Editor

I used to love the idea of the Treasury going into purdah before the Budget, like some mysterious veiled woman from the East.

But these days, not only is the Pre-Budget Report (PBR), for the second year running, shaping up to be the real star of the show, rather than the Budget proper next Spring, but Gordon Brown and Alistair Darling are also leaving very little to the imagination.

Gordon Brown leaving nothing to the imagination in the Pre-Budget Report

Posing for cameras tonight with pre-printed copies of the PBR in hand, the Chancellor and his team looked more like Man Booker hopefuls, than the custodians of fiscal policy that could change the shape of Britain for many years to come.

At the end of last week, the usual predictions and exhortations were being made by accountants and small business groups.

As early as Thursday, Gary Harley, head of indirect tax at accountants KPMG appears to have nailed one of the headlines for tomorrow:

There is growing speculation that VAT will be cut.  The UK could reduce the rate to 15 percent without any legal issues arising.

Although he goes on to suggest it’s hardly the targeted tax cut expected, it does of course put money in people’s pockets and also benefits small businesses.

It seems certain, however, that the rate will bounce back to 17.5% after a year or so, once the medicine has taken effect.

This give now, take back later approach is clearly going to be a theme.  The media’s awash with reports that the rich will be taxed at 45% by 2010 in order to help pay for a total Pre-Budget Report spending package expected to be £16 billion.

The always insightful Andrew Jupp of accountancy firm Tenon, dismisses the idea of a cut in VAT (good job he’s not a betting man), but goes on to highlight key issues for small businesses which he feels we could see tomorrow:

What I would like to see is a permanent back-down on the so-called income-splitting rules, so that family businesses can get on with creating profits rather than worrying about how they will be taxed.

He then encourages the Chancellor to abolish the increase in corporation tax for small companies which has crept up by 2% over the last couple of years.  Both these suggestions are just and plausible.

Most radical and certainly most welcome is the Federation of Small Businesses call for a £1 billion survival fund for SMEs in an open letter addressed to Alistair Darling.

Having said that this might as well be pie in the sky (despite British banks receiving a £500 million bailout) albeit a pie stuffed with hearty chunks of lobbying goodness.

So will there be a ‘rabbit from the hat’ of cliché?  Well, it seems unlikely.

What is surprising to me is the spend, spend, spend short term solution that’s shaping up, before we hit pay back time around 2010.

Is this political expediency, an attempt to defer the real pain or the only possible solution in extraordinary times?

I’ve no idea.  How about you?

[Picture credit: World Economic Forum licenced from Flickr]

Here’s the first in a regular SmallBizPod series focusing on the top seven things you need to know about all sorts of topics that could benefit you and your business.  First to take on the ‘7 thing’ challenge is writer and e-commerce guru Dan Wilson.

***************************************

In the past year or two, eBay has changed enormously and many people seem less optimistic about eBay than in the past. Whilst it’s true that there are a lot of disaffected sellers, eBay is still Britain’s most visited ecommerce destination and I predict that will hold true in Christmas 2008 and through 2009. Despite the doom and gloom it represents an amazing opportunity for small businesses to tap in to. Whether you’re a novice or a seasoned PowerSeller, here are 7 things every eBayer should know:

BIN to win

Of all the major changes, the ongoing rise of Buy it Now/fixed price listings (BIN) is the most striking. BINs are growing faster than the auctions that made eBay famous and there’s good reason to believe that eBay will continue to push BINs harder in the quest for profits. The auction isn’t dead by any means but it is at risk of becoming the ugly sister to BINderella.

eBay is complex

In terms of pricing, policies and practices, eBay must be one of the most complex places to sell. Incremental changes and category specific rules are making the eBay selling experience ever more Byzantine. For instance, if you’re flogging DVDs you must offer PayPal and free P&P and you’ll pay different fees to someone selling books or collectables.

