Global Business

The very essence of a strategic approach is taking a longer term view about your business and its prospects for the future. After all, you don’t want to be here today, gone tomorrow do you?

So, much as you’d like to put your head in the sand from time to time you really can’t afford to. You need to have a good awareness not only of what’s happening currently but what might be happening over the next twelve months or so.

It’s quite helpful to have a framework to help you sort through what’s happening around you. A simple one to remember goes under the acronym PEST – which stands for Political, Economic, Social and Legal.

Here are FIVE of the more pertinent Political Issues you might want to think about – illustrated by references to the UK (October 2010) and some PRACTICAL TIPS which you may find helpful

1. Political Stability: It’s useful to be aware of where your country is in its election cycle as often government grinds to a halt in the run up to an election. How long does the government stay in office and will it see out its term or might there be an intervening election?

In the UK, for the first time in most people’s memories we have a Coalition Government. Dire predictions of failure were made at the outset and commentators continue to point up the ideological differences between the two parties. For the time being, however, they seem to be broadly saying and doing the right things.

Practical Tip

Find out who your MP is and see if you can meet him/her face to face.

Don’t be reluctant to write if you have a burning issue.

2. Support for Small Businesses: What do you feel is the prevailing attitude towards small businesses? Are they seen as an essential component of a vibrant and economy and more importantly how much are they hindered by unnecessary rules, regulations and red tape?

There is a general acceptance that small businesses and entrepreneurs (they are not necessarily the same of course) play a vital role as the private sector downsizes with the Public Sector now having to follow also.

It has proved difficult, however, to clearly identify the tools and techniques to leverage world class performance and another round of re-structuring (abolishing Regional Development Agencies (RDAs) and setting up Local Enterprise Partnerships (LEPs) will further muddy the waters.

Practical Tip

Find out what support might be available to you locally such as free advice, funding for training, specialist grants etc.

3. Taxation: Does the regime help or hinder small business formation? Many countries relax their tax rules not only for small businesses directly but also for investors in small businesses – the so called Business Angels. Often too, there is support for owners when they decide to exit their businesses by selling out with favourable capital gains allowances.

The Tax Authorities seem to have a habit of playing ‘good cop/bad cop’. ‘Good cop’ because they are allowing companies some latitude in dealing with arrears of tax. ‘Bad cop’ – not only because of poor operational processes – but also because there are cases of them being disproportionately heavy handed in dealing with some companies.

Practical Tip

Make sure your accountant has a good reputation with the Tax authorities!

4. Employment Laws: There has been a struggle since time immemorial to balance the rights of employees (personified by the Trade Union movement) against avaricious employers (for example, sweatshops in Asia. Most start up businesses tend to be one man band so these issues may not weigh too heavily but they are certainly more relevant as the business grows.

There has been a raft of legislation coming out of the European Union (i.e Brussels) that has imposed layers of bureaucracy and unavoidable cost on businesses of all sizes- which is disproportionately punitive for small companies. These include the Minimum Wage, the Working Week Directive, rules on maternity and paternity rights and the setting of Employment Tribunals. This creates an impression of a Business Sector under attack.

The new Coalition government has undertaken not to introduce a new regulation without at the same time removing an old one – the ‘one for one’ rule.

Practical Tip

If you join any Trade Associations or Professional Bodies make sure they have a Helpline that can help you with Employment Issues.

5. Corporate Social Responsibility: Profit for profit’s sake is generally no longer acceptable. Generally- because it depends on the prevailing social, cultural and business norms of the country you’re doing business in – a wider perspective needs to be adopted.

So, there is a growing realisation that the needs of a number of stakeholders must be recognised and that just the maximisation of shareholder return alone is no longer acceptable. Businesses need to recognise the impact they have, for example, on the environment, consumers, employees, and the communities in which they operate.

The UK is not exempt from these issues but Corporate Social Responsibility (CSR) is still in a formative stage and generally it’s the larger corporates that are making all the noise. Keep close!

Practical Tip

This is an evolving area – stay in touch with what the press and professional publications are saying