Now here’s something none of us were expecting. Retail spending went up in May, says Reuters. This is peculiar because everyone’s talking about an economic slowdown. And they didn’t just nudge up a bit, they shot up by 3.5 per cent.

This is strange because we’re all feeling the pinch quite a bit – I know, I filled my car the other day. So what’s fuelling the sales mini-boom? Reuters’ contacts believe it’s seasonal. I have a few further ideas:

1. Let’s play a game. Go onto a train or bus and see how many people under 20 are carrying very visible consumer electronics, usually a media player of some sort. They keep buying this stuff regardless of what happens to the economy.

2. The nation is notoriously a binge-drinking group of massively obese individuals. We are not achieving this by holding back on food and drink spending.

3. As a side effect of 2, even those of us who don’t feel obliged to buy a new summer wardrobe every year are finding to our dismay that none of last season’s clothes actually fit any more. So we’re going out and replacing them.

Add inflation and the real price rises rather than official figures (see the car comment above) and you’ve got a good basis for quite a nice little rise in spending, at least in the shorter term.

Smaller businesses and in particular the self-employed like me will be delighted with the confirmation that the new fast clearance of payments into the banking system is coming this week. From now on when you put a cheque into your bank or when someone pays you electronically it won’t take the regulation three days to clear.

Actually money into my business bank take even longer, with one individual having initiated an electronic transfer last Tuesday and I still don’t have it (well, they say it went through last Tuesday and they’ve been reliable in the past). The new system instigated yesterday doesn’t seem to have speeded it along at all.

This is of course the real problem with payments and cash flow. People don’t always pay when they say they will. It’ not always their fault; one freelance commissioned me for a piece of work a while back and has been unable to pay me because her (inevitably larger) client hadn’t coughed up themselves. Payment for this ‘ere blog, meanwhile, are made at the same time each month regularly as you please and yes, they’ll now turn up a day or two earlier but I don’t really care – it’s the regularity and predictability of when these things will arrive that makes the difference, not the fact that the banks have – selectively if the BBC report is accurate – started to get slightly faster in their internal processes.

Of course it’s always been absurd that when I can pay for an Amazon purchase automatically it still takes over five working days for someone to get cash from their account into mine, particularly when we share the same bank. But this isn’t the great event some of the participants have been making out – it’s a tweak, no more than that.

All this talk recently about the economy and how we’re all doomed has of course distracted us from the main thrust of business discussion at the moment – who’s going to do well on The Apprentice?

Yes I know, I’m supposed to be writing either about business and finance or franchising. But The Apprentice is now relevant for franchises it seems – Franchise Magazine says so here. It’s building the profile of business and as a result franchising is up 8 per cent on last year.

I have no idea who’s going to win this year, although I hope it’s not the interesting chappie who asked a Muslim butcher for a Kosher chicken and made the sign of the cross to illustrate what he was after. What concerns me a little, though, is the image the programme and others like it are showing to young people. Former Dragon’s Den start Rachel Elnaugh often ruminates on this on her blog. It’s all seen as very masculine, aggressive and not suitable for pleasant people at all.

This will be why, a couple of weeks ago, candidate Jenny Celerier was not only fired for trying to get other candidates blamed for everything – she allowed the Kosher clanger to go ahead and claimed that at the age of 30-odd she didn’t know Kosher was a Jewish concept and funnily enough nobody believed her – but also taken to task on the follow-up programme for undue aggression and unpleasantness.

As a jobbing freelance I’ve been writing about business and indeed running my own sole trader business for 15 years. You don’t, you honestly don’t, have to be unpleasant about it – in fact it helps a great deal if you’re not. The people you help and respect on the way up will almost all fall over themselves to help you when things get tough later on.

And yet on TV we get some very self-centered, aggressive individuals as job candidates in a fake office whose master’s idea of HR is to tear someone to shreds and say ‘You’re fired’. Of course it’s all for the cameras and as long as you apply judicious pinches of salt while you’re watching it’s great telly, but beware – these are tomorrow’s role models.

In case we thought it was going to get better, the Bank of England is now saying inflation is going to get worse. As if we couldn’t have guessed, thanks guys. And yet I don’t think things are as bad as all that.

I know that must seem crazy in the light of the current headlines but I don’t regard myself as particularly elderly (43, thanks for asking) and yet everyone is still running around claiming inflation over 2 per cent is some sort of disaster.

