In the 90s we all thought we could take over the world
Discussion
Rory Sutherland, the fat guy from Ogilvy's, popped up on my YT short feed saying (paraphrased): In the 90s we all thought we could take over the world. Now, everyone feels like they can only survive by doing the core business as efficiently as possible.
I feel the same way. I don't see unlimited possibilities anymore. I feel like our business needs to pull in its horns and just be efficient. Not try to be ambitious. Just survive.
For me, it is a gut feeling rather than a response to particular economic conditions.
Anyone else feel the same or the opposite and care to articulate why?
I feel the same way. I don't see unlimited possibilities anymore. I feel like our business needs to pull in its horns and just be efficient. Not try to be ambitious. Just survive.
For me, it is a gut feeling rather than a response to particular economic conditions.
Anyone else feel the same or the opposite and care to articulate why?
I agree.
It's a general lack of stability and optimism
I could probably write a lot.
However, working in the property market the last 2 decades....
Up to 2006, Boom
07-10 massive bust
5 years of stability
5 years declining market (after Brexit vote announced)
Then COVID. Shutdown, @9 weeks.
2020-22 Then Boom. 2 years of mania
2022-2025 bust once more. market dead
That above is tiring!
Add on to that being hammered by rising costs. Many many years of min wage going up way over inflation. While the dividends have been taxed higher against inflation.
Many many many other costs rising too.
Where I am, the decent business suck all this up, while many competitors can still ignore all sorts of operational, employment, Tax, and road transport rules. And never get caught.
Which, Ok, that's same as it ever was. But when it's against the current backdrop. It's demoralising.
Then, there's other things that would take the thread off topic. However they remain just as broken now as thirty years ago.
It's a general lack of stability and optimism
I could probably write a lot.
However, working in the property market the last 2 decades....
Up to 2006, Boom
07-10 massive bust
5 years of stability
5 years declining market (after Brexit vote announced)
Then COVID. Shutdown, @9 weeks.
2020-22 Then Boom. 2 years of mania
2022-2025 bust once more. market dead
That above is tiring!
Add on to that being hammered by rising costs. Many many years of min wage going up way over inflation. While the dividends have been taxed higher against inflation.
Many many many other costs rising too.
Where I am, the decent business suck all this up, while many competitors can still ignore all sorts of operational, employment, Tax, and road transport rules. And never get caught.
Which, Ok, that's same as it ever was. But when it's against the current backdrop. It's demoralising.
Then, there's other things that would take the thread off topic. However they remain just as broken now as thirty years ago.
LuckyThirteen said:
I agree.
It's a general lack of stability and optimism
I could probably write a lot.
However, working in the property market the last 2 decades....
Up to 2006, Boom
07-10 massive bust
5 years of stability
5 years declining market (after Brexit vote announced)
Then COVID. Shutdown, @9 weeks.
2020-22 Then Boom. 2 years of mania
2022-2025 bust once more. market dead
That above is tiring!
Add on to that being hammered by rising costs. Many many years of min wage going up way over inflation. While the dividends have been taxed higher against inflation.
Many many many other costs rising too.
Where I am, the decent business suck all this up, while many competitors can still ignore all sorts of operational, employment, Tax, and road transport rules. And never get caught.
Which, Ok, that's same as it ever was. But when it's against the current backdrop. It's demoralising.
Then, there's other things that would take the thread off topic. However they remain just as broken now as thirty years ago.
What do you do in the property market?It's a general lack of stability and optimism
I could probably write a lot.
However, working in the property market the last 2 decades....
Up to 2006, Boom
07-10 massive bust
5 years of stability
5 years declining market (after Brexit vote announced)
Then COVID. Shutdown, @9 weeks.
2020-22 Then Boom. 2 years of mania
2022-2025 bust once more. market dead
That above is tiring!
Add on to that being hammered by rising costs. Many many years of min wage going up way over inflation. While the dividends have been taxed higher against inflation.
Many many many other costs rising too.
Where I am, the decent business suck all this up, while many competitors can still ignore all sorts of operational, employment, Tax, and road transport rules. And never get caught.
Which, Ok, that's same as it ever was. But when it's against the current backdrop. It's demoralising.
Then, there's other things that would take the thread off topic. However they remain just as broken now as thirty years ago.
Decline in disposable household income for the majority has been brutal over the last 24 months.
Inflation & taxation hitting most with some disposable very hard.
