So, how was it for you? Reactions from local businesses to George Osborne's latest Budget.

So how was it for you?

Angela Ward, Manager, PR Services with The Marketing Eye, interviewed a number of local businesses and professional advisers to gauge their reaction to this afternoon's Budget.

Today’s Budget was, businesses in the South East, generally agreed ‘good and well intended’.

Neil Edwards, managing director of The Marketing Eye said: “George Osborne said a lot of the things that small businesses want to hear - making Britain the best place to start up, finance and grow a small business has to be the right aim. However, service businesses in the South East never seem to get a mention – and we need a helping hand too. We are looking for more incentives and tax breaks to employ people in the South East.”

It wasn’t, however, a Budget with many surprises.

“As the Chancellor was speaking, I was struck by how much we already knew - due, no doubt, to the fact that either economists and accountants are getting better in second-guessing what’s coming or perhaps the government is getting better at leaking proposals before they are made public,” commented Martin Pollins, managing director, Bizezia. “Overall, it looks like a sensible Budget that responds fairly to the concerns of many citizens in the UK.”

There were a few ‘headline grabbers’, such as the proposed merger of income tax and National Insurance.

“However, this will have political implications about raising tax rates and will need to be carefully considered to make sure it doesn’t hit the ‘wrong’ people,” added Keith Hall, director, Feist Hedgethorne.

Nick Green, branch manager of Handelsbanken in Tunbridge Wells, described it as ‘a Budget that appeared to be aimed at stimulating growth and empowering entrepreneurial Britain’. He said that this could be seen in a number of measures, particularly the cut in Corporation Tax, no new regulation for small firms for the next three years and new rules to help planners prioritise jobs and growth.

Martin Pollins pointed out that cutting the Corporation Tax rate by 2% will mean that the tax rate will be the lowest in the G7 and Richard Holme, a partner at Creaseys, agreed that the cut in Corporation Tax is good news.

“This will hopefully encourage investment,” he added. “The rate for smaller companies will fall, as planned, to 20% from next month. More individuals and businesses should now look to channel activities through limited companies to save large amounts of tax, especially if extractions of profit can be deferred.”

Another key highlight was that investments under the Enterprise Investment Scheme (EIS) will attract tax relief of 30% (from 20%) form April 6, something described as a ‘step in the right direction to getting people to invest in small and growing businesses’ by Richard Holme.

Kieron Robertson, estate planner and independent financial adviser, Valiant Financial Consultants, added: “Increase in entrepreneurs’ relief will also be well received from those in business – a doubling of the lifetime limit of gains from £5 million to £10 million.”

It was also announced that there will be an increase in research and development tax relief to 200% (and 225% next year), which was described by Keith Hall as ‘an opportunity that smaller companies in the digital community should not overlook’.

Neil Edwards said that there wasn’t much in the Budget to take the risk out of employing staff and to get people back to work and spending again.

He added: “We want to grow the business, take on new staff and reward the ones we’ve got. Finding the cash for pay rises is difficult in the current climate and it’s made harder if anything you do offer is negated by inflation and increased NI. I am, however, pleased that increase in the personal allowance will offset the rise in NI for individuals and that steps are being taken to limit the rise in fuel prices. This means any pay rises we can offer will make people better off each month.”

There was some relief for first time buyers, which Nick Green said was ‘good’ and Kieron Robertson agreed. He explained: “The £250 million commitment to first time buyers provides some solace to those struggling to raise deposits – although it is a shame it is restricted to those buying new homes. Will this mean that more school fields are sold off?”

The one thing which everyone – including said Nick Green ‘the beleaguered motorist and haulage firms’ - was united in welcoming was the measures to freeze the planned inflation rise in fuel duty and reduce it by 1p.

The announcement of a 10% Inheritance Tax discount for those leaving 10% of more of their estate to charity was welcomed.

“The charity sector is suffering at the moment – so anything that can be done to give it a boost is good news,” said Richard Holme. “It is also positive for people who wish to leave part of their estate to charity. Donors will need to look carefully at their wills and also plan whether to give to charity in lifetime through gift aid, or on death to save Inheritance Tax.”

Kieron Robertson concluded that it was ‘always going to be a hard Budget – with so much anguish caused over the last few years (if not longer?) and the borrowing to fund the deficit forecast of £146 billion.”

Neil Edwards added that ‘there is still a lot of uncertainty out there’. He explained: “Rising inflation rates and threats of increases in interest rates don’t help. In the absence of confidence, we need our costs held down and the ability to leave as much profit in the business as we can to re-invest - not paying it all out in tax.”

What did you think of the Budget? Share your thoughts and we'll share them across our network.

Local entrepreneurs speak out on Budget wishes

With the Budget just around the corner (Wednesday 23 March), we canvassed some of our clients – a mixture of business owners and professionals – for their Budget wishes.

Understandably in this climate, our clients have a number of concerns – covering not only business issues, but also worries about the NHS, for instance, and our ageing population.

Martin Pollins, managing director of Bizezia in Haywards Heath says: “We need tax relief on private medical insurance premiums, which will help the overburdened NHS.”

Richard Bamford, key account director with Citrus Healthcare Consulting in Hildenborough agrees that the government needs to introduce measures to reduce the financial pressures placed on the NHS.

“Individuals who take out private medical insurance should be encouraged and rewarded for taking responsibility for their health and wellbeing, therefore reducing the cost burden placed on the NHS,” he says. “The constant advancements in medical treatment come at a price, with more money needing to be pumped into the NHS for it to cope with these costs. People should be given a tax break to help pay for their private medical insurance, especially pensioners. If the government wants the NHS to be sustainable in the future, bold decisions need to be made.”

If people are lucky enough to remain fit and well and outside of medical system as they head towards retirement – old age itself brings with it more than enough to worry about. Michele Pearson, wealth adviser with iMAP Your Finances in Cuckfield, would like to see a simplification of the pension laws.

“People want to know what they can expect at retirement, regardless of their savings,” she says. “If you want people to invest now to make their future in retirement better, then you need to give them certainly for them to build on.”

Martin adds: “Abandon the minor allowances for the elderly, such as winter–fuel payments, and combine them into an increased basic pension – it will save money on administration costs and put the level of UK pensions closer to those in other countries. Also for the retired population, I would like to see better interest rates on savings, or no tax on savings, lower taxes or no taxes on state and other privately-funded annuities.”

When it comes to saving, Michele says that personal investors want better returns from their savings. She adds: “The government can help by providing more tax-free havens – we haven’t seen a TESSA account for years – and why not extend the ISA limits further?”

