SMEs applying for support under the Coronavirus Business Interruption Loan Scheme should read the small print

read the small print in offered helpGrabbing a lifebelt when you are drowning makes sense, but when that so-called lifebelt is a business loan to survive the Coronavirus pandemic, you need to read the small print before signing on the dotted line.

The various government support schemes for SMEs may have made big headlines, not least their claims about making loans available for SMEs, but the devil is likely to be in the details.

No matter how panic-stricken you might be it is worth making sure you know exactly what you are getting into when applying for a loan under the Coronavirus Business Interruption Loan Scheme (CBILS). The difficulty many businesses are having getting through to someone at the bank is an indication of the problem, albeit it is hardly surprising given that banks have run down their SME support teams over the past twelve years.

Before even contacting a bank the first step is to take a deep breath and ensure you know exactly who to approach and what you can apply for. There are ample details about the process on the British Business Bank website here. However, the reality is that banks are likely to prioritise their own customers and among them, their long term ones.

The next step is to prepare a forecast showing how much is needed, what it will be used for and how a loan will be repaid.

Most banks have now undertaken to not pass on their usual loan application fees to customers because the Government has promised to cover the first 12 months of these and the interest payments.

However, you should be mindful of what happens after that in terms of your liabilities. According to the BBB website: “The lender has the authority to decide whether to offer you finance. If it can do so on normal commercial terms without having to make use of the scheme, it will”. This means you may be offered a loan but not under CBILS.

The Big Four banks have agreed that they will not take a personal guarantee (PG) from directors as security for lending below £250,000. However, this message hasn’t trickled down the chain in all cases such that managers are still demanding them. The other issue is that non CBILS loans may be offered in which cases the bank can request PGs and in some instances may want a charge over your home.

Despite there being 40 lenders listed as offering loans under CBILS, in practice most of them are small regional lenders who will not apply to you although they are worth checking out to see if you meet their criteria.

For years I have cautioned those seeking business finance and have advised directors to be extra careful about guarantees so make sure to read and understand what you are letting yourself in for. Indeed, I would also advocate involving your spouse in the decision if there is the slightest prospect of you losing your home. These loans are often sold by ‘nice’ banks to ‘nasty’ ones.

Surviving this dreadful situation is fraught with complexity. Decisions about staff with scope for furloughing them is one area that is complicated since contracts of employment must be honoured – there is a link for some good advice on all this from Acas.

Decisions about delaying payments to suppliers and other creditors is another huge issue, while it may be expedient, not paying liabilities as and when they fall due means that a company is insolvent.

It may be tedious, but you need to consider the possible consequences of decisions taken in the heat of the moment so you need to approach problems in a calm and rational manner and ideally you should discuss them with turnaround and insolvency professionals who have considerable experience dealing with such crisis situations.

Whatever you do, don’t just focus on the immediate benefits of decisions but consider the second and third order consequences of decisions before acting on them, despite this caution don’t delay action, most of it is common sense.

Check out https://www.onlineturnaroundguru.com/ for more tips on survival

 

Why you shouldn’t suspend your marketing during the Coronavirus pandemic

marketingSMEs have had to close, suspend or reduce their activities due to the Coronavirus pandemic and most are looking for ways to minimise their cash out flow however despite the temptation they should be wary of cutting their marketing budgets.

But if your business disappears from the market and in doing so is no longer top of mind for your customers and clients will you be able to regain your position or will others who continued marketing replace you?

Withdrawing from the market may suggest you have gone out of business, as indeed will be the case for many as a result of the Coronavirus pandemic.

While it is understandable that SMEs in dire financial straits will want to preserve cash by cutting back on expenditure, some newly-published research from Opinium, released on March 26 has found that people do still want to hear from businesses of many kinds.

The research revealed that “a very large majority of people in the UK would like to hear either the same amount, or even more, from brands” across a range of categories including the essentials such as healthcare and pharmaceuticals, supermarkets, food and drink and household goods but also from healthcare to fashion and beauty to entertainment.

