The long haul…..?

“Markets up on hopes of EU deal” screamed the headline on the BBC business news webpage earlier this week. Er no, not from what I could see. It seemed to be 3% down at present. Mind you that headline had probably been written an hour or so before and as we know at present an hour is an awfully long time in the stock market world.

Of course short termism has been a major criticism of Anglo Saxon capitalism. The focus on quarterly or half year earnings apparently meant that anything with a longer term benefit but immediate negative impact was often shelved. As a result we were seemingly left with a world dominating financial industry but not a lot else.

Back in the last century (oh how easily that trips off of the keyboard) we were constantly exhorted to follow the long term view taken by the Japanese and the Germans. Their industrial policies were based around such things as partnerships, local bank support and family businesses. As a result they made a lot of things and sold them around the world.

We have been hearing a lot recently above the drive to create Britain’s own “mittelstand” class, our equivalent of those primarily family owned SMEs that take a long term view of their business and have been the backbone of German economic development for decades.  I suspect that this has met with hollow laughter among Britain’s existing family owned businesses who have been ploughing their own furrow regardless, forgotten and unloved, some for many hundreds of years. (Indeed as one of my fellow Enterprise Britain bloggers has this week pointed out Britain’s oldest family businesses started in 1535 – we do read each other’s contributions, honest!)

Most businesses that I am involved with manage to work with a variety of short, medium and long term goals. Contrary to popular opinion these goals are not mutually exclusive. The short term focus on cash and liquidity through profitable trading, the drive to find competitive advantage to move the business forward in the coming year, and the desire to exit for a considerable sum of money or hand over the business to their offspring are the core principles that underpin their business planning.

Of course long termism requires a supportive infrastructure and I suspect this is where the government will have most of its problems in its attempts to create the kinds of businesses that they see as the future. Planning, transport and finance, in particular our banks, will all need to be with the programme.

So what should you be trying to create with your business? A company that is targeted on quarterly earnings? An exit in three to five years’ time? A legacy that will last for generations? All of the above I would think. Let’s hope that a business climate develops which allows you to do so…..

1 comment for “The long haul…..?

  1. Richard Hoblyn
    28 October, 2011 at 09:56

    Excellent post Antony! …As we all know the current crop of family based SME’s have had scant support from the banking system who in many cases have actively traded against their customers (see the financial services industry as an example). Unfortunately in the current over-regulated world I cannot see how new enterprises can thrive. The problems even amongst private enterprises usually start with the FSA ethos regarding an extraordinary redefintion of what RISK is. This banal handicap has filtered down into all aspects of business support from bankers, venture capital, management consultancy as well as the professional bodies so there really is an uphill struggle here. But of course those of us at Enterprise Britain are happy to give our support to some old fashioned yet radical changes….allowing for a little extra and understanding Risk.

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