Kieron Robertson, an estate planner and independent financial adviser with Valiant Financial Consultants in Tunbridge Wells, says that it would be good to see more done to encourage people to save both in the short-term and beyond.

“It would be good to see a reduction in Capital Gains Tax for those with assets held over periods of say, more than five years and more to encourage savings towards retirement,” he explains.

Richard Holme, a partner with Creaseys in Tunbridge Wells, wants George Osborne to ‘leave Capital Gains Tax alone or perhaps look to reduce the main 28% rate slightly. He adds: “Above all, retain the 10% rate for sales of businesses (entrepreneur relief) in order to encourage entrepreneurs to invest to assist in the continuing recovery of the UK economy.”

We – and our clients - are united in wanting to see more done to stimulate business investment and offer companies support.

“George Osborne must fulfil his promise to centre the Budget on entrepreneurialism and business growth,” says Neil Edwards from The Marketing Eye. “Getting people back to work and safeguarding the liquidity of small businesses is the priority. Offering rewards and incentives to businesses to employ people by offering relief from employers’ NI or rebates on previous years’ corporation tax will take the risk out of new hires for small businesses and get consumers spending again.”

Chris Winning from The Winning Partnership in Tunbridge Wells says that there need to be tax incentives for Research & Development.

“We need to ‘kick start’ the economy again and, more importantly, help businesses to recover from years of depression,” he says. “They need assistance with R&D to give them a chance to be innovative, create new income streams and boost the bottom line profit.”

He’d also like the 50% tax rate to be abolished, as he feels it is discouraging entrepreneurship.

“Much wasted time was spent preparing for this incredible leap upwards,” says Chris. “For the costs involved and fees paid to advisors, I would have thought more cost effective methods of collecting taxes from a larger proportion of the population would have been better employed.”

Adds Nick Green, branch manager from Handelsbanken in Tunbridge Wells: “There are many ways that businesses can be supported, such as reducing red tape, incentivising local government to speed up the planning process, simplifying the corporate tax regime and looking to reduce the 50p income tax rate to encourage entrepreneurship and spending.”

Finally, a major worry to everyone is the price of fuel.

“The price of fuel is reaching crisis proportions and is rapidly becoming an inhibitor to business growth. Steps need to be taken to bring fuel prices down or at least cap them at where they are,” says Neil Edwards.

Adds Nick Green: “Individuals’ spending power is being eroded through inflationary pressures, due to increasing food, commodity and oil prices. With the rising price of oil, the government is already benefiting from additional ‘tax take’ and while the additional fuel duty levy was built into their calculations for reducing the UK debt burden, the impact on individuals and business is becoming increasingly apparent and, therefore, I would like to see this potential further imminent rise in fuel duty deferred or scrapped.”

Finally, Richard Holme is hoping for a quiet Budget.

“Please no tinkering with the tax system unless absolutely necessary – we already have over 12,000 pages of tax law,” he says. “It would be good to have a Budget one year which makes no tax changes at all!”

Looking ahead, at The Marketing Eye, we are remaining upbeat. Neil says: “We are countering uncertainties around growth, inflation and interest rates by maintaining our marketing to build our brand and keep in touch with the evolving needs of our clients. Businesses that have the courage to continue marketing will survive and prosper when growth returns to the economy in the latter part of the year.”

What are your pre-Budget wishes? Do you agree with our commentators? Let us know.

What price a price cut?

A KPMG report out today says that UK firms are paying the true cost of inflation and slashing prices to an unsustainable level in an attempt to maintain customers and turnover.

As we wade our way through the worst recession in living memory, it is dichotomous that the high-end brands such as Hermès and Rolls-Royce are continuing to flourish.

At the other end of the scale, bargain brands are also increasing their share of the market. This can be seen, for example, in the hotel sector, where value hotel chains such as Premier Inn and EasyHotel are doing very well indeed. The EasyHotel chain has recently opened a 216-bedroom hotel in Dubai.

The brands which have suffered most and seen their sales stagnate or fall are the mid-market ones – those caught in a pricing ‘no-man’s land’.

This begs the question, how does one position a product or service during a recession? If we aim for a middle of the road price point, which, from the outside, might look like a sensible option, are we setting ourselves up to fail?

The question vexes business people up and down the land and the answer lies, not in the price, but in the clarity and consistency of the proposition.

RyanAir, Lidl and others do well because they are unambiguous about what their offer is and have put as much thought into their positioning as the top brands.

Equally, the top-end brands are unashamedly proud of the prices they charge, confident in their quality and clear about who their target audience is.

But what about the mid-market? Not every business wants to offer bargain basement pricing, nor indeed can command premium pricing.

If a business decides it wants to target the mid-market, then it must look to position its brand where there is a gap in the market – but not lead on price. Instead, it must find another point of difference, another reason for clients to choose it. This could be quality of service, level of expertise or the something unique that it offers.

Certain types of customer will take reassurance from a higher price and see it as a sign of quality and expertise. If this is where you are, don’t waiver and dilute your brand by slashing prices when demand falls. Hold your nerve, because once you have lowered your price it is very hard to increase it again.

Indeed, the worst thing any of us can do is confuse our customers by suddenly setting our prices lower because of the current economic climate, or simply to get a foot in the door – they may see it as a sign of desperation.

As our accountants will swiftly remind us, selling more products more cheaply isn’t necessarily a successful exercise. For a start, our margins will be less, so we will need to sell more and this may mean a larger investment in production and advertising. Successful ‘bargain basement’ brands spend a lot of money on getting their message out there.

Pricing and positioning a brand is a key aspect of the marketing process and something we spend a lot of time talking to our clients about. The key for any business is to know its target audience and, importantly, know on what basis it is going to compete. Once that is known, entrepreneurs should build a pricing policy and stick to it.

For business' sake - interest rates must stay low

With inflation at 3.7%, why is everybody starting to advocate increasing interest rates?

The inflation in the economy is cost-push, not demand-pull. Simply put, prices are going up because the cost of goods is going up - not because demand is running away with itself on the back of borrowed money. The important subtlety is that it is import costs - principally fuel and food - that are going up, not domestic ones.

The theory is that as you increase interest rates, speculators are encouraged to buy sterling and its value goes up. The relative cost of imports therefore goes down.

But hang on a minute. The £ will only rise sustainably on the back of underlying economic strength. If that underlying strength doesn't exist, the £ will remain under pressure and we will be caught up in a perilous spiral of rising interest rates in a vain attempt to shore it up.