Of course, many of you have reacted quickly, communicating your actions and in many cases pivoted your business model as a response to the crisis.

One example is a small bakery that has closed its shop and set up an outside market stall so customers don’t need to go inside and a drive-by collection service for other customers who order by phone and don’t want to get out of their car. Another bakery does deliveries to hospitals and essential worker sites.

There are examples of SMEs in the hospitality and restaurant businesses that have been forced to close their doors to the public and have responded in different ways, in the case of some hotels, by offering accommodation to such people as health care workers or the homeless and restaurants that have quickly established food takeaway and delivery services as well as special deals for key workers such as those in the NHS.

Some in fitness, health and beauty have moved online to offer their services remotely to help people in lockdown stay not only fit and healthy but also to be able to look after their appearance.

Of course, all of these will be remembered positively when the crisis comes to an end and it is likely that their business will recover more quickly that those that shut down. Plus, if your business has a website you need to protect its place in the search engine rankings with regular blog posts and ongoing marketing activity.

Perhaps more surprisingly the research found that many people want “brands to talk about something other than the pandemic”.

“This desire for something different is symptomatic of a consumer who is struggling to find their place in a drastically different world”, it says. So, any marketing that can convey some sense of normality is good for your business.

Opinium also asked people what were their preferred forms of marketing communication and top of the list came TV advertising (31%) and e-mails (40%).

While the desire to cut the marketing budget may be understandable when margins are tight, clearly it is far from the right thing to do if you want your business to return after the crisis.

 

To Pay or Not to Pay Quarter Day Rent & Business Rates – the latest

Quarter Day RentAs if the pressure and worries SMEs are facing due to the Coronavirus pandemic were not enough, yesterday (Wednesday) was when Quarter Day Rent was due to be paid.

For many, it was also a payment date for business rates although the government has suspended these for a year.

While SMEs may be eligible for suspending the payment of business rates as announced by the Chancellor in his first set of measures to help businesses survive the pandemic, little had so far been said about rent.

However, yesterday, the Government published details of three months’ protection for businesses from eviction for failure to pay rent. While is included in the emergency powers legislation that is due to be given Royal Assent today but we are still awaiting confirmation. There more details here.

Some businesses had already declared their intention to miss paying their Quarter Day Rent, like, for example Burger King, whose CEO Alasdair Murdoch announced on Tuesday that the company would not be paying the rent due on its UK restaurants this week.

According to the BBC, it seems that “Banks have been told [by the government] to be supportive as long as landlords act responsibly.”

It also reported that the government has said shops will not forfeit leases if they do not pay but will have to pay arrears in the future.

This may be the case, but many smaller SMEs have been unsure about what they are supposed to do given the latest set of restrictions enforcing the closure of non-essential businesses and the virtual lockdown of the population. Presumably more details will emerge once the emergency powers legislation has been published.

For many withholding rent may be necessary but there are consequences and you should speak with your landlord since the pain needs to be shared between both of you if you are both to survive. If however you are being pressurised by your landlord, there are a number of surveyors who specialise in negotiating rent reductions. It is wort remembering that your landlord won’t be finding a new tenant in the near future.

Meanwhile, the suspension of business rates is helpful as will be the grants to smaller SMEs.

On top of this bank branches are closing, there are two hour waits on hold in telephone queues and most systems seem to be overloaded.

It is admittedly a massive task to roll out so many measures to help and support SMEs but if you are a business worrying about protecting its future it is very hard to be told to be patient.

To provide more information about business rates and grants, I am maintaining an update on the support available for SMEs in my guide at onlineturnaroundguru.com.

At the current moment on business rates this is the situation:

A one-off grant of £10,000 is available to eligible businesses to help meet their ongoing business costs and applies to those businesses that occupy property that is eligible for small business rate relief or rural rate relief.

There will be cash grants to retail, hospitality and leisure businesses, based on the rateable value of your business property. Those with a rateable value of under £15,000 will receive a grant of £10,000. Those with a rateable value of between £15,001 and £51,000 will receive a grant of £25,000.