Most businesses are trying to preserve as much demand as they can. Invariably this means accepting
that a lower profit margin is the ‘new normal’. Being hit by price rises for non discretionary business items
that are way over inflation is exhausting and demoralising. Insurance / payrol / rent / transport etc are all
being squeezed up relentlessly. While as already pointed out - taxation is too, so if you do make some
money, you keep less now, to pay your own household bills.
Ultimately a low / thin profit margin creates fragility, in individual businesses and in the ecconomy as a whole.
Rory Southerland is right - many are hunkered down, sensing ‘this feels precarious’ - because it is!
Unless a business has lots of HMG contracts (not widely regarded as a price sensitive customer) or is a
suplier of a genuine essential (like insurance) then it will inevitably be feeling as Rory Southerland describes.
In a nutshell - we have had a lot of demand destruction and nobody can see a reversal of that trend.
Inflation & taxation hitting most with some disposable very hard.
Most businesses are trying to preserve as much demand as they can. Invariably this means accepting
that a lower profit margin is the ‘new normal’. Being hit by price rises for non discretionary business items
that are way over inflation is exhausting and demoralising. Insurance / payrol / rent / transport etc are all
being squeezed up relentlessly. While as already pointed out - taxation is too, so if you do make some
money, you keep less now, to pay your own household bills.
Ultimately a low / thin profit margin creates fragility, in individual businesses and in the ecconomy as a whole.
Rory Southerland is right - many are hunkered down, sensing ‘this feels precarious’ - because it is!
Unless a business has lots of HMG contracts (not widely regarded as a price sensitive customer) or is a
suplier of a genuine essential (like insurance) then it will inevitably be feeling as Rory Southerland describes.
In a nutshell - we have had a lot of demand destruction and nobody can see a reversal of that trend.
z4RRSchris said:
Furbo said:
What do you do in the property market?
i work in property and echo the above. costs have gone up 40%+ and values are down. the equation doesn't work anymore - hence why no one is building.
Brexit put a big dent in our business. It started the day after the vote. Covid saw us taken for large 5 figure sum. Since then we have been battling massively increased overheads and a lack of quality tenants. We seem to get an influx of Africans or Indians, almost like a ship has landed! Then nothing.
We've stopped developing and dealing because, as you say, there is no money in it.
We've some other small businesses that are doing nothing much. But, as Rory was saying, I am not feeling ambitious and cannot see any obvious opportunities.
An interesting and timely thread as I've been mulling on this for a while now.
I thought my attitude to this was age related but seems not.
I spent 25 years co-owing a business that pursued growth. My business partner was of the school that taught you that a business that doesn't grow is in decline but I slowly began to question this because whilst we did indeed grow, this wasn't reflected in the profits. Employing people became increasingly burdensome and because we committed to this strategy, we ended up bidding for every project going rather than picking and choosing the right ones to go for. This lead us doing work that we were capable of but not what we were good at. This took much of the enjoyment we gained from the work out of the equation. We ended up not doing our best work as a result and felt like we were racing to the bottom rather than the top.
Like many others, Brexit took a lot of wind out of our sails. Covid the rest and with my business partner retiring, I set up entirely solo and took a more simple route - working from home, no staff but a team of cracking collaborators and freelancers I can call upon. We punch well above our weight and compete with (and win against) much bigger and 'supposedly' better-resourced firms.
Started this around five and half years ago. In that time, I have been more profitable and made more profit than the combined 20 odd years prior, doing fundamentally the same thing.
I've twice had the opportunity to jump into bed with others and have also looked at investing for growth but when I do the sums, it just doesn't make sense. The added overhead would mean I'd need to triple or even quadruple my turnover just to retain the status quo on where I am now financially but with the additional risk that this carries.
Back in the 90s, I would - and did - do differently. Set up my first ad agency in '89. I was the stereotypical Essex yuppie with ambitions to grow to the size and stature of the big London agencies. The trajectory was there and were it not for two big bad debts, I may well have succeeded. Bankrupt by the time I was 23!
At 58, with my sensible head now fully evolved and a bit of experience I now recognise the potential futility of such unbridled ambition. As I say, I thought this was me but thinking about it, I know and work with several other similar people that appear to have taken the same view and Rory Sutherland's observations clearly suggest it's the new way thinking.
I'm not certain if this is a good or bad thing. It works for me, very well, and is likely to be very industry specific. There is, in my view, nothing wrong with making your own way in life, doing good work to earn a decent income with sufficient to provide a future for oneself independent of government support.
But on the other hand, as a nation, growth is needed. Ambition is where crazy ideas come from and from these, innovation is born. Ambition, innovation and growth are what builds the economies of nations.
Interesting times!
I thought my attitude to this was age related but seems not.
