On the wrong tack

Governments may be too constrained to take truly tough decisions, but business owners have little choice.

Governments may be too constrained to take truly tough decisions, but business owners have little choice.

Yesterday we heard in the Queen’s speech how Britain is set for a revival and rebuild, with a maintained focus on reducing the deficit. Today we are reminded of the obstacles in the way, with a 24-hour stoppage across the public sector in the hope of keeping welfare, pensions and deficits high.

With some irony the Olympic torch is itself lit in Greece today on route to London. How long before the swelling mass of tax receivers in Europe overwhelms the taxpayers here and the whole European enterprise goes over, knocking down France on the way.

As a growing businesses at the modern coal face, struggling to keep going, such wider context is unsettling. Buyers and suppliers change daily. HMRC sends menacing letters if any payment is a few seconds late. Clinton Cards yesterday fell to demands from its main suppliers (and a somewhat questionable treatment of its debt by the banks). Banks continue to be unhelpful, encouraging any Tom, Dick or Harry to try and cash in with their pawn shops or payday loans. Maybe business should just take a holiday, stop employing and paying taxes like in Greece until sanity returns.

On the bright side, in the absence of growth from large corporates there’s ongoing growth in the number of small businesses being created in Britain. We are moving from a nation of shopkeepers to a nation of entrepreneurs.

Unlike constricted coalition governments, business owners appreciate that strong helming is required to get them through choppy economic waters. This requires super-accurate cash flow management to stay close to the feeble wind (i.e. zero). Navigation skills become critical, keeping focus on your destination, even if reaching it requires multiple tacks in the wrong direction. No opportunity can be neglected, whether it’s taking on non-core projects just to bring in some cash, or applying for R&D grants.

Or there’s the other approach, seeking elusive venture capital that can supercharge your sailing with powerful outboard motors. This brings its own risks of course: powering blindly forward without learning the pain of running a real cash-generating business, or crashing into rocks and keeling over as you move too fast (hiring lots of the wrong people and then restructuring, for example). Ultimately many such ventures can fail, as the reason they got funded was to reach a specific, elusive destination which has either sunk beneath the waves like a lost Atlantis, or become pointless to arrive at now the market has moved on.

Annoying to admit it, but Sir Alan Sugar was probably right in his preferred approach never to borrow or use anyone else’s money. All businesses need to be in the market from day one, selling what they can make or do, learning, and above all generating cash. Otherwise companies too easily become loss-making machines, losing control of their own destiny like bankrupt European countries.

Simon Daniel

Simon Daniel

Simon Daniel is the inventor of the USB battery and folding keyboard. He was also CEO of Moixa, the renewable energy group.

Related Topics