All retail, hospitality and leisure businesses in England including covers shops, restaurants, cafes, drinking establishments, cinemas and live music venues and premises used for assembly and leisure. It also covers hotels, guest & boarding houses and self-catering accommodation. Will be given a one-year business rate holiday.

Administering all these will be the responsibility of your local authority and while you do not need to do anything to claim them it may be wise to register your business as paying by direct debit so that your bank details are registered with the local authority  and you should keep an eye on the situation with your relevant authority.

Please be assured that as more details on the various Government measures to support businesses emerge or if anything changes I will update the information as soon as possible.

For more business help please go to onlineturnaroundguru.com.

Above all, if you need help and support I am here for you.

 

In a crisis it is crucial that SMEs keep staff updated, especially those working at home

working at homeIn the current Coronavirus-induced crisis people are understandably worried and frightened, for their jobs, their families and their health so it is crucial for SME employers to communicate changes as quickly and sympathetically as possible.

After all, while you as SME owners are currently facing unprecedented challenges to your business and feeling bleak if not panic ridden about your prospects for survival, at some point this crisis will come to an end and you will hope to still have a business.

With all the financial support measures recently announced by the Government, most SMEs do not need to close their businesses or dispense with staff.

I have posted the latest information with advice for SMEs on how to deal with the coronavirus pandemic on onlineturnaroundguru.com and will update as the details become clearer.

While in the short term SMEs may have had to ‘furlough workers’ (see the above advice link for what this means) but eventually staff will be needed back at work.

Staff are most likely to remain loyal if they feel their employer has done their utmost to help and has kept them informed of developments and these days the technology available is so extensive that this is much easier to do – whether it be a conference call or virtual meeting via an online platform to people who are working from home.

McKinsey.com has some very useful guidance for leaders coping with a crisis.

Firstly, it says: “they cannot respond as they would in a routine emergency, by following plans that had been drawn up in advance. During a crisis, which is ruled by unfamiliarity and uncertainty, effective responses are largely improvised.”

It is also crucial, it says, to promote “psychological safety so people can openly discuss ideas, questions, and concerns without fear of repercussions”.

This means dealing with the human tragedy first and foremost with empathy and understanding as well as being transparent about the circumstances.

If the situation means the way the company does business SME employers should discuss the options as soon as possible.

Acas also has some useful advice:

“Where work can be done at home, the employer could:

  • ask staff who have work laptops or mobile phones to take them home so they can carry on working
  • arrange paperwork tasks that can be done at home for staff who do not work on computers.

 

If an employer and employee agree to working at home, the employer should pay the employee as usual, keep in regular contact and check on the employee’s health and wellbeing.

You may be able to pivot your business in such a way that it can keep going, as this London SME restaurant chain has done after the Government ordered all restaurant and pubs to close.

Leon is to turn its 65 UK restaurants into shops, selling meals via both click-and-collect and delivery from Wednesday. Meals will be placed in ready meal-type plastic pouches which are refrigerated and can be heated, stored or frozen at home.

The company’s founder John Vincent has said the move could save Leon as a business but also relieve some of the pressure on the food retail stores: “A lot of people in the industry are just giving up and shutting up shop. But we think this way we can keep 60% of our stores open and keep food production going.”

A good example of a business using agility at very short notice to survive and save staff jobs when It is important to consider the second and third order consequences of any decisions before acting on them while not delaying action.

Check out onlineturnaroundguru.com for more tips on survival

Otherwise please stay safe, you do not need to deal with this alone.

Support for SMEs struggling to deal with the coronavirus pandemic

coronavirus support for SMEsMy comments and advice below are intended to help SMEs struggling to deal with the coronavirus pandemic but should not be regarded as definitive advice since we are dealing with a highly fluid situation.

I shall correct the facts and advice as more information emerges since like turnaround situations we are dealing with a crisis where rapid decisions must be made despite some being wrong. This doesn’t matter providing they are corrected by other decisions along the way. The key is to understand priorities and avoid making wrong decisions that cannot be rectified. Those that terminated employment contracts a week ago may regret their decision in the light of new survival initiatives announced on Friday.