OK, let’s not get party political here but 1980 – yes, just after the last unbroken period of Labour administration and with a Prime Minister who took over after the elected bloke resigned – inflation’s peak was 20 per cent. The same link confirms that interest rates peaked at 17 per cent at the time, and they hit almost the same height, albeit only overnight, in 1993.

Younger readers (he patronized) will be now be staring at their screens in disbelief but these are facts. I’m not saying we’ve never had it so good, nor am I claiming it can’t happen again. Nevertheless, if everyone wouldn’t mind calming down a bit and remembering what’s actually happened in the past, they’d realise this isn’t anywhere near the disaster that’s being portrayed by certain members of my own illustrious profession. Inflation itself can actually be a good thing as long as people have the money to cope with it as it aids expansion – disinflation, in which prices go down, is the opposite and it’s when jobs start to get lost.

No, the real problem, as I’ve said before in this column and as the Bank of England hints in the BBC report quoted, is confidence. The Banks have been seen to wobble and that mustn’t be allowed. But inflation at panic levels? Don’t make me laugh.

OK, sanity actually returning when it’s not shown all that many signs of having been around in the first place is a bit of a stretch. Nonetheless, there’s a lot to be said for Anatole Kaletsky’s recent column in the Times about the current economic crisis. Like the Bank of England last week, and the US Treasury today, he thinks it’s all been a bit overstated and suggests everyone should calm down a bit.

Long-term readers will be aware that I have a lot of time for Mr. Kaletsky. When everyone was panicking about the UK’s withdrawal from the Exchange Rate Mechanism over a decade ago, it was he who observed that this would offer a chance of lower interest rates and therefore a better standard of living. He was right then and I suspect he’s right now.

As always, however, the difficult stuff is in the detail. He is not, repeat not, saying the easy credit is going to come back. Business loans, like personal loans, will be harder to come by than they were six months ago. There are solid reasons for this. Banks had estimated the value of their assets at least partly on untested items – for example if you had a house and wanted to remortgage, the Bank would probably make you an offer and yet without the house on the market nobody would really be able to establish an actual value. This, on a massive scale, is what’s caused the short-term problem we’re suffering now.

If Kaletsky and two Treasuries including ours are right, that problem is about to go away. With a bit of luck its cause will also go away, and people won’t make rash valuations of assets and borrow against them again, either on an individual or national scale.

Unfortunately I remember saying something similar in 1995..

P. S. Interest rate day tomorrow and I got it completely wrong last time. So I’m going to stick my neck out and say ‘hold’ this month.

At least that’s what Mervyn King, governor of the Bank of England, seems to think according to today’s Times. More particularly he’s concerned that the top executives at said banks are using other people’s money to do it. So the bail-out the other week should be seen as an offer of breathing space and time to put financial houses back in order rather than license to continue as before.

In other words there will be no return to the good old days. Anyone thinking the current tightening was going to be short term was kidding themselves.

It might be a surprise to hear that I believe this is a positive move. I’ve said a number of times in this blog that we need to stop living on borrowed money and actually earn and save something. This is going to happen now because people – and by extension the mass of people that is the economy – won’t have the choice.

The problem is going to be that a number of small businesses tend to survive on other people’s credit. Would the likes of Amazon really be as big if it didn’t have the facility to order items on a credit card with one click? Personally I think not. This isn’t to blame online retailers for people losing control of their willpower and buying stuff they can’t afford, that’s down to the individual, but facilities like one-click make it very easy to do.

The challenge is going to be for retail businesses to restructure themselves so that they’re less dependent on people’s plastic. This is going to mean lower turnover, which in turn will need to attract more margin to keep a business running.

There are industries in which this will be possible. People will pay a premium for goods if there is genuine value in the form of services to be had. They don’t mind paying a fair price if they can understand why. Companies like Richer Sounds never compete with Internet companies because they know people will pay the money to keep them in business for next time they need advice from a human.

The difficulty is going to be in the commoditised markets. You can add value to a sound system in a way that can never apply to, say, a book. These are absolute commodities and will sell on price alone. How you keep that sort of product profitable in an environment in which people don’t want to use credit is beyond me.

In recent weeks, given the remit of covering business money, I’ve said quite a lot about the state of the economy. I’m going to give it a break this week; either confidence will return or it won’t (and I still believe a lot of the problem has been about either confidence or more likely overconfidence when it comes to, say, valuing a house and the bank valuing its assets on the value of the mortgage) and that’s pretty much that.

