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Bumpy road

It's Going to be a Bumpy Ride

But the ERI is ‘very optimistic…’

Will there be a fourth wave? Probably.

Do we have to learn to live with it? Definitely.

…And it’s tempting to think that as we do learn to live with the pandemic and its legacy – and as the economy gradually recovers – then it’s all going to be plain sailing. Far be it from me to cast a shadow – given the start Newcastle have made to the season how could I possibly cast a shadow over anything – but I don’t think it will be.

I think it could be a bumpy ride – which is why we’ll all be relying on an old, familiar friend.

As I start writing (on Tuesday morning) the BBC is reporting that ‘staff and supply shortages are taking their toll on the recovery.’ I suspect the vast majority of people reading the blog will agree with that.

The BBC article says that the Purchasing Managers’ Index fell to 55.3 in August – a six month low and down from 59.2 in July. For those of you unfamiliar with the PMI, any figure above 50 indicates optimism about the state of the economy. But clearly the purchasing managers are not as optimistic as they were…

Even more pertinent, perhaps, was this article in City AM, featuring a fraud expert. If there’s one thing we can all agree on, it’s that the pandemic and working from home has seen a massive upsurge in fraud (hang on, the Inland Revenue are on the phone. They’re sending me to jail. Unless…)

Thirty-nine per cent of companies have reported a rise in online payment fraud. Unsurprisingly, this has caused a booming demand for fraud detection and protection, with machine learning playing an increasingly important part.

The article makes the point that, post-pandemic, businesses will be under pressure from two different directions. The continuing rise in fraud – because it most certainly isn’t going away – and genuine customers who find themselves under increased financial pressure.

So much for the reports. What about the anecdotal evidence from TAB members? Some members are struggling to meet demand, some are struggling to get hold of materials cost-effectively – and some are doing both. Plus, of course, the ‘war for talent’ is being fought more fiercely than ever.

Throw in factors well outside our control – the P of the good old PEST analysis seems to be having a busy week – and there’ll be plenty of bumps in the road ahead.

So it’s important we don’t get distracted. And there are plenty of shiny new toys tapping us on the shoulder. The increasing emphasis on the ‘wellness’ of the people that work for us. The continuing debate on purpose versus profit. The growing murmur that ESG (environmental, social, governance) issues may be rather more important than the bottom line.

I’m not saying that the welfare of the people that work for you – or your environmental and social obligations – don’t matter. Far from it.

I am saying – and I make absolutely no apology for it – that nothing is more important than your bottom line.

That may be a dangerously old-fashioned view but, as we all know, making a profit guarantees that…

  • You can carry on investing in your business
  • You can carry on paying the people that work for you
  • You can carry on meeting your environmental and social obligations
  • And it tells you the hard work and the sacrifices have been worth it.

Making a profit also means that you sleep at night. The Alternative Board is about your business and your life: but if you’re worrying about the business you always take it home with you.

That’s why your KPIs are so important. That’s why whatever shiny new toys are in front of us, we must track the basic metrics all the time.

We all need to know that the cash flow is flowing, that people are paying us on time, that we’re buying for X and selling for X plus the right margin. Outside of this, every business will have different KPIs – ours, for example, are numbers of members and average fees, which determine monthly recurring revenue – and these KPIs must be regularly, remorselessly tracked.

That’s not a new message: it’s not sexy, it’s not innovative, it doesn’t tick any of the boxes that are currently taking up so many column inches. It is, though, the most important message in business.

The road to recovery is going to be bumpy. We’re all going to face different challenges. But, as we sit round the TAB tables up and down the UK, tracking our KPIs is one thing we all have in common.

What’s the other thing we have in common? Optimism. And if the purchasing managers have the PMI, maybe I’m allowed to have the ERI. And I have to tell you that the Ed Reid Index is currently well above 55.3.

I’m absolutely certain the initiative, inventiveness and hard work of the entrepreneurs I meet every day – plus the extra boost we’ll all get from more face-to-face meetings – will help the recovery tremendously. No, the ERI can’t be measured: yes, it’s completely anecdotal. But it reflects the mood of the TAB UK members, and right now – despite the bumps in the road – it’s pointing to ‘very optimistic…’

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