I summarise below the government survival initiatives announced so far with details on how to access them and my advice on what you else should consider

  • VAT – Despite statements about deferring VAT payments to the end of the financial year, the deferral would appear to relate to VAT liabilities accumulated during the period from 20 March 2020 until 30 June 2020 with payment of these being  deferred for three months. However the statements about this are confusing since they refer also refer to payments being made by the end of the 2020 2021 tax year which is a PAYE reference. So much for Government guidance on their website but I shall try to interpret it and provide further clarification as more information becomes available. VAT refunds and reclaims will be paid by the government as normal.

Advice: File VAT returns as normal but if you need to defer payments cancel the direct debit and defer payment for three months making payments manually. This is an automatic offer with no applications required.

  • PAYE – There have been a number of statements about deferring PAYE but for the moment I assume they all refer to Time to Pay arrangements which are agreed with HMRC on an individual basis. HMRC will agree a payment plan based on weekly or monthly payments over a period that is normally less than 12 months but can be as long as 30 months. Please note that HMRC adopt a draconian attitude to Time to Pay arrangements such that all future returns and payments must be made on time where any late returns or payments are likely to trigger a default rendering all outstanding PAYE becoming immediately due.

Advice: File PAYE returns as normal and contact the dedicated HMRC Time to Pay helpline on 0800 0159 559 to discuss repayment terms.

  • CJRS (Coronavirus Job Retention Scheme) launched to cover 80% of wages up to £2,500 per month with scope for employers topping this up. This is aimed at designated employees who are affected known as ‘furloughed workers’. You will need to notify your employees of this designation and change their status with HMRC by notifying HMRC about your ‘furloughed’ their earnings via “a new online portal” which I assume will be via the company’s existing PAYE gateway. Your employees remain subject to existing employment contracts although these may be renegotiated. This will be back dated to 1st March and I assume the contribution will be applied to payroll and therefore PAYE and NI and student loan deductions with pay slips and payments as normal. This may become interesting as many employers are likely to seek Time to Pay arrangements with HMRC so I assume these will only apply to pre March liabilities

Advice: HMRC are due to send out details shortly.

  • CBILS (Coronavirus Business Interruption Loan Scheme) announced on 13th March for business loans up to £5 million has since been amended to be interest free for 12 months, longer than the original 6 months. The loans are aimed at SMEs with a turnover below £41 million; they will attract a 2% guarantee premium and can be repaid on terms of up to ten years. They are due to be available from 40+ approved lenders from Monday, 23rd March but accessing one may be more difficult than implied since they are intended as loans to viable businesses that meet the lender’s normal lending criteria for such a loan. Viability and the ‘normal’ loan criteria will be subjective given the uncertainty of future income projections although we can expect a degree of latitude from lenders who are under pressure from the Government to provide such loans. The Bank of England has also made lending easier by waiving the 2020 stress test of the major banks which over the past few years has made it difficult for them to lend to most SMEs. The factor that I have not yet managed to find out is whether or not Personal Guarantees will be required but I shall let you know as soon as I can clarify this.

Advice: Access CBILS by contacting an approved lender from the list which can be found on the British Business Bank website at: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/.

  • SSP – a Statutory Sick Pay relief package for SMEs will be made available for sickness absence due to COVID-19. this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. It applies to employers with fewer than 250 employees. No evidence is required for the claim but employer are advised to ask employees with symptoms of coronavirus to get an isolation note from NHS 111 online or from the NHS website. Legislation is required for this but in due course the Government will advise employers of the repayment mechanism.

Advice: maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.

  • Self-employed – Income Tax payments due on 31 July 2020 will be deferred to January 2021. This is only for those who are self-employed and is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. Despite this measure no deferment can be assumed for the 31 January 2021 liability so anyone withholding tax must ensure they can pay this amount plus their January Income Tax by 31 January 2021. For many who are not affected they may like the discipline of paying this tax knowing they will not have to pay it in January.