I spent 25 years co-owing a business that pursued growth. My business partner was of the school that taught you that a business that doesn't grow is in decline but I slowly began to question this because whilst we did indeed grow, this wasn't reflected in the profits. Employing people became increasingly burdensome and because we committed to this strategy, we ended up bidding for every project going rather than picking and choosing the right ones to go for. This lead us doing work that we were capable of but not what we were good at. This took much of the enjoyment we gained from the work out of the equation. We ended up not doing our best work as a result and felt like we were racing to the bottom rather than the top.
Like many others, Brexit took a lot of wind out of our sails. Covid the rest and with my business partner retiring, I set up entirely solo and took a more simple route - working from home, no staff but a team of cracking collaborators and freelancers I can call upon. We punch well above our weight and compete with (and win against) much bigger and 'supposedly' better-resourced firms.
Started this around five and half years ago. In that time, I have been more profitable and made more profit than the combined 20 odd years prior, doing fundamentally the same thing.
I've twice had the opportunity to jump into bed with others and have also looked at investing for growth but when I do the sums, it just doesn't make sense. The added overhead would mean I'd need to triple or even quadruple my turnover just to retain the status quo on where I am now financially but with the additional risk that this carries.
Back in the 90s, I would - and did - do differently. Set up my first ad agency in '89. I was the stereotypical Essex yuppie with ambitions to grow to the size and stature of the big London agencies. The trajectory was there and were it not for two big bad debts, I may well have succeeded. Bankrupt by the time I was 23!
At 58, with my sensible head now fully evolved and a bit of experience I now recognise the potential futility of such unbridled ambition. As I say, I thought this was me but thinking about it, I know and work with several other similar people that appear to have taken the same view and Rory Sutherland's observations clearly suggest it's the new way thinking.
I'm not certain if this is a good or bad thing. It works for me, very well, and is likely to be very industry specific. There is, in my view, nothing wrong with making your own way in life, doing good work to earn a decent income with sufficient to provide a future for oneself independent of government support.
But on the other hand, as a nation, growth is needed. Ambition is where crazy ideas come from and from these, innovation is born. Ambition, innovation and growth are what builds the economies of nations.
Interesting times!
Certain sectors will fly and when you’re making a lot of cash, it covers over other matters.
For too many SMEs, however,their profits are falling yet tax is increasing.
Owners now realise that they are hated by government and it is inevitably having real world consequences, as the flow of spending starts to dry up.
It will end by design with a lot of people living off or working for the state, or for bigger companies.
For too many SMEs, however,their profits are falling yet tax is increasing.
Owners now realise that they are hated by government and it is inevitably having real world consequences, as the flow of spending starts to dry up.
It will end by design with a lot of people living off or working for the state, or for bigger companies.
z4RRSchris said:
the equation doesn't work anymore
^^ This. The "cost of doing business" in UK has become so high that it's barely worth it. Rachel Reeves increase of employers' National Insurance was in many ways the final straw that's broken the camel's back. And she's then adding another layer of icing by talking about further tax increases in the autumn budget. As you said, the equation doesn't work any more. I listened to one of Rory Sutherlands podcasts which rang very true with me and was one of the reasons I set up my business.
"Businesses driven by the financial point of view often focus on where the money comes in but ignores where they add value" or words to that effect.
There's quite a lot to unpack in there and it's something I'm acutely aware of it as I started my career in 2007 and ever since 2008 I've been hearing the "We must do more with less" mantra.
"Businesses driven by the financial point of view often focus on where the money comes in but ignores where they add value" or words to that effect.
There's quite a lot to unpack in there and it's something I'm acutely aware of it as I started my career in 2007 and ever since 2008 I've been hearing the "We must do more with less" mantra.
The UK has achieved poor productivity growth compared with other countries. Extract below, and the full article is an interesting read, highlighting the failure of government to make UK a good place to do business. And Rachel Reeves keeps making it worse.
"The UK has performed particularly badly relative to comparable economies in terms of productivity growth. It is in the bottom half of the rankings in the OECD, well below France, Germany and the United States; just below the average for the euro area; and slightly ahead of Italy and Spain."
https://www.productivity.ac.uk/news/what-explains-...
"The UK has performed particularly badly relative to comparable economies in terms of productivity growth. It is in the bottom half of the rankings in the OECD, well below France, Germany and the United States; just below the average for the euro area; and slightly ahead of Italy and Spain."
https://www.productivity.ac.uk/news/what-explains-...
Radio 4 'Today' this morning had a piece on the general malaise and lethargy in the UK; apparently to do with 'agency', ie the ability to do things yourself and make a difference.