Economic strength comes from a strong balance of payments and a healthy business sector that is creating employment and driving domestic demand.

The consequences of a rise in interest rates now would be catastrophic for the recovery: our resurgent export industry would be dealt a debilitating blow and people with mortgages would be forced to cut back. Businesses too would be saddled with an increased cost - slowing employment and forcing some to the brink.

To load a rise in interest rates on top of an increase in VAT, the rise in fuel duty and the impending increase in employees' NI, all in the same quarter, would be a particularly vindictive form of masochism.

Interest rates will have to go up at some point - we all accept that - but only when we have an excess of demand, which is not now.

Please folks, see sense. A bit of inflation in the economy today, when the causes are readily identified and the adjustment rationally explained, is a worthwhile price to pay when the alternatives are contemplated.

'Be prepared' - is the main advice for 2011 from The Marketing Eye

The Stock market has a Santa ride to a year-end high, interest rates remain low, inflation is above target, but not a major cause for concern, and manufacturing and exports are picking up.

So, what is there to worry about?

Well potentially, quite a lot. Expect an early adjustment to the stock market as soon as trading re-commences next week, interest rates will rise before the year is out and fuel will be more than 130p per litre by the time most of you read this. Hopefully, we won't have to add a series of strikes or, worse still, another General Election, to the obstacles we have to overcome during the year.

But this doesn't mean gloom and despondency.

Far from it. One of the first laws of good marketing practice is to understand your environment and if we go into the year suitably prepared for what is to come, we will have nothing to fear. As an old riding instructor once said: "There is no such thing as bad weather, just bad kit".

2010 was a significant one for The Marketing Eye. We doubled our headcount, launched a PR business and consolidated our reputation in event management. While it looks as though we will miss our stretching turnover target by a small margin, we will still achieve 50% growth - no mean achievement in a culture where, historically, the first reaction to any sign of difficulty has been to cut the marketing budget.

We are very grateful to new clients and old for the trust they have placed in us and consider ourselves fortunate to have clients that see marketing and The Marketing Eye as part of the solution, not part of the problem.

To look back on earlier posts is always amusing and, fortunately, I seem to have avoided any grave embarrassment with my predictions for 2010.

Marketing budgets were indeed hard won and major projects were either cancelled or heavily diluted. The focus on ROI was sharp - as it always should be.

Businesses in the UK made good progress with social media. Twitter moved on from 'toe-in-the-water' dabbling to an accepted way of engaging with a community that continues to grow exponentially. The non-believers, however, remain abundant. The art is to be discerning with who you follow and to build your profile with a relevant audience. Note the use of the word 'relevant' here.

Facebook fan pages have come a long way, with personalised Facebook URL's now being common place in promotional material. The Marketing Eye is using Facebook for short news items - a rolling commentary on what is happening in the business - and finding a good fit for it within our overall communications strategy.

The marketing soothsayers are out in force with their predictions for 2011. Picking our way through them, our 'Big 5' tips are:

• Wake up to the reality of the 2012 Olympics. There will be more sport related references in marketing and sport sponsorship will become fashionable and effective. Lawyers will no doubt be busy advising on and defending against breaches of Olympic copyright.
  


• Make sure your website is fully accessible on mobile browsers. There will be an explosion in mobile marketing and if your website is not accessible on a smartphone, make sure it is by the end of the year. Mobile is another reason to join in with Twitter and Facebook as these are easily and regularly accessed via smartphone apps.
  


• Rein back on content generation. People are not reading reams of content online: instead, it is bite sized bulletins that can be consumed in downtime on smartphones that are needed. Be discerning in what you produce and who you send it to. - and don't forget to use PR to gain coverage in printed publications, radio and TV.
  


• Don't get too excited by geo-location networks. 4Square and its compatriots are touted as the 'next big thing', but have all the signs of being a fad. There will surely be a backlash against revealing personal locations as people realise they are only of benefit to advertisers.
  


• View marketing automation with healthy suspicion. Marketing automation gained ground as a buzzword in 2010, particularly in the US. Marketers must, of course, make use of all the technology at their disposal to increase the frequency and relevance of their communications. We sense, however, the same whiff of panacea as was promised by CRM systems in the 1990's. Any system is only as good as the information that is put into it and the people that access it. Marketing silver bullets will remain works of fiction. There will never be any substitute for an integrated and sustained programme of activity across a variety of media.
  

As well as paying heed to the foregoing, our 'be prepared' kit for 2011 will include even greater focus on client service to ensure we retain and reward the clients that we have; a new emphasis on making a contribution to the community in which we work, financial prudence to make sure we remain masters of our own destiny and a relentless commitment to building brand awareness in our core target markets.

On which note, may we wish you all a happy, successful and marketing led 2011.

Osborne navigates the South East economy across thin ice

Chancellor George Osborne was optimistic in his update to MPs on the health of the UK economy during his autumn statement today, but life is likely to remain unpredictable for businesses for some time to come.

George Osborne is only offering the lightest hand to businesses as he gingerly navigates the economy across thin ice. He is gambling that net export income and new investment will percolate its way through the system before domestic demand drops due to the cuts in public spending and the impending increases in VAT and employees’ National Insurance.

While his statistics might look encouraging at a macro level, I wonder if he truly appreciates how finely balanced it is on the front line.

The uncertainty, even among those of us that are doing relatively well, makes it very difficult for any business owner to commit to significant new investment or employment. Most businesses don’t have the option of suddenly opening up markets in China and India if demand falls at home.

The availability of finance will remain another significant inhibitor to growth. Osborne shouldn't believe the bank's spin when they say they are supporting small businesses. I have it on good authority that despite what the leaders and PR people might be saying, the people who work in the dark offices behind the scenes are scared rigid of making a mistake: credit is extremely tight as a result. If we need finance to grow in 2011, we will need to look elsewhere for the investment we need.

One of the best things George Osborne could do in the next Budget is to make it even easier and more attractive for private individuals to invest in small businesses. If the banks won’t do it, somebody else has to fill the gap.

While he is at it, Mr Osborne should also look at increasing incentives to employ people by extending the National Insurance concession for new businesses that was announced in the last Budget to the whole of the UK (the South East, London and the East where notably excluded). He should also stop limiting the allowance to start-ups, as it is the established businesses that will offer the most secure employment opportunities - particularly for young people.

Finally, it is time to update the concession on VAT for marketing materials. At the present time, printed promotional materials are zero rated for VAT. This needs bringing into the 21st century by extending it to websites, email marketing and pay-per-click advertising. Any disincentive to businesses marketing themselves effectively needs to be urgently removed.