What’s more disturbing is the report today that we’re increasingly victims of Internet Fraud. Granted, this week is the week of the Infosec show in London so there will be a lot of people talking up security stories out there but it remains a concern that official figures are underestimating how many people are losing money by so much.

The usual caveats apply and the calls for a Cybercrime unit make a lot of sense. In the meantime this is going to hit customer confidence very hard indeed – it was getting a lot of coverage on the Today programme, for example. Businesses that have downsized to take account of non-face-to-face trading could be in for an unpleasant reality check (elsewhere the BBC has reported – shock horror – that people are increasingly resorting to cash they actually have to fund their purchases).

It’s just what we didn’t need, and makes it a good time for Internet traders to look at and upgrade their security – this afternoon would be a good time.

OK, it’s starting to look serious. The economic outlook has been poor for a while now but a number of people, including me, have been suggesting that if we can steady our nerves all will be well. There was a rate cut last week and no doubt others will follow.

Then this happens. The Government, bless them, plan to help the banks by converting some of their mortgage debt into Government bonds.

This might have been a good idea a while ago but it has to be pointed out a similar move has done very little for the American economy. We now have a Government that is admitting openly that things are looking scary and imitating an only mildly successful business model to get us out of it.

Mind you, at least they’ve made a decision this time. We’ll see whether they manage to pull it around.

It has come to my attention that a number of readers may have been given the impression in one of my recent posts that there was no rate cut imminent.

This post was of course a figment of your imagination and if you can still see it you need a holiday, or something.

OK, OK, I was wrong…

…because a lot of this economic forecasting is giving me a headache.

It goes like this. Alistair Darling’s forecast for this year was for 1.7 per cent or so growth in the economy. It seems not everyone agrees with him and the actual figure is likely to be 1.5 per cent.

More seriously for Darling, the figure next year is also likely to be under two per cent when he’s been predicting a figure over it. And this could be an election year.

My question is really quite simple. What do people understand by the word ‘growth’? OK, we’re not growing as quickly as hoped and yes, the American economy is having its effect – as someone whose mortgage is likely to increase twice in one month if reports are to be believed, I’m going to become all too well acquainted with the idea.

But it’s still growth, isn’t it? Nobody – repeat nobody – is saying there’s going to be less money (although less on credit, which is probably no bad thing), more unemployment, more inflation. Check the dictionary. Growth is growth. And yet confidence is suffering, simply because virtually the longest sustained spurt of economic growth in living memory is coming to its natural end.

There needs to be a correction, certainly, and we all need to pay back our borrowings – as a nation and as individuals, to set things straight. I just don’t see us as doomed, that’s all.

Just when we thought things couldn’t look any bleaker for the markets (and by extension the business community), the Bank of England’s chief Mervyn King is playing down the chance of any rate cut next week.

I suppose you can see why; he has to think about inflation rather than rescuing the economy if indeed it is rescuable. Meanwhile everyone’s telling us not to panic just because of a little thing like First Direct refusing to offer mortgages to anyone who’s not already a customer.

Again, in isolation this makes sense and shouldn’t be a problem. Some of the other banks are experiencing problems so larger than normal numbers are gravitating towards them and they can’t cope. So they’re opting only to service existing customers. It’s all fine in isolation. It’s just that, looking at it as a whole, you can’t help but wonder how bad it’s likely to get before it picks up again.

Amid all the financial jollity that the Easter Season has become, it’s almost a pleasure to be on the receiving end of a good old-fashioned attempt at a scam. Yes, someone has tried to nick some of my precious IT kit.

I’m trying to sell a second-hand mobile phone through Amazon’s marketplace scheme (and this is relevant to smaller businesses since it’s a very efficient way of disposing of a few assets you no longer need). I won’t use this blog as a platform for my private sales, but it’s not rubbish.

So I had this query from someone, asking for its full spec. Innocently I sent them a note of the manufacturer’s website so they could make their own judgement rather than wait for a glossy spiel from me.

And I get what looks like confirmation from Amazon that I need to send the item off immediately and money will be with me by the middle of April, which would be their standard way of completing a sale. Except…the address is in Lagos. And we’ve all heard of Nigerian scams.

Let me be frank. I hate, hate, hate the fact that any country mentioned in an e-mail automatically raises the spectre of doubt in the recipient. I’d much rather trust people. Only…I remembered something. Amazon, when I sold a couple of CDs through it last week, has changed the format of its mails and no longer includes all the address details in them.

