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Friday 22 October 2010

Rebalancing the Economy

I am sure many people who followed the chancellors spending review statement were trying to determine how the reduction in public funding would affect them personally, in most cases they are probably still wondering.

We have had the headlines but its the detail that really matters and that will take some time to emerge.

The area that I keep coming back to is the levels of employment/unemployment, with over 400,000 public sector jobs being lost and the subsequent knock on effect on jobs in the private sector; yet the coalition is confident that the economy will continue to grow and the private sector will create over a million jobs in the next four years, rebalancing the economy. I believe the appetite to start businesses is as strong as ever: calls to BIP asking how to start up a business are increasing faster than I can remember.

The key to a succesful start up is having enough customers who are willing to pay for the product/service being sold, my concern is will there be enough money avaliable to keep all these new businesses afloat, if not all the hopes for the recovery may be shortlived. Lets hope the goverment have got their sums right.

Monday 11 October 2010

Tesco Profits - Good or Bad?

Tesco have just announced record half year profits of £1.6 billion. I am sure their suppliers will be arguing that this is wrong and Tesco should pay them more.

Certainly beef and milk producers have a strong argument for wanting higher prices for their produce but is £1.6 billion excessive? Not really, is the answer, it equates to a profit of 5% of turnover. Its the huge sales that Tesco have that is questionable as they constantly seek to build their sales squeezing out small retailers that cannot exist on a 5% return on turnover. Business owners reading this may want to check their figures to determine the % they achieve, for many businesses it will be much better than 5%.