A seller has to be self-reliant and keep abreast of changes or otherwise risk being sanctioned by an eBay that is notoriously inflexible and uncommunicative with rule-breakers. The complexity of the rules are why sites such as Tamebay are so popular.

eBay is courting big retailers

eBay established itself as a person-to-person marketplace and a home for small business. No longer. Speculation is rife that eBay is not only courting big retailers but offering them preferential terms and fees. Is the level-playing field dead?

Feedback has never been more important

eBay’s famous Feedback system has been central to the company’s success and long been important to sellers. Now, a seller’s Feedback score and Detailed Seller Ratings (DSRs) form part of the ‘Best Match’ system that determines where your listings appear in search. Even a few poor ratings can detrimentally effect how visible your listings are to buyers. Maintaining your ratings is critical and getting started under the new regime is also more difficult. It’s best to start slowly and not stake your shirt on a fast buck.

It’s not just the price.

Whilst pricing is important on eBay, it isn’t everything. It is quite normal for different sellers to get better prices for identical items. The nature of search on eBay, which considers Feedback and a seller’s previous selling success to be important to how things appear in search results, means that cheaper sellers with less good records can be almost invisible to buyers who don’t seek them out. More than that, a quality listing with a winning item title, brilliant description, superior pictures and maybe even a vzaar video can clinch the deal by inspiring confidence when a cheaper option does not.

An eBay seller’s margin are in efficiency

The one commodity struggling eBay sellers don’t seem to value is their own time. Listing, monitoring, answering enquiries, posting and packing and everything else an eBay seller needs to do is immensely time-consuming so any tools, software and discipline that boost the bottom line are to be embraced. Time saved can be invested in developing the business or spent on that other rare commodity: leisure.

Look beyond eBay

eBay is just one channel you can sell on. If you can make money there, you can do it anywhere: the skills are the same. Consider Amazon, other marketplaces and setting up your own ecommerce website. I’ve never met an eBay seller who regretted branching out. But I have met loads who regret not doing it sooner.

**********************************

Dan Wilson is a writer and consultant specialising in online communities, ecommerce and internet marketing. Part of the team that founded eBay in the UK, he worked for the company between 1999 and 2006, latterly heading the Community team. He is the bestselling author of Make Serious Money on eBay UK and an eBay University presenter. He advises companies large and small about how they can make the most of the web. He blogs at www.wilsondan.co.uk.

If you’re looking for a single theme to explain why the world’s financial system is in such a mess and why the UK economy is being hit particularly hard right now, you could do a lot worse than focus on the subject of risk.

And that’s precisely why Enterprise Week 2008, which starts today is so vital. Not because we want to create more entrepreneurs, although that’s a great ambition, but because we need to create a generation that values, understands and manages risk a lot better.

Resourceful, shrewd risk-takers is what we need.  In our corporations, in the public sector and out there starting businesses themselves.

In an interview with Peter Jones who’s fronting Enterprise Week, Richard Tyler of the Telegraph suggests some will wonder whether it’s wise to be giving kids enterprise education at a time when the economy’s in such a parlous state.

Playing with fire - risky business?

Jones gives this view short shrift, reiterating that downturns offer great entrepreneurial opportunities and wishing his own 12 year old was a little older so he could take his chances.

But imparting a little of the entrepreneurial mindset to young people in our schools is about more than creating a plethora of Peter Jones clones.

Entrepreneurs are traditionally thought of as risk takers.  And of course they are.  But their attitude to risk is actually, in my experience, quite refined.  It combines astute gut instinct with focused analysis and a shrewd understanding of a market opportunity.  It’s not about rolling the dice and seeing how they fall.

The failure of the banking system and the painful crash in the housing market are both arguably the direct result of a lack of this entrepreneurial approach to risk.

It turns out senior bankers had no clue how risky or otherwise the complicated financial instruments used to parcel off debt actually were.  A lack of understanding bordering on negligence.