Time to decide

So, after what seems like months of campaigning it is now decision time.

The Conservatives have the clearest and most favourable policies for business and if my vote was to be cast on that alone, it would be an easy choice.

But, of course, it's not. A few pounds off the tax bill and perhaps a little less red-tape pales into insignificance when placed alongside the broader impact of a possible return to recession.

The central issue is how to deal with the structural debt. Labour says we must continue to invest to ensure a return to growth. The Conservatives say we need to put the breaks on and take the pain now. If your business was in a similar position, what would you do? The answer should guide your vote.

Throughout the campaign, Brown has been the strongest performer when it comes to the numbers. Close your eyes and listen to the content and it is evident that Gordon Brown wins hands down on substance. He knows that some of the promises made by the other parties won't work and has been straight when saying that NI must go up to allow spending to be slowly, not rapidly, constrained.

Cameron, a polished performer backed by a successful and well funded marketing campaign, promises the change that many feel is overdue. The PR machine has worked well and he has campaigned tirelessly.

The promised change though is a risk. Cameron conceded in the Marr interview on Sunday that only 20% of the necessary expenditure cuts have been highlighted, blaming the Government for not detailing its spending plans. Are we being softened up for broken election pledges already? - it feels like it.

The argument that the Tories don't know what they might inherit is ridiculous. The Institute of Fiscal studies has been able to produce a detailed analysis of the economy for all to see.

I worry too why Cameron won't be drawn on who he intends to appoint as Chancellor - no doubt fearing a backlash against Osborne. Surely, as his potential employer, we have a right to know what the team will be.

We then come to The Lib Dems who's star has risen too early. Their policies are ill-prepared and weren't written with Government in mind. Their time will come though. This election has shown that Clegg and his team are the party of the generation that is now under 30. They will have to be taken more seriously next time and are still likely to have a significant influence on this outcome.

So, where does that leave us. The Lib Dem balloon will be pricked if not popped and they will secure around 25% of the vote. The electorate will give Labour a bloody nose in the marginals leading to the loss of many key seats.

If all this happens, we will be looking at a narrow Tory victory and I suspect Cameron will try to lead a minority Government.

I find myself, like many others, torn between the Tory promise of a new impetus and Labour's dour pragmatism on a measured return to growth.

When I enter the ballot box tomorrow, my pencil will hover between red and blue. A hung parliament might have attractions for those that genuinely can't decide, but it would be a recipe for stalled policy making at a time when we need action.

Time is running out and it is now our duty to decide. I'm veering towards playing it safe.

Are Tories taking the high ground in battle for business votes?

At long last, I've had a reply from the Conservatives - a comprehensive and persuasive reply at that. The question is, do we believe there are £6bn of efficiency savings to be had? Labour are rapidly losing touch with the business community over the issue of National Insurance and it could prove to be their downfall. A U-Turn could be the only option.

The full text of the reply is shown below:

Dear Mr. Edwards

I am writing on behalf of David Cameron to thank you for your e-mail of 14th March 2010. I apologise for taking so long to reply; our office has been inundated with correspondence in recent months. Nevertheless, we are grateful to you for getting in touch, and I have taken careful note of the points you raise.

Government needs to create a climate in which small businesses can thrive and compete, both nationally and internationally. In 1997, Britain’s tax system was one of the most competitive in the developed world. But over the last decade we have become progressively less competitive and our tax system has become the most complex in the world. And astonishingly, the Budget confirmed that Gordon Brown wants an extra £1 billion in taxes out of small and medium-sized businesses.

We can’t go on like this. And that is why, if elected, a Conservative Government will make sure that Britain is open for business again.

We believe in low taxes, so we will ensure that the largest part of the burden of dealing with our budget deficit – a critical step if we are to get this country back on its feet – falls on lower spending rather than higher taxes. And, where savings can be realised from existing budgets, we will use some of these to protect jobs and businesses.

This is why we have announced plans to cut waste in order to avoid most of Labour’s planned tax increase on working people. The 2010 Budget confirmed Government plans to raise Employer National Insurance Contributions (NIC) for everyone earning over £5,700 per annum. This is a tax on jobs that will undermine the recovery. We will stop a large part of this tax increase by raising the secondary threshold at which employers start paying NICs by £21 a week, saving employers up to £150 for every person they employ relative to Labour’s plans.

We will also stop the increase in NICs for most employees. Relative to Labour’s plans everyone liable for Employee NICs earning between £7,100 and £45,400 – seven out of ten working people – will be up to £150 better off each year under the Conservatives. Lower earners will get the greatest benefit as a percentage of their earnings. Nobody will be worse off than they would be under Labour’s plans.

These proposals have been backed by a raft of high profile business leaders – Sir Stuart Rose, Executive Chairman of Marks & Spencer, Sir Stelios Haji-Ioannou, Founder and Chairman of easyGroup, Simon Wolfson, Chief Executive of Next and Justin King, Chief Executive of Sainsbury’s, to name but a few – as well as Britain’s top business organisations such as the Confederation of British Industry, British Chambers of Commerce and Federation of Small Businesses.

We also aspire to create the most competitive corporate tax environment in the G20. So to begin with, we will cut the headline rate of corporation tax to at least 25 per cent and the small companies’ rate to 20 per cent, funded by reducing complex reliefs and allowances introduced by Gordon Brown.

And we have also outlined plans to reform government support for business, much of which is, at present, delivered through Business Link. We are considering a range of options but do not currently have any plans to abolish Business Link itself.

These proposals are in addition to our plan to allow local authorities to offer business rate discounts to help struggling firms, and to make small business rate relief payable automatically to qualifying firms.

Meanwhile, we have tried to offer practical ideas for further action. A Conservative Government will:

· reduce the burden of red tape on business with a ‘one in one out’ rule for new regulations, mandatory sunset clauses for regulators and regulatory budgets for departments;

· help small firms grow by using Government guarantees to create diverse sources of affordable credit and providing a £2,000 bonus to small and medium-sized businesses for every apprenticeship place they create;

· cut the number of forms needed to register a new business – moving towards a ‘one-click’ registration model with the aim of making Britain the fastest place in the world to start a business;

· end restrictions on people starting a business in social housing, to enable social tenants to become entrepreneurs;

· make enterprise a central pillar of our plans to get Britain working again; and

· open up government procurement to small and medium-sized businesses by reducing administrative requirements.

We know that only the private sector can generate the sustainable growth we need to get Britain out of the red. That is why we have set out these plans, and why we are proud to be the party of enterprise and hard work.