Advice: The self-employed do not need to pay their Income Tax due on 31 July 2020 but must ensure that they can pay this amount plus their January Income Tax by 31 January 2021.

  • Small Business Grant Funding scheme – this is a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs and applies to those businesses that occupy property that is eligible for small business rate relief or rural rate relief. It will be provided in due course by the local authority.

Advice: Do nothing but look out for payment online. Despite not having to pay business rates due to a nil bill you are advised to register your business as paying by direct debit so that your bank details are registered with the local authority for receipt of the grant. Look out for the payment and if others receive theirs and you don’t then contact your local authority.

  • Retail and Hospitality business rates relief – a 12-month business rates holiday for all retail, hospitality and leisure businesses in England has been announced. It covers shops, restaurants, cafes, drinking establishments, cinemas and live music venues and premises used for assembly and leisure. It also covers hotels, guest & boarding houses and self-catering accommodation. It will be applied to your next council tax bill that is imminently due for the year from April 2020 although local authorities may have to reissue bills since many have already been prepared.

Advice: Do nothing but check your rates bill and if necessary contact your local authority but give them time to send out a revised bill before contacting them.

  • Retail and Hospitality Grant Scheme – this will provide cash grants to retail, hospitality and leisure businesses. And is based on the rateable value of the business property. Those with a rateable value of under £15,000 will receive a grant of £10,000. Those with a rateable value of between £15,001 and £51,000 will receive a grant of £25,000. This will be paid via your local authority.

Advice: Do nothing but look out for the payment and if others receive theirs and you don’t then contact your local authority.

I invite you to provide any feedback on the above and cite examples of initiatives you come across about survival initiatives.

Please consider the second and third order consequences of any decisions before acting on them but despite this caution don’t delay action, most of it is common sense.

Check out https://www.onlineturnaroundguru.com/ for more tips on survival

Otherwise please stay safe, you do not need to deal with this alone.

 

 

Maintaining a positive mindset about your business during the current crisis

maintain a positive mindsetNobody would deny that the current pandemic-induced situation is a worrying time for SME business owners but they should do everything they can to maintain a positive mindset.

It helps to see if there are potential opportunities for either new ways of working or new services that you can adopt, especially if the changes you make demonstrate a concern for the needs of others.

There have been some excellent examples among the smaller micro-businesses that have been remarkably agile in doing this very quickly. Many of these are likely to fall into the category of sole trader/self-employed for whom there does not yet appear to any Government financial help, so hats off to them for their agility.

Examples we have seen is the numbers of exercise and fitness, yoga, Zumba and other classes that have set up to carry on via video in response to the closure of their usual physical venues.  Not only does this mean that they are able to maintain the link with their clients but they have found a way for people to maintain a level of fitness if they do find themselves having to self-isolate.

The same applies to other types of coaching and mentoring, which can be done one to one via Skype and other platforms or can offer training sessions via video for people.

One independent brewery in Scotland has started making hand sanitiser at its distillery and is giving the product free to anyone who needs it. Perhaps not profitable but a good piece of marketing its social responsibility, which may lead to more people trying its main product!

Local pubs and restaurants, too, are demonstrating a positive mindset despite a drop in customers or actually having to close. Many independent restaurants, for example, have switched to producing and delivering ready-meals. Some local retailers have set up outside their shops and others are offering home deliveries of staple supplies such as bread, eggs, fresh meat, fruit and veg.

At the other end of the scale the Co-op has announced that it will create 5,000 store-based posts which will provide temporary employment for hospitality workers who have lost their jobs because of the coronavirus crisis and is simplifying its recruitment process so successful candidates can start work within days.

Of course, many SMEs have more immediate and pressing concerns keeping them awake at night, like how they are going to pay staff if they have suffered a catastrophic drop in customer orders given that there is as yet no sign of when the promised Government grants and loans will be available. In the meantime, staff expect their wages to be paid and most other overheads are having to be paid.

