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Wednesday
Sep022009

Businesses Need To Look To Their Prophets

The problem with economists, analysts and other commentators of financial doom and gloom are they are essentially basing their opinions on historical data.

Most of the quarterly figures seeping through now cover the economy between April 1 and June 30.

To a business April is dead and gone – no one remembers or cares what happened then except for financial accountants preparing the tax returns.

The important facts and figures are what is happening today and how can a business adapt tomorrow to do something better to attract more customers and make more money.  That’s why businesses have management accounts – so they can make relevant decisions about current trading.

Trends in lending, unemployment and sales are interesting but they only reinforce what a business already knows. If you are a manager, you know – or you should – exactly how good or bad your business traded in the past.

Statistics are like stocks and shares. Future performance is not reliant on past success or failure.

Then fact that the banks are not lending now is a fact of life for business. According to the latest Bank of England data lending to business fell 1.7% in July and is the largest drop recorded since figures were started in 1997 – hardly a history shattering event.

Unfortunately, all this data says is something businesses already know and have already taken account of in their current plans.

What would be more useful for businesses would be some idea of what finance they can rely on in six months or a year.

Some indication of what the Bank of England plans to do with interest rates for business and homeowners would be more than helpful, but we don’t have any indication from the bank.

While the government and Bank of England react to old news, they are creating a vacuum for commerce that is leading to businesses failing and people losing jobs.

The economy needs some new blood, some people in the corridors of power who are willing to lead the way with new ideas and sweep away the pessimists who are too stuck in the old ways and are holding the economy back.

Business needs to look to their prophets, not their detractors.

 



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