I wanted to post a link so you could listen to it, but am no longer able to figure out how to find it. See 'agency' above.
I wanted to post a link so you could listen to it, but am no longer able to figure out how to find it. See 'agency' above.
JonPH said:
Certain sectors will fly and when you’re making a lot of cash, it covers over other matters.
For too many SMEs, however,their profits are falling yet tax is increasing.
Owners now realise that they are hated by government and it is inevitably having real world consequences, as the flow of spending starts to dry up.
It will end by design with a lot of people living off or working for the state, or for bigger companies.
I couldn't put it better. I've known things to be so negative for SMEs and owners. Large corporates = good, public sector = good.For too many SMEs, however,their profits are falling yet tax is increasing.
Owners now realise that they are hated by government and it is inevitably having real world consequences, as the flow of spending starts to dry up.
It will end by design with a lot of people living off or working for the state, or for bigger companies.
IMO its like investing in children and young people. Not a real priority and the country will pay the price in the longer term.
The country has been sold out to Private Equity.
Many of those large corporates are also going to continue massive cuts as AI takes over many roles. Way of the world but with many SMEs on the ropes it seems a huge blunder especially if foreign owned with profits ultimately ending up outside the UK.
orbit123 said:
Many of those large corporates are also going to continue massive cuts as AI takes over many roles.
and the more it costs to employ people, the more attractive it becomes to replace them with AI.Like increasing costs by increasing employer National Insurance, for instance. Well done Rachel Reeves.
JonPH said:
Owners now realise that they are hated by government
I own a small accountancy practice, practically every client I speak to feels that the government is actively working against them. I'd agree, and I've never really known it like this before, certainly not to this degree.LeighW said:
JonPH said:
Owners now realise that they are hated by government
I own a small accountancy practice, practically every client I speak to feels that the government is actively working against them. I'd agree, and I've never really known it like this before, certainly not to this degree.'not understood' would be more accurate.
Edited by StevieBee on Thursday 14th August 12:59
I read recently that small businesses failed to pay 40% of the corporation taxes that they owed in 2023-24. Some HMRC figure (hmmm).
I presume current situation is an element of punishment and tar all with same brush. Whilst some of cash is fraud, a lot appears to be the increasing tax complexity and SMEs accidentally paying the wrong figures.
SME never going to be comparable to multinational taxes though and those companies have way more complex tax situations. I could guess many pay 100% of the corporation tax owed! (*in whatever country has lowest tax regime).
By design they're often not especially interested in the communities they're based in. Staff are simply lines in a spreadsheet etc.
Jobs are created in huge numbers but can be low skilled and pulled on a whim by foreign changes.
If we've paid 100% of our tax each year we're at a disadvantage against the other SMEs and against the multinationals IMO.
I presume current situation is an element of punishment and tar all with same brush. Whilst some of cash is fraud, a lot appears to be the increasing tax complexity and SMEs accidentally paying the wrong figures.
SME never going to be comparable to multinational taxes though and those companies have way more complex tax situations. I could guess many pay 100% of the corporation tax owed! (*in whatever country has lowest tax regime).
By design they're often not especially interested in the communities they're based in. Staff are simply lines in a spreadsheet etc.
Jobs are created in huge numbers but can be low skilled and pulled on a whim by foreign changes.
If we've paid 100% of our tax each year we're at a disadvantage against the other SMEs and against the multinationals IMO.
Furbo said:
For me, it is a gut feeling rather than a response to particular economic conditions.
Furbo said:
We've stopped developing and dealing because, as you say, there is no money in it.
We've some other small businesses that are doing nothing much. But, as Rory was saying, I am not feeling ambitious and cannot see any obvious opportunities.
From what you say, I suspect your gut feel is a response to the prevailing economic conditions.We've some other small businesses that are doing nothing much. But, as Rory was saying, I am not feeling ambitious and cannot see any obvious opportunities.
There are places with growth, but the UK isn't one of them and it isn't random, or because a generation have grown up. It's because there's no reward for putting extra effort in. I don't know anyone running their own business who's really looking at the UK to expand, maybe one, but it's very niche and they're still putting more effort in to expanding abroad.
Panamax said:
orbit123 said:
Many of those large corporates are also going to continue massive cuts as AI takes over many roles.
and the more it costs to employ people, the more attractive it becomes to replace them with AI.Like increasing costs by increasing employer National Insurance, for instance. Well done Rachel Reeves.
AI will dent some sectors but it's been hugely hyped. I use it in marketing. It's a useful tool but it won't replace anyone. Anyway, long thread on it in the employment section on here....
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