One example of the lack of understanding among many large firms is Funding Circle who were contacted on behalf of a client to discuss a short-term suspension of payments or at least interest only payments, they were not interested and said that they would issue demands on the personal guarantees they hold if ongoing payments were not made in full.

It doesn’t help that many firms have suspended all trading with the stopping of all payments to suppliers and placing new orders.

In these circumstances it will help to talk to an experienced turnaround and rescue adviser who can help SMEs manage their cash flow and assist with the urgent measures necessary to survive.

Remember, a problem shared is a problem halved!

Using the Pareto 80/20 Rule as a guide in your business

Pareto 80?20 RuleMany people in business are familiar with the Pareto 80/20 Rule, particularly the idea that 80% of their business comes from just 20% of customers or clients, or that 80% of their profits comes from 20% of orders, or that 80% of their profits come from 20% of products, or even that 80% of their sales are generated by 20% of their sales staff.

Understanding this can influence behaviour such as protecting the 20% that contribute the most or looking at how to improve the lower performing 80%.

Essentially the Pareto 80/20 Rule is simply a way of demonstrating that most things in life are not distributed evenly.

This can apply to everything but focuses on considering productivity as an output of time spent or as a return on investment. It looks at resources, in terms of people, time and cost with a view to optimising the output. Analysis of turnover and profits by customer, market segment and products to produce a pie chart is likely to highlight aspects of the Rule.

The 80/20 Rule is a guide that can be misused, While 20% workers may be measured as doing 80% of the work this rarely means that the work of remaining 80% is irrelevant. Indeed, it may be that 20% contribute to profitable work while 80% are necessary for the 20% to be productive. It does however show where to focus on improvements.

So how can businesses use the Pareto 80/20 Rule to improve their businesses?

To a large extent this is about identifying the processes, systems or activities on which to focus because they have the best potential for a return on the effort.

You might focus attention on customers perhaps with view to selling more to your best customers or to improving sales to the 80% with view to generating the same level of return as the 20%. This might be putting prices up or selling different products or even turning away unprofitable business or customers who are hard work.

You might focus on staff perhaps with a view to measuring and improving their working practices that in turn improve productivity. Can one person be trained to do several jobs? Or should teams be reorganised or shift patterns altered? Sales and delivery may benefit from reorganising those geographical or market segments for which they are responsible.

You might focus on your products and production. Do you reduce the number of suppliers or the stock held or number of products sold. Can one product replace several existing products? Should you outsource the manufacture of components?

The Pareto 80/20 Rule is, in short, a handy guide to where you might focus your attention for improvement, it should not be regarded as a fixed and immutable rule.

Something for everyone in the Spring budget – but will it be delivered?

Spring budgetWho could envy a Chancellor having to deliver a Spring budget just one month into the job and in the midst of a global pandemic?

The Spring budget came after the early morning announcement of by the BoE (Bank of England) of an interest rate cut from 0.75% to 0.25%. Was this an outgoing Governor stealing an incoming Chancellor’s thunder?

With short term measures to help businesses deal with the Covid-19 consequences and others dealing with the environment, infrastructure, business taxes and addressing regional inequality the Spring budget covered them all.

The headline was a commitment to invest in infrastructure in support of the government’s commitment to ‘level up’ the economy by focusing investment on the Midlands and North: “over the next five years, we will invest more than £600bn pounds in our future prosperity”.

Many worries of SMEs were addressed by the £30bn package of short term measures to deal with the consequences of the Covid-19 epidemic.

They included abolishing business rates altogether for a year for small retailers with a rateable value below £51,000 extended to include museums, art galleries, and theatres, caravan parks and gyms, small hotels and B&Bs, sports clubs, night clubs, club houses and guest houses.

There was also a promise that business rates as a whole would be reviewed later in the year.

Any firm that is currently eligible for the small business rates relief will also be able to claim a £3,000 cash grant.

The Government will also cover up to 80% of a coronavirus loan scheme to cover the cost of salaries and bills and will offer loans of up to £1.2m to support small and medium sized businesses.