We all know that the re-election of a Labour government with more debt, waste and taxes will bring us a new recession. That is why there is a clear choice at this election between five more years of Gordon Brown’s tired government making things worse, or David Cameron and the Conservatives with the energy, leadership and values to get the country moving. I hope you will feel able to join us as we seek to change our country for the better.

Kurtis Christoforides
Office of David Cameron MP

PS. Normal marketing posts will resume shortly!

A budget for business?

For the last few months I have been engaged in a simple, yet seemingly naive quest to get some clarity from each of the political parties on their policies for small business.

So far, I have had a hand-off from the Labour Party – who, about a month ago, promised me a reply within 15 days; an apology from David Cameron – who said that my first communication couldn’t be found and would I send it again – so he could ignore it again; and nothing from the Lib Dems – who you think would sell their own mother to get a cross in the box.

At least Alistair Darling has been forced to the dispatch box today to give me and every other business owner in the country, an account of what we can expect in the coming months should we entrust Labour with our vote.

The answer appears to be a series of modest, but well intentioned changes.

The Annual Investment Allowance, which gives us tax relief for capital expenditure, has been doubled to £100,000. Whilst the increase will provide a modest boost, it is only businesses that have the cash or the borrowing capability to invest above the current limit of £50,000 that will be able to benefit from it. Even if the allowance is fully utilised, it would only be worth £14,000 a year.

I, and I think most businesses, would prefer direct savings in tax and National Insurance over incentives to spend or borrow when business confidence is low and the availability of credit remains scarce. Liquidity is the key to our survival – not debt and new machinery.

In this respect, the Chancellor shows that he is out of touch with the real needs of small business. He spurned the opportunity to reduce the headline rates of corporation tax and made no move to stall the 1% rise in employers’ NI, which is due to take effect from April next year: a clear sign that he believes taxing businesses on employing people is the best way to reduce the dole queues.

The promise of cuts in business rates for one year from October is more promising. There seems to be scant detail available on who will qualify and for what relief, but let us not look a gift horse in the mouth – nor get our hopes too high.

The extension of the time to pay scheme is another welcome move. We haven’t needed to make use of this facility, but it is nonetheless reassuring to know that HMRC will play its part should we find ourselves in distress.

For the best news, it seems we have to wait until our ship finally comes in. Entrepreneurs’ relief has been doubled from £1m to £2m, providing an effective Capital Gains Tax rate of 10% on any gains that we make up to this level. Best get my finger out then and build some value.

The biggest factor though is not the impact of individual measures on individual businesses, but where the economy is going in general – nationally and globally. Business is about confidence and when the confidence runs out the impact on small businesses is cataclysmic.

We are in the midst of our worse crisis for seven decades and our vote has to be cast on who with think is delivering the most sensible response. Do we believe that the impact of the recession has been minimised by the present government or caused by it? Do we think that we need to make the present government see through its actions or is it time for change?

Darling has been forced to err on the side of caution and avoid any radical changes for fear of it being branded electioneering. I, like many business people in the South East, see it as a missed opportunity to give a much clearer indication that the Labour Party is the party for business.

The question remains, who is?

Which way to vote? Finding the party for small business.

I am a floating voter.

I can’t ever recall having been so interested in the outcome of an election and my vote is there for the taking by the party that can convince me that it is the party for small business.

After more than 12 years of Labour government, and a definite sense of this being the low point, I can see the argument for it being time for a change. I live in dread, however, of the country being slammed into reverse by a Conservative party that is bent on unwinding all previous policies and that will spend at least 2 years blaming its performance on the situation it has inherited rather than concentrating on recovery.

As I have said in an earlier post, I rate Brown as a financial manager and the prospect of Osborne in No.11, who I have yet to hear say anything meaningful, leaves me cold.

To help resolve my dilemma, I have spent the morning reviewing the websites of the 3 main political parties to try and decipher their policies for small businesses.

Surprisingly, or not, depending on your persuasion, the Labour party doesn’t have a specific section for business on its website, nor does it list business under its policies. Surely, this is a major own goal.

I want to know where the Labour party stands on business in general and employers' NI and Corporation Tax in particular.

Employers' NI is an explicit tax on recruitment and it seems illogical to me to be increasing this at a time when we want to get people back into work. Corporation Tax drains small businesses of funds for investment or survival. What was the rationale for removing the £10k tax free band and, more importantly, does Labour propose to bring it back?

The Conservatives do a lot better. Business is listed as a clear policy area on the website and within it there are pledges that counter the Labour position.

The Tories promise to abolish tax on new jobs created by new businesses.

I like the sound of this and want to know more. Will the policy only apply to businesses that start-up post the election? I hope not. There should be an incentive for all small businesses to take on new staff. Established small businesses offer a more stable and secure employment environment than start-ups and are better able to fuel sustainable growth.

The Tories also say they will cut the small companies’ Corporation Tax rate. Unfortunately, there is no detail on when, how and by how much.

The Lib Dems seem destined to remain the perennial third party. They too promise to cut the rate of corporation tax and say they will do this through the removal of complex reliefs.

Digging a little deeper I find a policy that says the party will allow small businesses to choose to be taxed on cash flow rather than accounting profit. This sounds interesting. In theory, it will allow growing businesses like ours to reinvest.

As a business that has just moved premises and is investing in their improvement, the Lib Dems' pledge to cut business rates for smaller businesses and calculate rates on site values also catches my eye. The present system of total rental value penalises us for the improvements we are making.

So, a mixed bag with intriguing, but unsubstantiated ideas dotted all around.

The one thing that all the parties have in common is a promise to cut red tape and ease the burden of regulation. Politicians always make great play of this and yet never seem sure about what red tape and regulation they are referring to. This seems to be an easy line to bulk up the manifesto, without any real substance or measure of success. Red tape and regulation are nowhere near the challenges that tax and cash flow are and I wonder if it simply betrays a lack of understanding of where the real issues are.

Despite lauding small businesses as the engine room of the economy, none of the parties seem to be talking about the sector in any detail yet. I have written to each of the parties with specific questions. The best response is likely to get my vote.

2009: A year in review - and our predictions for 2010

2009 was a challenging year for marketers. This time last year we were talking about the collapse of Woolworth's and still recovering from the shock of Lehman Bros; the banking crisis was in full swing and we were surrounded by fear and uncertainty.

Fortunately, we seem to have been spared the worst fears of the naysayers. Whether this is because of, or despite, government intervention divides opinion and we will all get our chance to record our point of view in 2010.

