Billion pound challenge

One of the ways industry can help our economy come out of recession is to get more people into work, and then reduce our massive deficit from the tax revenues raised and reduction in state benefits paid out.

I don’t think you need to be a rocket scientist to work that out!

If someone is unemployed, they are unlikely to see a job advertised and think I won’t apply because I’ll pay too much tax. So if taxes need to be raised to balance the books the logical thing to do would be to increase VAT and to increase PAYE tax.

However, politicians of all persuasions seem to be spineless and only interested in short term votes rather than the long terms well being of our economy.

They have proved that by increasing Employers NIC. All that will do is stop employers employing people at source. I  run a small business so only have 6 translation job vacancies at the moment.

What the country needs is a radical policy and approach to balance the books and get people back to work:

• Cut Employers NIC to 5%, massively encouraging employers to take on staff
• Force Employers to contribute 3% to employees stakeholder pensions
• Raise employees NIC by 3%
• Raise PAYE tax rates by 4%
• Raise VAT to 20%

Forget this rubbish about dramatically cutting Public Sector Jobs, in general Public Sector money is spent internally in the UK on jobs and big internally spent capital projects. By cutting this back, laying off staff and ineffect putting more money into all our pockets will just result in a huge proportion of that money flowing out of the country into foreign holidays and chinese goods.

It might not gain votes but it would get us out of the mess we are in as a country much much faster than the populist burying heads in the sand policies of the national political parties!

We have like many UK small businesses now experienced a sharp downturn. And as a lot of our business is to the financial sector which the ecomomic downturn has hit hard, thus impacting on us.

We are however, through efficiency and cost-cutting measures staying in profit even though we have seen a 33% reduction in our forward sales.

This has been achieved by reducing our workforce by 33% through a combination of natural wastage and redundancies, meaning we are a now a very lean outfit, where everyone has taken on new roles and responsibilities and learnt new skills.

We have all become more efficient at the tasks we perform and everyone mucks in helping everyone out.

I have cut back our sales and marketing budget by 80%, leaving us to focus on our core and existing customers, and waiting for an upturn in the economy before agressively marketing again.

I have set our 2010 budget on expecting a 50% drop off in business, meaning that anything better than that means we make a profit.

I don’t believe a word the government tell us about the economy, and think the recover is unlikely to happen before 2011.

Although we have experienced a downturn I am so proud that my staff, most of who have been with me many years have risen to the challenge that the downturn, recession and limited redundancies has brought…

They have come up with lots of new ideas, and that coupled with our software development project which we have boring named www.askgroup.net we are very very confident about the future, even though we all know the next 18 months will be incredibly tough.

In 21 years of business I have never before had to make people redundant, until now.

I have managed to keep it to just 4 members of staff, but it is still a very stressful and depressing thing to do, I just hope I never have to do this again!

However much it feels horible I don’t feel guilty, firstly because it is not of my making, I am just at the mercy of economic circumstances, and secondly by making the redundancies I have when I have which is early rather than too late, I will have protected the jobs of all my other staff, and my job of course!

The last thing I would want to do is go and work for someone else after 21 years being self-employed!!

Wow!

The Loan application was approved in 3 weeks!

I may not be a fan of the current Government’s economic strategy, as history has shown us that printing money and getting further into debt normally criples economies, but in a credit crunch where banks have stopped funding small firms, getting a loan for an investment project is the sort of thing that will help the economy in the long term!

So let the software development commence …

We need to continue to invest in systems for the future and I have planned the most amazing Translation Company and Online Print Management Systems, automating much of our Project Management, and giving Clients and Suppliers access to all their work. It will increase our Project Management efficiency by 60% and cut our supplier costs by up to 20%, so it would be madness not to continue with this investment, even though it will cost nearly £200k to develop!

With the help of our Lloyds Bank Relationship Manager I applied for a £100k Small Firms Loan Guarantee Scheme Loan today, that the Government keep mentioning!

With our future orders at a 2 year low do I bury my head in the sand and hope things improve, or take the depressingly big decision and make some staff redundant and streamline the business, in order to be stronger in the long term, and enabling us to invest in the right areas so we come though the recession a stronger, leaner company.

The very fact that the government are having to print money to negate the effects of deflation shows how ill our economy really is.

Sterling could come under emormous pressure, and ultimately hyper inflation.

And if our current economy comes under inflationary pressure in its current state, requiring higher interest rates we  could see 10% unemployment, business failures on a scale unseen in our lifetimes and a level of government borrowing that would take decades to sort out.