BUSINESS

By Mark Salter, Fort Financial Planning

Less than a year ago, The Guardian reported, ‘Why low inflation is a worrying sign for the UK economy’. More recently, an article in The Independent presented a headline that likely touched a raw nerve among investors, ‘Bank decision in sharp focus amid beast of inflation warning’.

Is inflation headed higher? In the short term, it’s already moved that way. With many firms now reporting strong demand for goods and services following the swift collapse in business activity last year, prices are rising – sometimes substantially. Is this a negative? It depends on where one sits in the economic food chain.

Do such price increases signal a coming wave of broad and persistent inflation or just a temporary snapback following the unusually sharp economic downturn in 2020? We simply don’t know. But future inflation is just one of many factors that investors take into account. The market’s job is to take positive information and balance it against negative information, like falling profits, wars and natural disasters, to arrive at a price every day that both buyers and sellers deem fair.

Let us assume that rising inflation persists into the future. Some investors might want to hedge against higher inflation, while others might see it as a markettiming signal and make changes to their investment portfolios. But for the market timers to do so successfully, they would need a trading rule that directs exactly when and how to revise the portfolio. A trading rule based on inflation estimates, however, is just a market-timing strategy dressed in different clothes. A successful effort requires two correct predictions: when to revise the portfolio and when to change it back. It’s not enough to be negative on the outlook for stocks or bonds in the face of disconcerting information regarding inflation (or anything else). Current prices already reflect such concerns. To justify switching a portfolio, one needs to be even more negative than the average investor. And then outsmart the crowd once again when the time appears right to switch back. Rinse and repeat.

The evidence of success in pursuing such timing strategies – by individuals and professionals alike – is conspicuous by its absence.

Some of the recent concern regarding inflation appears linked to substantial increases in government spending and government debt load. Determining the appropriate level of each is a contentious public policy issue, and we don’t wish to minimise its importance. But historical news headlines suggest these concerns are not new, and the expected consequences of these issues are likely already reflected in current prices. The future is always uncertain. But as economist Frank Knight observed 100 years ago, willingness to bear uncertainty is the key reason investors have the opportunity for profit. Investors will always have something to worry about; the possibility of unwelcome or unexpected events should be addressed by the portfolio’s initial design rather than a hasty response to stressful headlines in the future. As research from Fort Financial Planning highlights, simply staying invested can help investors outpace inflation over the long term.

HOW TO MAKE YOUR BUSINESS EASY TO INSURE

By Dean Holloway

Over the next few months, Holloway Insurance Services will use its thirty years’ experience to share tips on how to make sure you are fully covered when you choose your insurance schedule, so you don’t face the horror of trying to make a claim and then find your loss isn’t covered under your policy. The current insurance market is hard; insurers have less appetite for risk. This means that at renewal you may find the terms you enjoyed before are no longer available for you. We shall share ways in which you can make your business more attractive to insurance companies to take on your risk. This month we look at the paperwork that insurers will often expect to see in place before they will offer to cover you. Having appropriate risk assessments, checks and rules in place will sometimes be mandatory for your insurance cover. It may be possible to find insurance that doesn’t request them but this will cost more and will be harder to find. Some of these may be legal obligations to protect your staff. 1) Ensure that your health and safety risk assessments are reviewed every year and signed. They may not have changed, but they need to be signed to say that they haven’t changed. If someone makes a claim after an industrial accident, the insurers may not pay out if you have not got up to date assessments. We have risk assessment templates that we share with our clients so they understand what may be asked of them.

2) Check your equipment is tested regularly, think PAT testing, pressure boilers (e.g. coffee boilers), fire suppressant systems and smoke alarms. An insurer may not cover you if these are not in place and may request to see certificates. 3) Ensure you have a regular, signed cleaning cycle. Leaves in gutters that cause flooding, blocked drains, cooker extractions systems furred up with fat will all reduce your chances of pay-out. 4) Clear staff policies that are easily accessible to staff. For example: expectations of your drivers, no smoking near gas storage units, moving and handling training which are all regularly updated and signed by the staff. 5) Careful storage of equipment; consideration of possible factors that may include items not being stacked against the building due to fire risk; most insurers stipulate they must be stored several metres away. Items cannot be stacked up

Telephone: 01460 206588 or 07341 663783 info@hollowayinsurance.co.uk to the ceiling. Fire doors must be kept shut and not propped open and fire drills rehearsed regularly. Next month we shall look at common policy exclusions. Look out for them and consider if it is something you really need covered. In the meantime, do visit our blogs page where we share more useful information for businesses (www. hollowayinsurance.co.uk/blogs) and search YouTube Yeovil Chamber Business Fair for our presentation.

