One of the key things in getting your business off to a success is to have a vision, set a strategy and then determine your tactics to achieve your vision. Two good books on the subject which I can recommend are “From Vision to Exit: The Entrepreneur’s Guide to Building and Selling a Business” by Guy Rigby, or if you want an exciting novel which actually goes through these important steps mixed with action and even some sex then read “The Devil’s Deal” by Richard Lambert.
But that is not what this blog is about. This blog is about how our government hinders entrepreneurs in executing their strategies as they continuously change policies, do u-turns and do not stick to long term strategies themselves. The latest example is the u-turn on feed in tariffs for alternative energy sources.
Feed in tariffs have been around for more than 10 years in countries like Germany and we finally caught up in 2010. The principle is simple: if you can generate electricity through something like solar panels, you are paid for the electricity you generate. The idea is to encourage small installations so the tariff is generous for up to about 10kW and then drops rather sharply. Once it becomes the norm to use renewable energy sources, the support will not be necessary.
Just over a year ago the scheme was put in place. About 4,000 small businesses operate in this sector employing around 25,000 people and the idea is starting to gain some traction. Not the kind of traction we see in Germany of course where they have been doing it for a long time and where they have clear targets to achieve by 2020. We are just starting and I am not clear we had any targets at all, except perhaps ensuring the energy companies are kept very profitable.
In their brilliance, the government announced about two weeks ago that they were going to slash the feed in tariffs by 50% with just 6 weeks notice. As the planning process alone takes 8 weeks (if there are no questions) this means that virtually all current projects will be pulled. The result will be bank loan costs incurred unnecessarily, many installations companies failing and no chance of ever achieving any environmental targets we might have imagined.
This kind of knee jerk policy setting makes it very difficult for any business to set a strategy. At least one business I know had earmarked £36,000 for solar panels and had paid the £18,000 deposit. This company is now left high and dry.
The lessons we can learn draw from this is to be very careful in trusting government policy and whatever you do in business, do not follow their lead. The vision of this government was to be the greenest government yet and to stimulate small business. Their strategy is made up on the hoof which means of course that neither vision will ever be achieved, but something totally different and of course unexpected will happen and it is unlikely to be good.
Both “The Devil’s Deal” and “From Vision to Exit” are available in Kindle format on Amazon, whilst “The Devil’s Deal” is also available in a format readable on your iPad or any other pad on www.lulu.com.