Here we are at November 5th: roughly two months – and four more blog posts – to the end of the year.
Traditionally – and I think the blog is old enough now to have traditions – I’d now be writing about planning for next year. Going somewhere different, thinking differently, not being afraid to dream…
That worked perfectly until last year. But then planning when we were still in the grip of the pandemic seemed pointless: a waste of time.
Is it any different this year? After all, we still have uncertainty. The price of energy seems to be increasing every week, with a forecast this morning that oil could reach $120 a barrel by the middle of next year.
Then there’s inflation: the Bank of England has warned that inflation could hit 5% in the coming months – very possibly triggering a rise in interest rates.
Anecdotally there are plenty of stories of inflation far exceeding 5% already. The food and drink industry is one example, where they’re warning of ‘terrifying’ price rises and inflation of 14-18%. And that’s before you factor in the increase in the National Living Wage (from £8.91 an hour to £9.50) announced in last week’s Budget.
‘So if I have one message for Rishi as he puts the finishing touches to his Budget it’s this. One of the oldest, most basic business maxims of them all. KISS…’
That was what I wrote two weeks ago. Did we get that in the Budget? Simplification? Less red tape? The Government recognising that owners and directors of SMEs only have so much time – and that they need to devote that time to their businesses?
We didn’t. What we got was a Budget that brought more spending and almost certainly higher tax, at least in the short term. And one that came in for its fair share of criticism. The tax burden will continue to increase said the IFS, stating that there was now “clear blue water between now and any time in the past.”
Neither was business happy: ‘a Budget packed to the rafters with promises and light on the means to pay for them’ was one verdict quoted by City AM. Tony Danker of the CBI said that the Budget “did not go far enough to deliver the high investment, high productivity economy the Government wants.”
…And yet, in the short term, I was happy with the Budget. I understand the temporary increase in Government spending – I feel like the country needs it – and I think that as the economy improves some of the mooted tax increases (Corporation Tax, for example) may well be scaled back.
Politics almost certainly played its part as well. Yes, we need to recover from the pandemic and re-build the economy. But let us not forget that Rishi Sunak is a politician. Even the man once described as ‘someone who thinks in Excel’ must have an eye on the next Election, which will be in 2023 or 2024 – when the OBR say the economy will not be growing as quickly, and sundry rabbits may need to be produced from Rishi’s hat.
The Chancellor didn’t dwell on global economics during his speech. George Osborne always prefaced his Budgets with a caveat. ‘Whatever I do, well… it’s a big old world out there.’
And if we’re determined to see the glass as half-empty there’s plenty in that big old world to worry us. Not just oil and inflation: China’s factory gate prices are increasing at their fastest rate for 26 years: US growth in Q3 was only 2% and – citing worries about the energy crisis and supply chain disruptions – Germany has just cut its growth forecast for the full year to 2.6%.
As you know, I take the opposite view. I’m optimistic. I do not believe that the Four Horsemen of the PEST Analysis are heading our way.
Neither do TAB members. The evidence from them is that the economy is recovering and it’s recovering strongly.
So I’m making plans for next year, and I’m delighted to see so many TAB members making equally optimistic plans. The one thing I’d suggest, though, is that your plans are flexible.
Way back in 2017 I wrote about Tim Ferris, of 4 Hour Work Week fame. Here’s part of that post:
He [Tim Ferris] refuses to have long term plans, instead working on what he describes as three to six month ‘experiments.’ Often he has no idea where these experiments will lead: “What’s the worst that can happen?” he says. “You waste a few months and learn a lot while doing it?”
For me, three months is a very effective period for your business. It’s long enough to set targets which have urgency, without being simply today’s to-do list.
As we head into an exciting – but uncertain – year I think that approach has a lot to recommend it. Make plans for next year – but make plans which are very flexible and which can quickly be adapted to changing circumstances. And keep them under constant and regular review.
After all, you’ll be meeting a few people each month who’ll ask a simple question. ‘So how’s it going…’
