A repeat of 1975?

I saw the first swallows of the year on April 11th and heard my first cuckoo on April 25th.  In Yorkshire we have had only a few millimetres of rain since the end of February.

For those old enough to remember, this is like the start of 1975, the year of, among other things, the great drought; no rain for months on end. However, that was not all that was happening in 1975.

If you are feeling that 2011 is close to the end of the World as we in business know it, compare your lot to the situation in 1975.

Britain voted to remain in the European Union, forerunner of the Community, in the last referendum held in this country.  Not only did people turn out to vote but 67% of the population voted ‘Yes’.  Just like today and the referendum on changing the voting system, people wanted change.

We needed change and this is why.

In 1975 the Bank of England base rate was 11.75%, inflation was around 25% p.a.

The price of petrol had risen 70% in the past year to an eye watering 16p per litre.

Unemployment was spiralling and many of those still in a job were on strike protesting about just about anything.  Trade Unions were at the peak of their destructive power encouraging their members to treat their own employers as enemies of the working class, sabotage any working reforms and demand more money for doing less.

The nationalised industries were so inefficient they were costing the country almost all of GDP, millions of Pounds every day when the average price of a house was under £12,000 and a family saloon car under £2,000.

Britain suffered ‘stagflation’; stagnant growth and meteoric inflation in all prices.

I was one and a half years into my first business and I now realise, I knew nothing.  I had come up with an idea, got a product designed and into self manufacture and was selling it direct to industry and commerce.

I managed that in less than six months and in the eighteen months trading had the sales at an equivalent of £750,000 p.a.  That was 750,000 1975 Pounds!  In 1975 we came up with the Mark 2 product and I lost all sense of direction.

Sadly, as I say, I knew nothing about business, then, and within a further six months German venture capitalists tricked me out of the business.  I still see the product today with dozens of different logos attached but I was left with nothing.

It was not all bad; the Vietnam War ended and the VW Golf was introduced.

So what is 2011 offering that makes business so bad?

O.5% base rate, real lending rates around 7% compared with 15 – 20 % in 1975; toothless and useless trade unions; 4% inflation; a single market in Europe and more small businesses than ever before.

Despite this there are similarities, slow payment and bad debt, difficulty in borrowing money at affordable rates; nationalised banks not nationalised industry costing us millions a day.

Can we learn from 1975?  Possibly if you listen to wrinkled, old cynics like me, who have the 1975 T shirt.

These are my top tips.

  1. Never deliver without a proper contract of sale.  (Few realise that without a contract there is no legal right to ask for payment.) Editor: Live and learn Richard Lambert)
  2. Never offer credit unless there is no other way to do the business and even then make sure your contract will be enforced and the customer knows it.
  3. Monitor and measure everything you do, so you know if a policy is effective, ineffective or just a waste of money.
  4. Don’t employ and become bound by employment law if there is an alternative.  It is not true that the more people you employ the more successful and important you are.  (In that first business I employed over 30 people directly and another 150 indirectly.  In my last major business I employed 1.5 people.)
  5. Always ask your customer about your business efficiency and product suitability, not your accountant or PR agent.
  6. Challenge every bit of professional advice you are offered.
  7. Challenge every professional invoice you are sent.
  8. If you suspect you are lost, ask for directions.  Make good use of experts, experienced specialists like the people at Orchard Growth or wrinkled, old cynics who have the T shirt.
  9. Learn that marketing is not selling and selling is not talking; learn to sell.
  10. Learn to form the question to which the only answer is ‘Yes’ and negotiate absolutely everything.

In summary if you think current market conditions are too tough then you are probably lost and need to ask directions.  If you want financial direction ask Orchard Growth.  If you want directions to make the finances, ask the wrinkly, old cynic in the 1975 T shirt.

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