In a tough and uncertain climate, marketers were called on to perform in a way that we haven't been for some time. The pressure for short-term, measurable results financed with slender budgets overpowered any sense of long-term planning and brand building. We rushed head-long into social media, not I suspect, because we knew how it would work, but because it was trendy and cheap.

In the office, we had to improve relationships with sales and finance to ensure stakeholder buy-in and a seamless progression from concept through to delivery: it is bizarre to think it might ever have been any other way.

Unfortunately, little progress has been made with improving marketers' sense of self worth. The hand wringing continues, with many marketers bemoaning their lack of influence at senior levels within their organisations, yet seemingly unable to devise a strategy to put it right.

On a more positive note, the summer months saw The Marketing Eye engaged in the debate about marketing automation. Led by the US, this still has some way to go in the UK, but it is encouraging to see people trying to harness technology to support sound marketing principles.

Our involvement came about via this blog, which has proved popular in many countries and has a particularly strong following in the US. The appetite for new content in the US appears insatiable. Our post on the differences between B2B and B2C marketing still attracts more than 100 readers a month and a plethora of comments.

The year saw fewer than normal corporate re-brands, but the controversy they created was no less heated. AOL, Kraft and MSN where amongst those that offered us evolved identities. Starbucks sent bloggers into a spin with their experiment with un-branded coffee shops in Seattle.

The big story of 2009 was, however, the explosion of Twitter, which came of age with the revolution in Iran. Twitter is still growing and is now finding its natural level. We have still to see the first Twitter-born brand, but the growth in the personal brands of people like Stephen Fry and Ashton Kutcher suggests the potential is there. Compare the Market is the best example we have seen in the UK so far of Twitter being incorporated into a broader marketing strategy, building the personality of the brand via the incomparable meerkat, Aleksandr Orlov.

As a business, The Marketing Eye has come of age too. We have new people, new offices, and a recently appointed Chairman designate who will help steer the business towards its full potential. We are firmly set on a road to growth and the final few weeks of 2009 were spent immersed in strategy and operating models. Our goal is to grow the business four-fold by 2012, which we will achieve by hiring the best marketing people and staying true to our philosophy of 'every client is our only client'.

So what will 2010 hold for us? As a business, we will take on more staff, enter new markets and strengthen our internal processes so that we can continue to put customers first. For the world of marketing, our crystal ball reveals the following:

• Twitter will continue to grow globally: its value for search and news will be realised. Marketers will still struggle to harness it for commercial purposes - but will keep on trying


• The shift towards spending on digital marketing vs. off-line will increase, probably because it is cheaper, not because it is proven to be better


• There will be some renewed growth in branding. Businesses that have neglected their brands over the past couple of years will now be finding that a revamp of the external and internal brand is overdue. At a visual level, an updated identity will signal renewed optimism as we claw our way out of recession. The business case will still have to be made and investment will be hard won


• Marketing budgets will nudge gently upwards as we come out of recession or as businesses start to adjust to, and accept, the 'new normal'


• A change in Government seems inevitable. As a marketer, I'm interested to see how the parties make use of new and old media to win our votes. As a businessman, I want to know which is the party for business.

What were your main marketing memories of 2009 and what do you predict for 2010? We'll be interested to hear your views. Whatever your role and wherever you are, may we take this opportunity to wish you a happy and healthy 2010.

Happy New Year!

Moving on up - new offices for The Marketing Eye

Today is another big day for The Marketing Eye as we move into our new offices in Uckfield town centre.

After two very happy years in East Hoathly, we now need to be nearer to our clients and give ourselves more space as we work towards our medium term vision of being the most sought after provider of marketing services in the South East.

The new offices at Nelson House in the High Street provide us with 1100 square feet of working space, separate meeting facilities, a staff area and customer parking. We hope the town centre location will be appreciated by our clients and employees alike.

At the commencement of our search, we looked at properties as far afield as Lewes, East Grinstead and Tunbridge Wells, but we decided to stay in Uckfield because of its central location and friendly business community. While our clients are spread across London and the South East, we have a loyal following in Uckfield and want to build upon it. At the same time, Uckfield allows us to reach Eastbourne, Brighton, Tunbridge Wells, Haywards Heath and Crawley with ease and London is but a short train ride away.

The wisdom of committing to new premises and a larger team when the economic climate remains so uncertain will be questioned by some. At The Marketing Eye, we believe dealing with the recession is a state of mind: we can let it crush us and demoralise us, or we can accept it and work hard to overcome it. We prefer the latter option. There is business out there for those willing to go out and find it and finding it we are.

Now, faced with the prospect of unpacking boxes, plugging in computers and re-printing stationery, our first priority is to maintain business as usual for our valued clients. We will throw open the doors to our friends and neighbours with an official opening event very shortly.

We leave the beautiful Hesmond’s barn with a heavy heart, but great excitement and optimism for the future.


Foot note
We would like to take this opportunity to thank and recommend the following businesses for their help with our move.
Chris Boakes - Acumen Business Law - for all legal matters
James Neeter - Neeter Solutions - for organising our telephony requirements
Tim Knibbs - Knibbs Computer Services - for taking care of our IT and cabling needs.

Cut to grow - a plea to politicians on behalf of small businesses

With the growth of our business being at the top of my agenda, I find myself paying closer attention than ever to the political situation.

Like England's one-day batsmen, Brown and Darling look to be on their way back to the pavilion. Never at their best in public, last week's party conference did little to boost their ratings and confidence.

This is a shame, because in the single most important issue of recent times - the global financial crisis - Brown has proved himself to be the safest pair of hands. The support for the banks and the expansion in public spending has been instrumental in containing the depths of the recession - a model that has been copied across the world. When the dust has settled, this will go down in history as Brown's legacy. As the BBC's Nick Robinson observed: 'Now it seems the electorate will treat him as they treated Churchill in 1945: "Thanks for the help, but now it's time for you to go"'.

These are finally balanced times. Where we see signs of recovery - rising house prices and increasing confidence in the UK; the end of technical recession in France, Germany and Japan - we see signs of a double dip recession elsewhere. Higher than expected unemployment figures from the US pushed the FTSE100 back below the psychological 5,000 level on Friday.

Finally balanced indeed.

Forgive the bias, but one of the principal policies for economic recovery must be a strategy for the growth of small businesses. Small businesses like ours with an ability and ambition to grow have the potential to create jobs and wealth, which in turn will create wages, spending and tax income.