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Risk Management Company Needs Insurance Guidance Proud to be insuring and supporting local businesses

Compliance Communication Telephone: 01460 206588 or 07341 663783 deanholloway@gauntletgroup.com

Expect more from your broker - expect our full spectrum of solutions INSURANCE & RISK MANAGEMENT You can rest easy with our regular compliance newsletters, articles, action plans and support to FOR BUSINESS keep you up to date on the latest legal developments as your company grows.We don’t believe in finding you We aren’t just here to help you when you have a claim, all our clients have access to FREE risk cheap business insurance, management resources that will improve e ciency we believe in finding you the best and reduce risk within your company whatever stage or sector of business you are in.business insurance and working With over 30 years’ experience and as part of the with you to ensure that you are Gauntlet Group we o er an unrivalled level of access to market. We have access to more options and more supported at all stages. insurers than most of our competitors, o en leading Proud to be insuring and supporting to a more competitive quote for your business.www.hollowayinsurance.co.uk local businessesinfo@hollowayinsurance.co.uk 01460 206588

PRINTERS, AGAIN!

By James Flynn, Milborne Port Computers

As you’ll know from previous blogs, I hate printers! They are the bane of my life and I have wasted more hours, days and years failing to fix them than I care to think about. Microsoft also don’t help, as every time they release an update it seems to remove all your printers and then try and rediscover them, failing in the process. It’s then up to you to reinstall your printer manually. So, what is a printer? In computing terms, a printer is a peripheral which makes a persistent human readable representation of graphics or text on paper (thanks to Wikipedia!). In English, they put what you see on the screen onto paper. Today there are only really two types; inkjet and laser. Inkjets squirt dots of coloured ink onto the paper as the print head passes over it; they are relatively slow and, cost per sheet, expensive on ink, but good for low volume home use. They are also excellent for home printing of photographs; they don’t require any warm-up time but are prone to drying out if not used regularly. Cheap to buy! Laser printers fuse coloured powder onto the paper with heat, they are fast and much cheaper on consumables per copy in a high-volume environment. However, they can’t use special papers for photographs, can take several minutes to warm up for the first copy, but will print perfectly after months in a cupboard. Historically they have been relatively expensive to buy in comparison to an inkjet, but they continue to become cheaper. Should you buy cheap replacement ink and toner? I do! The cost of a set of genuine cartridges for an inkjet can be almost as much as the cost of the printer itself. However, it carries a risk in that if your printer is still under warranty then it is invalidated if you have not used genuine ink or toner. I could never ‘recommend’ you do it, but I consider the risk to be worthwhile as the savings can be huge … T&Cs apply!! So, what are you to do? I always say, ‘spend as little as possible, and replace as often as necessary’. If you’ve only spent £34.99 on a printer, then it’s not worth worrying about if it breaks down after your year’s warranty. There is nothing to mend in a printer, you just throw it away and get another one. When buying a printer also try and make sure that it has a screen on the printer as these can be easier to install and troubleshoot if you need to. Finally, always spend a little time uninstalling the old one from your computer first, then carefully follow the instructions provided by the new one to get it set up properly right away. If it’s a wireless printer, the order is – your printer talks to your router and your router then talks to your computer! The choice as always, is yours, but if you think you need advice, you know where to come.

KNOW YOUR LIMITS

By Jim Rayner

How profitable could your business become? In heady moments of entrepreneurial excitement it’s tempting to imagine the sky is the limit. The reality is that for most businesses there are physical limits constraining our profit making capacity. A hotel has only so many rooms to fill. A theatre has a limited number of seats to sell each week. In practice businesses rarely operate at full capacity all the time. Imagine you’re running a small restaurant. Your business potential could be limited by the size of the kitchen, or even the number of customer parking spaces. But let’s say the biggest constraint is the number of tables. Your restaurant only opens in the evening and with every table occupied you could serve a maximum of 240 covers each week. Let’s suppose the average spend is £30 (plus VAT), the cost of food and drink is £12 (40%) and your weekly overheads amount to £2700. The absolute maximum profit you could achieve each week works out to £1,620. Of course you’re unlikely to have a full restaurant every night. So how many covers do you need each week to avoid making a loss, and how wide a margin of safety do you have? The answers are shown in the table below.

