of doing this is sending volume texts from a website – this required a bit of technical expertise but you could potentially log into a private web page, type in your message, and have it instantly text all your employees. Whilst this may take a bit more work to set up it’s something we’re looking into doing.


An alternative is private email addresses – a bit difficult this one because people vary enormously in how often they check their emails. Also, not everyone has a mobile or email address though

The main thing is you get something that is firstly going to let you contact everyone you need to, and to be able to do it from wherever you may be yourself. A business facebook page might be a good idea!


I hope this guide has been of use – if you have any questions about the issues raised here or other employment law issues then either leave a comment below or look at the HR section of our website


Cheers


Sladey

Dec 21

Business Blog – Why am I doing one?

Recession, Redundancy, Small Business No Comments

This is a question a few people have asked – I’m already running a couple of other blogs (admittedly not as often as I would like). The reason for a new one is that this one is directed at a different sort of target audience.

I’m intending to share my experiences of running a small business. I’ll intersperse that with bits of legal advice – beginners guides – whether you should incorporate, how to start up a company – that sort of thing; but much of the blog will be me talking about our own experiences of running a small business.

So by way of introduction, what is our business? Pretty obviously (or maybe not – depending on how you’ve arrived at this page) we’re a law firm, in North Notts. We’re currently about 50 staff strong, but just before the recession and the media kicked the property market where it hurts we were standing at around 80 staff. The last two years have been difficult, to say the least, but I really feel we are coming out of this now and looking forward to the future with renewed optimism.

Although we provide a full range of legal services, we’ve been heavily into the property market (by providing conveyancing and HIPs) for many years now. Unlike previous recessions this one appears to have been lead by the property sector – so for us the recession started in the last quarter of 2007, aided and abetted by misreporting and exaggeration in the press.

2008 was our big painful year when we had to make the redundancies (once in April and again in October), and the tide turned in February 2009. The rest of 2009 has featured slow but steady growth and treading water. I’m not going to go into too much detail on it all at the moment as there are certain specific areas that I’d like to blog on in detail later on.

One of the best thing to come out of difficult times is that you often find out who your real friends are. As business partners we’ve really come together in this difficult time, and feel all the stronger because of it – the old expression about what doesn’t kill you makes you stronger is very true.

Some of the things I’m planning to blog on are

Your business’s culture – what is it? or ‘tell me about your childhood’
making redundancies – doing it right
cash - It’s king alright, but how do you collect it in?
vision – where are you going? Do you know?
Meetings - a waste of time or the glue that holds you together?

Business books that have changed my life
Efficiency – why it’s even more important in a recession

If you have any other suggestions then please let me have them.

That’s enough for now

Cheers


Sladey

Powered by WordPress Entries RSS Comments RSS