As an advocate of the spending that is happening now, I accept that it has to be met with increases in tax revenues in future. My anxiety is that Brown's strategy is geared to raising revenue with tax increases rather than economic growth. We already have the prospect of £10 billion worth of tax rises next year - amongst them increases that will hit small businesses very hard: fuel duty, VAT rising again, higher business rates and the pending increase in employers' National Insurance contributions. These make me, and I'm sure every other business owner, very nervous indeed. This is not a healthy situation.

Despite my admiration for Brown as a financial manager, there is a worrying lack of logic in many of these rises.

Employers' National Insurance is an explicit tax on jobs. We should be encouraging businesses to employ people, not taxing them more for doing so.

Higher business rates will hurt cash flow and lead to more empty shops and offices. Empty shops and offices depress the nation. Furthermore, as many commercial premises are owned by pension funds, the value of people's pensions and their feelings of security will be hurt, leading to cut backs in spending.

The pointless cut in VAT at the last pre-budget report remains lost on me. The changes required to implement the change are significant and impose a costly and unnecessary distraction on small business owners.

But it is a tax that is not currently flagged for increase that causes me the greatest anxiety. Corporation Tax is the biggest inhibitor to business growth. Like many businesses, we have an impending tax bill based on last year's profits and have had to create a reserve to meet it - a reserve that could be used to fuel the expansion of the business. A cut in Corporation Tax would lead to significant increases in employment and investment in the short term and propel growth and a higher tax take in the long term.

Through the conference season, I haven't heard any party come out with solid policies for small businesses. The party that eventually does will get my vote this time.

What do you think? Let me have your views.

Maxine Davenport

These are exciting times at The Marketing Eye. With a move to new offices on the horizon and our eyes firmly fixed on our next phase of growth, we are pleased to welcome Maxine Davenport to the team.

Maxine has been appointed as Client Director and will support Neil with the development of new business and the management of key accounts.

Maxine is a qualified marketer with over 15 years event and marketing experience and particular knowledge of the leisure, retail, IT and security industries - markets that we intend to establish a presence in over the next few years.

Working with blue chip clients such as Hewlett Packard, Cisco, Virgin, Siemens and Sony to name just a few, Maxine is well known within the industry and has planned and implemented a number of award winning campaigns across the globe.

Maxine’s energetic approach and creative flare is a valuable complement to her experience.

Previously a semi-professional tennis player and now an artist and enthusiastic karaoke singer in her spare time, there is seemingly no end to her talent!

We look forward to introducing Maxine to new clients and old.

When the tail wags the dog – the great sales versus marketing debate

How can you tell if a salesperson is lying?

His lips are moving.


Don’t you just love the arguments between salespeople and marketing? Ali v Foreman was nothing compared with the constant bickering between these two old adversaries. Like brothers, they defend the family honour in public and snipe at each other in private.

I came across an excellent LinkedIn discussion last week started by a sales guru who was giving marketing both barrels: sack the Chief Marketing Officer; make every marketer spend at least a year in sales and measure marketing performance solely on the basis of reductions in the cost of sales where among his more strident remedies.

Never one to resist an argument, I couldn’t help but wade in with a view.

So, let’s try and resolve this once and for all. Should the marketing department be a support function to sales or is sales a function of marketing?

In my career I have seen examples of both. Now I’m running my own business, I see it from yet another perspective.

Among my favourite definitions of marketing is the one provided by Professor Paul Fifield who says that the sole purpose of marketing is to sell the maximum amount of units at the highest possible price.

So there you have it, even a Professor of Marketing admits that, in the final analysis, marketing has to deliver sales and profit. Perhaps the salespeople are right? Marketers should immediately bow down to Sales and accept their true position in life.

But what would happen if they did?

I have worked in organisations where salespeople rule. The top roles were filled by the top salespeople and every conversation was about turnover and pipeline. In this environment, the role of marketing was invariably limited to tactical direct mail campaigns, brochures and corporate gifts: all geared to supporting this week’s idea and today’s income target. To create a discussion, let alone gain sponsorship for more strategic initiatives was all but impossible.

This is not to say that the salespeople who were promoted into the senior management positions didn’t have the ability to be strategic. Of course they did, but because the culture was so heavily geared towards short term measurable results, tactics tended to dominate the decision making process. Business performance was highly cyclical as a result with great highs and near catastrophic lows.

Another great definition of marketing is ‘making friends with people who might need you one day’.

The definition needs some work. ‘Might need you’ feels untargeted and ‘one day’ too uncertain, but I love the whole concept of marketing and business being about ‘making friends’ and forging relationships. The idea that a customer would consider a business a friend is a brand Nirvana, providing as it would a platform for long-term sustainable growth and resistance to the worst highs and lows of economic conditions.

Inevitably the idea of building a brand and making friends is too soft and intangible for many people.

Let’s be in no doubt, and I see this first hand in my own business, Sales is one of the most important components of the marketing strategy. If the leads aren’t being found and converted, there is no long term to plan and position for, so the marketing department needs to get its finger out and do its bit to feed the machine.

But Sales is exactly that: one part of the marketing strategy and it puts the cart firmly in front of the horse to have Marketing reporting to Sales. All of the elements of product, price, place, promotion, people, process, physical evidence and positioning need to combine before a business can make friends with customers and sell the maximum number of units at the highest possible price.

A Head of Sales who has the ability to do all of this - manage sales performance as well as think about strategy, targeting and positioning - isn’t a Head of Sales at all, but a Head of Marketing... and thoroughly deserving of the title.

What price a relationship?

Business life is rarely without its ups and downs and there are occasions when we all have to call in the odd favour.

Such was the case this week, when an issue arose with an advert for one of our clients. With the fault laying fairly and squarely at our door, our first response, after apologising to the client, was to arrange to run the advert again at our expense.

Having worked with the publication in question for many years, and purchased a reasonable amount of advertising from it, we asked for some leeway on the price. The response was an uncompromising 'No. This is your problem, not ours'.

This might seem perfectly reasonable. After all, why should the publication compromise its margins to help us out, particularly in these straitened times?

The answer lies in the pricing strategy.

The incident brought home to us that what we had seen as a relationship, the publication prefers to treat as a series of unrelated transactions, each to be exploited for the maximum possible price. No value is placed on our future spending power: the priority is to maximise revenue now.

This is a legitimate pricing strategy, but not without its consequences.

The discovery forces us to re-appraise the way that we will do business with the publication in future. The loyalty that we have felt towards it now looks misplaced and leaves us feeling a little foolish. We must now start to treat each transaction as the publication does and judge it primarily on price. We are also motivated to look more closely at the competitor publications and get to know the people behind them a little better. These are all the characteristics of a transactional relationship.