But what if the trading environment changes? Maybe hospitality staff are in short supply and you need to pay more to retain your team, and at the same time the cost of food and drink rises? Let’s say your fixed costs rise by £270 (10%) per week and the cost of food and drink rises from 40% to 42%.

Break-even Maximum Break-even Maximum

Covers

150 240 171 240 Sales £30 ASP £4,500 £7,200 £5,130 £7,200

Direct cost 40%/42% £1,800 £2,880 £2,155 £3,024 Gross profit £2,700 £4,320 £2,975 £4,176 Fixed costs £2,700 £2,700 £2,970 £2,970

Profit per week £- £1,620 £5

£1,206 Assuming you don’t increase your menu prices, your maximum possible profit falls to £1,206 and your margin of safety now starts at 171 covers per week. Suddenly it has become more difficult to trade profitably and even if your restaurant operates at full capacity your potential weekly profit has fallen by over £400 per week. That is a potentially catastrophic £20,000 a year. If you need help with working out your maximum profit, there’s a simple calculator on my website www.james-rayner.co.uk or give me a call.

STAY ON TOP OF THE NUMBERS

PROTECT YOUR BUSINESS

By Patricia Marks

Creating your own business or becoming self-employed or starting to work for yourself can be the most exhilarating challenge you will ever take on in your life I believe. There is something deep in all of us that at some point or other feels the need or desire to go it alone – my advice: ‘do it’! But do it with the right support, the right frame of mind, the right reason, and the right business to suit you.

Choosing the type of enterprise for yourself is the biggest hurdle at the beginning of your journey. Take the time to reflect on you – for once it is all about you! Write yourself a story about what you like, what you are interested in, what you already know about the work you are considering doing, and what connections you have to the sector/industry you are considering. Who do you already know that can help you, where can you get data from the area of work, how good are you at finding things out, how good are you at connecting with people, how risk inclined are you, and what is your appetite for trial and error? So many questions that need real and considered answers that you understand and can work with. You need to know yourself. It will help determine the immediate direction of travel.

A great starting point is a SWOT analysis – a tried-and-tested method of reviewing something. An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given below. Strengths – Strengths are the qualities that enable you to accomplish the projects and your own personal goals. These are the basis on which continued success can be made and continued/ sustained. Strengths can be either tangible or intangible. These are what you are well versed in or what you have expertise in, and the traits and qualities you possess. Strengths are the beneficial aspects to the project or the capabilities you have. Weaknesses – Weaknesses are the qualities that prevent you from accomplishing the projects and your potential. Weaknesses are the factors which do not meet the standards set by you or the organisation. They must be minimised and eliminated. Weaknesses could be in products, service and knowledge, technical

PARDOES FREE LEGAL HELPLINE

Questions for the Qualified

Tough times require a community willing to help and support one another. Due to the restrictions in place in Somerset (and the nation) we have had to halt our popular free Legal Clinics in the villages/towns dotted around South Somerset. We have endeavoured to continue to help our community by offering other free services such as The Friendly Law Podcast which covers a range of important legal topics, but we would like to offer a further solution: The Pardoes Free Legal Helpline will commence on the 22 February and will run every Monday between 16:00 and 18:00. It will be manned by qualified staff The Legal Helpline

It is our ambition that dedicating this time to give free legal help will ease some people’s worries and give back to the community of which we have been a proud member for over 100 years. Please book an appointment using our enquiry form at the bottom of our website homepage www.pardoes.co.uk Alternatively, please check our website/social media platforms @PardoesLLP to find out who will be taking calls and their number. We look forward to hearing from you. skills and competencies, your understanding of your role and responsibilities, and in elements that could be around your confidence or desire to undertake certain tasks.

Opportunities – Opportunities are presented by the environment within which you and your project operate. All individuals and project leads should be careful and recognise the opportunities and grasp them whenever they arise. Selecting the targets that will best serve the project while getting desired results is a difficult task.

Threats – Threats arise when conditions in the external environment jeopardise the reliability and success of the project’s outcomes. At journey’s beginning I recommend two SWOTs: one of you and one of your business idea. Remember to be honest

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with yourself and ‘all seeing’ about your idea. Then give them to a trusted mentor/advisor/ critical friend to get feedback and comment. With the right person, be prepared for challenging questions, some actionable advice and potentially some home truths that may feel negative. If you are interested in starting your journey, email hello@sbacic. org and I will send you SWOT templates, or visit www.sbacic. org for the latest business support and guidance.

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