Equally people who bought property using loans at many multiple times their salary over the last couple of years probably had an under-developed sense of the way the market they were entering was likely to perform, at least in the short term.

While money in property may be as safe as houses in the long term the one trillion pounds sterling of personal UK debt was clearly going to come home to roost at some point.

Educating young people about taking risks, about resourcefulness and about managing money effectively is therefore doubly important and timely.

So the Department for Business (BERR) and all of those backing the Make Your Mark campaign by taking part in Enterprise Week are to be congratulated.  As are organisations like Young Enterprise who have been fostering a sense of entrepreneurship in the classroom and inter-school rivalry for many years.

NESTA (The National Endowment for Science, Technology and the Arts) too is encouraging some fantastic work around giving young people a sense of risk-taking and getting them involved with real businesses.

All this activity does have an impact.  I saw first hand last year how young people in an east London school clearly relished the responsibility and the rush of taking part in projects based around enterprise education.

Combining young people with entrepreneurs, as Enterprise Week does, brings together two powerfully optimistic forces.  A combination that’s a little unpredictable, but one I reckon is well worth the risk.

[Picture credit: Christiaan Briggs @ Flickr]

One of the things I love about what I do is the sheer variety of businesses and people I get to meet, interview and write about.

From the outset SmallBizPod has combined aspiration and identification.  That’s why I’ve always found as much pleasure talking to the smallest of startups as I have to the largest of successful businesses.

So in the last seven days I’ve had a great time at both The Economist’s annual Innovation Summit packed with well funded startups and mega corporations, and the London launch of a one woman micro business called DaisyChainBaby.co.uk.

Lindsay Drabwell of DaisyChainBaby.co.uk

An interesting contrast and one highlighted by the comments of Anne Glover of Amadeus Capital Partners, one of the UK’s most respected venture capital funds.

Speaking at the Innovation Summit Anne’s assessment of the current economic turmoil for startups and fast growth businesses was one of the bleakest I’ve heard.

She anticipates a lot of businesses going bust in the coming recession and implicitly suggested that a lot of those businesses deserve to disappear.

Her view, one I’ve never heard expressed before, is that there are too many startups being funded in the UK and Europe.  We need greater focus and fewer new businesses competing in roughly the same space for roughly the same market.

This Darwinian outlook is as it should be, but Glover has serious concerns that even well funded businesses with solid business plans are going to struggle as capital dries up.  As she said:

There’s going to be real value destruction, rather than just a necessary market correction.

Scary stuff appropriately delivered to an audience on Halloween.

But what’s this got to do with Lindsay Drabwell who launched DaisyChainBaby.co.uk on Monday night?  The answer is probably not a lot.

Lindsay’s website sells organically and ethically sourced clothing, accessories and skincare to a carefully focused niche of under 2 year olds. The whole business was set up for just £5,000.

Lindsay has big hopes for her startup, but is quite happy to grow it organically while continuing to work for a firm of data security specialists full time.

Of course, DaisyChainBaby is not alone.  The rise of the micro business, the ebay business or the spare room startup, however you want to describe them is something of a phenomenon.

It seems likely that it’s these businesses that have been responsible for the growth in the UK small business sector over the last decade.  According to a recent report on home based businesses they now account for some 2.5 million of the 4.6 million SMEs in the UK.

These ultra-bootstrapped businesses will of course barely register in the minds of VCs like Anne Glover.  But it’s the fast growth businesses which are going to find it tough over the next 12-18 months.

The big startup beasts will be fighting for survival in a world with no funding, while the bootstrapped minnows will be providing a very useful income to their founders at a time when every penny counts.

I’m not absolutely sure, but I think Ian Denny’s blog has now been honoured twice in the coveted SmallBizPod recommended category. Ian knows a thing or two about running a business, staying positive and coming through tough times, so his post on how small businesses can survive the credit crunch and coming recession is well worth reading. Opportunity, despite the gloom - a positive outlook that’s well worth sharing.