In contrast, a small concession would have deepened our sense of loyalty, encouraged our advocacy and even left us feeling a little in the publication's debt.

The publication has great confidence in its brand and, if it is right in its assessment that it is the No1 brand in its niche, it can indeed dictate terms in this way. For most businesses, however, applying transactional pricing in a relationship situation is a dangerous and short-termist approach. The pursuit of margins, in the absence of, or at the expense of customer loyalty, ultimately shifts economic power to the customer. Customers quickly leave when a better offer arises elsewhere.

Sour grapes? We hope not. We accept our misjudgment of our worth and respect the publications right to act as it pleases. We are happy to work under the new rules.

Not a recession, it's the new normal

According to Sir John Gieve, the outgoing Deputy Governor of the Bank of England, Britain is at risk of being in recession for the next 10 years.

That being the case, it's about time we adjusted our language and stopped thinking about it as a recession and more as 'the new normal'. If we look back on the last 10 years as exceptional (and let's be fair, not universally enjoyable - the whole process of keeping up with the Jones's and comparing house prices was pretty draining after a while) then we might have more chance of getting on with life.

In the 'new normal' things will not be worse, just different.

The way our customers think will be different, they way they act will be different and they will care about different things. They might even be different people.

Armed with this new mind-set we can set about acquiring the knowledge and insight we need to market effectively.

Here are 9 thoughts for the new normal (it was going to be 10, but one was cut in honour of the new climate). We must:

1. Make sure that our relationships with customers, suppliers and staff are in excellent shape


2. Identify changing needs and wants and adapt our propositions accordingly


3. Stay true to the quality of our brands. Price promotions might hold up volumes in the short term, but will reduce profits and brand value over time


4. Continue to invest in new products and services. Try new things. Cutting back on investment, innovation, product quality and customer service will result in a loss of market share that will be impossible to recapture


5. Reduce our key objectives to a 'vital few' and focus all of our marketing energy on these


6. Review our marketing budgets, invest where we need to and make sure we are running tight ships


7. Take advantage of falling media prices to steal a march on the competition


8. Recognise what we are very good at and build on it


9. Be noticed and stand out from the crowd.
   

The bottom line is we musn't panic and throw our business strategies out of the window. Customers won't go into hiding. The desire for holidays, new houses, financial services, sales training or whatever it is we offer will still exist, we will just have to work harder to convert that desire into a purchase. Put another way, we will need to give people more and better reasons to make the commitment.

Daily Telegraph 19 Feb 09: Britain at risk of 10 year recession

and here is another interesting post, almost a parable

It's not the economy

Payment by results

I was asked at a recent networking event if I knew of a telemarketing agency that would be prepared to work on an exclusively payment-by-results basis. The same question has been asked directly of me in the past: the 'put-your-money-where-your-mouth-is' challenge.

Agencies willing to work on this basis undoubtedly exist (try peopleperhour.com), but I don't think it is a good idea for the client or the supplier.

The client is asking the agency to take all the risk - the risk that the product or service is saleable and that there is a market. If the client believes there is a market for the product or service, then it should be prepared to make the investment required to promote it: it is not for the agency to finance the hopes of the client on the promise of later riches.

For the client, the risk is that the agency is inappropriately motivated to deliver results. This can result in poor quality leads, unduly aggressive tactics to achieve sales or other forms of corner cutting to accelerate the cash-flow.

The whole scenario is a recipe for blame and the relationship to breakdown.

Any choice of agency (or client) should be based on trust. The client needs to be discerning in the choice of agency and the agency must convince the client of its credentials and competence. If the client has doubts that the agency can deliver the service they want, then the agency shouldn't be employed in the first place.

I don't object to agencies being accountable for their performance: on the contrary, they should be. Clear objectives should be agreed and under-performance dealt with through termination of the contract or pre-agreed non-payment conditions. If the agency has done all the work, but the results are slower than expected, then it should be a matter of partnership to work out the next steps. This makes for a much more satisfactory and ultimately successful relationship for both sides.

We'll get through this together

We are launching our new advertising campaign today. Based on a theme of ‘We’ll get through this together’, the campaign recognises that many of our clients are currently focused on survival and security.

Survival and security doesn’t mean cancelling all marketing – on the contrary – it means marketing wisely and in areas that will deliver results. There are several things that we are talking to clients about at the moment that don’t involve them spending more money.

Knowing and staying in touch with customers is probably the most important one and is at the forefront of many plans. We describe this as ‘reviving that first date feeling’: looking for excuses to get in touch and be together.

Watching competitors also yields results. Competitors are eating our client’s lunch and we need to know what they are doing. Asking customers if they are being approached and to see what they are being offered can be very informative.

Whatever field our clients are in, we look for the one thing that will make them stand out from the crowd. Without differentiation, there is only price to compete with, which can often be a downward spiral. The starting point for differentiation is to understand what our clients are very good at - what the signature dish is. With this established we can focus the marketing effort on the core strength.

Finally, we advise concentrating on one thing at a time. In reality, and particularly now, it is better to take small steps towards a goal than embark on a huge project that will absorb a lot of resource and take a long time to deliver. Results breed confidence and confidence is what is needed right now.

Cut VAT? Will somebody please explain

So, the great white hope is a cut in the rate of VAT.

Forgive me, but aren't prices set according to supply and demand (or has the free market gone for ever too)? Every shop in the High Street is already cutting prices by 20%, 50% or more in an attempt to stimulate demand, so what difference is another 2.5% going to make?

And even if we do all feel a little warmer at the thought of paying less VAT, are we really going to spend the money or are we going to save it?

From a business perspective, I just don't see where the benefit is. We collect and reclaim VAT, so it's going to be the same exercise with a different number. Instead we'll have to make changes to our accounting software to accommodate the change, get confused by what rate to charge over the intervening period and then go through it all again in reverse in 12 months time.

The big opportunity was to defer the collection of corporation tax. We, like many businesses, have a March year end, which means we've got a corporation tax bill to pay in a few weeks time. Deferring the collection of these monies for 6 months or longer would put much needed liquidity immediately back into a large number of small businesses and reduce their reliance on the banks - who can't be counted on to help them out in any event.

We are fortunate that our liquidity is OK, but none of us knows how long or how deep the recession is going to be and when we will be tested.

All of the measures announced today will take a long time to trickle down into the pockets of businesses and their customers. In the absence of cash, the hope has to be that the budget will instill confidence, whether it's real or perceived, because that is what is missing at the moment. If consumers and businesses are confident they will buy more and the economy will start moving forward again.