£2bn will be allocated to cover firms employing fewer than 250 people that lose out because staff are off sick with the cost of a business having to have someone off work for up to 14 days refunded.

The benefits rules will be relaxed to enable those who currently do not qualify for sick pay, such as the self-employed and gig economy workers, to claim benefits, which will also now be paid from day one of sickness.

Fuel duty was also frozen for a further year, but tax relief on red diesel will be removed over two years albeit with an exemption for farmers, rail and fishing.

In the longer term and over the five years of the parliament, the much-anticipated £170bn spending on improving the transport infrastructure and addressing the regional imbalance was also confirmed.

This will benefit the construction industry and is no doubt part of another statement: “Today, I’m announcing the biggest ever investment in strategic roads and motorway – over £27bn of tarmac. That will pay for work on over 20 connections to ports and airports, over 100 junctions, 4,000 miles of road.”

Similarly, the Chancellor confirmed that more than 750 staff from the Treasury and other departments will move to a campus in the north of England, as well as significant investment on R & D and that at least £800m will be invested in a new blue skies research agency, modelled on ARPA in the US.

Among a host of environmental initiatives, a new tax on plastic packaging is to be introduced, as well as freezing the levy on electricity and raising it on gas from April 2022.

Given the uncertain prospects for the UK’s economy, how many of the longer-term promises will be realised is likely to depend on the Government’s ability to borrow at unprecedentedly low rates so that it remains to be seen how much of the longer-term spending will actually happen.

It also remains to be seen how difficult the processes by which SMEs can claim help for Covid-19 related losses will be and whether the promise to review business rates as a whole will materialise.

The PR spin is already in place such as RBS’s claim today that it will provide £5bn of support for SMEs when in practice the small print refers to this as an extension to existing loan and overdraft facilities.

Notwithstanding any cynicism the Chancellor’s rhetoric was optimistic claiming his budget was aimed at “Creating jobs. Cutting taxes. Keeping the cost of living low. Investing in our NHS. Investing in our public services. Investing in ideas. Backing business. Protecting our environment. Building roads. Building railways. Building colleges. Building houses. Building our Union.”

Sector – business in UK’s North and Midlands

UK's North and MidlandsThe UK’s North and Midlands were once the powerhouse for the country’s economy, with its manufacturing and engineering industries driving the Industrial Revolution in the late 19th Century.

Cities such as Leeds, Bradford, Manchester, Sheffield and Birmingham were the industrial heartland of UK when national economies depended heavily on what they could make and sell, from textiles to steel and heavy engineering machinery.

But as industry in UK declined, the UK economy shifted its focus to services and in particular to the professional and financial services with a lot manufacturing being transferred to countries such as India and China, where production costs were much lower. This was also associated with a shift in the UK economic centre of gravity from the Midlands and the North to London leaving much of the country behind.

Vestiges of industry have survived in places like Sunderland, where the Japanese car manufacture Nissan has thrived and recently increased its commitment by investing more than £50m in its plant that builds the Qashqai model.

According to a “State of the North” research by the IPPR (Institute for Public Policy Research) and reported in the Yorkshire Post  in November 2019, “only countries like Romania and South Korea are more divided” than the UK.

It found that “in Kensington and Chelsea and Hammersmith and Fulham, disposable income per person is £48,000 higher than in Blackburn with Darwen, Nottingham and Leicester”.

In December 2019 various reports by the Centre for Cities highlighted the issues. According to the Financial Times it had found that the economic divide between London and the rest of the UK widened last year.

The FT also quoted ONS (Office for National Statistics) figures that showed that “The UK capital recorded a 1.1 per cent annual rise in output per person to £54,700 in 2018, increasing the per capita gap with the poorest region — the North East — where growth was only 0.4 per cent to £23,600 per head”.

The Centre for Cities research analyses business and employment opportunities across the UK, finding that many northern cities are underperforming, hampered by a need for growth and by being at different economic stages in terms of availability of skilled workers and of infrastructure.

But there have been some signs of hope for the UK’s North and Midlands amid the gloom with the Centre for Entrepreneurs think-tank reporting that Birmingham is now the UK’s start-up capital outside London. The British Business Bank has also revealed that entrepreneurs in the north of England received more loans than those in London.

Business Live recently reported that figures from UK Powerhouse have shown that Stoke-on Trent has the fastest employment growth in the UK.

During the recent General Election much was made of pledges to level up the economy with heavy investment promised for the UK’s North and Midlands.

Among the promises made by the Government is a pledge to get on with the proposed HS2 railway to connect northern cities like Birmingham, Manchester and Leeds to London. It argues in support of this plan that “The Midlands already has the highest concentration of businesses outside London, including international firms such as Jaguar Land Rover, MG Motors, Deutsche Bank, JCB and the 150 year old, West Midlands-founded FTSE 250 engineering firm IMI”.

It has also promised “massive investment” in a new institute of technology to be based in Leeds, and to be modelled on MIT in the US (Massachusetts Institute of Technology) and there are suggestions that parts of the Treasury will be relocated to the North of England.

Whether these promises will be delivered remains to be seen, especially given the more immediate and pressing problems of the NHS demands due to the worldwide pandemic of Covid-19 now playing havoc with the global supply chain and countries’ economies.

Perhaps this week’s budget will provide some clues.

Employing millennials should not be a problem

employing millennialsEmploying millennials should not be seen as a problem but according to some reports in the business press many employers would prefer not to.

The reasons given range from this generation having a poorer grasp of language to being less loyal than older workers, and allegedly having higher absence rates.

Quite apart from the fact that age discrimination is outlawed under equal opportunities legislation, millennials (the generation born between 1980 and 2000) now make up the bulk of the workforce.

While it would be fair to say that employing millennials means bosses need to understand that this age group may view their careers rather differently from previous generations, it is also true that each generation comes with skills and attitudes that are a benefit to their employers. It is also true for many employers that they are customers who need to be understood.

Approximately 10 years ago PwC produced a report that focused on the millennial generation, examining their career aspirations, attitudes about work and level of comfort with new technologies. It predicted that they would make up 50% of the global workforce by 2020.

It also examined the key features that employers would need to understand about this generation: “Millennials’ use of technology clearly sets them apart. This generation has grown up with broadband, smartphones, laptops and social media being the norm, and expect instant access to information”.

This is clearly a benefit for 21st Century businesses.

However, the report continues that employers need to understand that it is a generation whose “behaviour is coloured by their experience of the global economic crisis and this generation places much more emphasis on their personal needs than on those of the organisation for which they work”.

This should be no surprise given that it has been a long time since employees of any age have been able to rely on the “one job for life” career model.

Couple this with having had to make compromises due to the 2008 global financial crisis, such as having to do work that is beneath their skill and education level. Indeed, they are often better educated than previous generations who tend to be more senior people in organisations and they are living with high levels of rent and living costs while at the same time they have been burdened with university debts that were not imposed on those who complain about them. It is hardly surprising therefore that many of them consider their income as derisory when compared to the income of others. Loyalty works both ways.

In addition, they are aware of other factors such as quality of life, environmental concerns, diversity, ethical business and equal opportunities which are becoming more important factors when deciding who to work for.

As older employees reach retirement and the likely restrictions on immigration, employing millennials is not going to be a choice and indeed employers should be looking for the best available skills for their businesses – or the potential to develop them.

It may mean that employers will need to re-think their rigid, hierarchical structures and use a more cohesive, mentoring approach to their management style.

They will need to pay more attention to employees’ training needs and careers aspirations, and to accommodate their increasing focus on environmental and social concerns.

Good workers know when they are being treated well and young people tend to be well able to adapt to a fast-changing world, accordingly employers should focus on helping young people to become good workers as a demonstration that they valued. Employees should no longer be regarded as a burden or treated as being lucky to have a job. It is now the other way round.

Survival in the 21st Century will involve businesses having to adapt rather than expecting their people to adapt.

While most businesses claim that their people are their greatest asset, the reality is only true when their people claim their business is the greatest employer.