So I have another look, and what do you know – in their confirmation e-mail, ‘Amazon’ (which, now that I look carefully, doesn’t have an amazon.co.uk e-mail address) is suddenly putting two ‘p’s in ’shipment’. Then I get an e-mail from my alleged buyer and guess what – he wants me to confirm something he calls ’shippment’ when I’ve sent the goods off.

You can imagine the tone of the mail I sent back to him. The odd thing is that my reaction wasn’t so much anger as to go ‘aah…’

I was going to try to be erudite on my own behalf today. To look at the current difficulties in banking, to consider what’s going on under the bonnet of the major lending institutions and to consider what effect this would have on the smaller operators (like SmallBizPod readers) who depend on the institutions for their funding.

I’m not a qualified economist, I grant you, but 20 years spent writing about business issues affecting smaller businesses ought to count for something, I thought. My problem is that other people have got there first, and done it better.

Luckily we’re in the world of blogs, so when I link to the stunningly clear explanation of exactly what’s going wrong by the BBC’s Evan Davis,who writes about the relationship between capital and lending better than anyone I’ve seen. More importantly he addresses the issue of why we should be talking openly about nationalising banks rather than seeing it as some desperate last resort.

I’ll admit I hadn’t thought much beyond the idea that nationalisation was A Bad Thing in economic terms. This is what being brought up in Thatcher’s Britain has done for me; nationalisation to me carries connotations of an outmoded form of politics and economics, and when someone like Davis analyses it objectively as a means to an end and cites examples in which it has worked, I begin to realise how foolish the dogmatic approach actually was (even more so when you consider I didn’t agree with Thatcher anyway).

We may have to consider the idea (he says as if it were up to us mortals) sooner rather than later. A report in the Guardian confirms shares in HBOS are falling even now amid rumours it’s overextended itself. Meanwhile cracks are appearing in the Bank of England and there are signs of a rate cut ahead.

Let’s hope it’s enough and in time.

OK, I think we’ll take all the digs about journalists going off that nice Mr. Darling because of the hikes on alcohol as read – suffice it to say a lot of us will be binge buying very quickly.

There’s a lot of positive stuff in this budget, though – and after Northern Rock there needed to be. It won’t meet the approval of every business; increased tax on larger cars is going to appease the green lobby but not people who need the vehicles for their livelihood, for example. The money to get people back to the workplace is welcome, though, as is the small drop in corporation tax. CGT remains untouched, in case anyone was wondering but the small firms loan guarantee’s pot will be increased and there will be funds available to get women into business.

Nothing dramatic or unexpected, then. There is more tinkering; the law that would have stopped husbands and wives splitting their tax allowance is delayed which is a relief as many thought it would be unworkable.

The really fun bit, though, is the threat to start taxing plastic bags if shops don’t start charging for them. It will be entertaining to watch the inevitable backlash against this one. At the moment loads of people have agreed that plastic bags are a bad thing, in fact I’ve seen only one view questioning the received wisdom that they are harmful. Noticeably I haven’t seen much coverage of the actual science behind getting rid of them. I wonder how long it will be before someone starts asking: are you *sure* about this..?

It’s official – the minimum wage will go up as of October, reports the BBC. And although they haven’t put anything on their website yet, the Federation of Small Business has circulated its approval to all the journalists it knows. At least, their argument runs, the amount is in line with inflation.

A scan of the newspaper websites suggests this isn’t going to make much of an impression – nobody’s writing a great deal about it. What concerns me is the amount of people still falling below the minimum rate, though. I know of one businessman on an Internet forum who boasts openly that he pays his labourers in cash, and that they never complain about the low amount. Well, if you’re desperate to accept it I suppose you wouldn’t do any boat-rocking, would you.

The thing is, I’ve only seen one story about someone flouting the minimum wage rules. There could be more, lower-profile examples, but if so they’re well hidden. The laws would have more teeth if some people – particularly those openly boasting of ignoring the law – actually faced some consequences.

Meanwhile the smart money, says the Telegraph among others, says interest rates won’t be cut tomorrow. So, back to the doom and gloom this time next week,

I was looking at the Franchise Chat website the other day when a piece caught my eye – the Independent had reported on the sale of the Pret a Manger business.

The item had my attention for two reasons. First, being picky, I wondered why the franchise people were interested because Pret hires staff rather than operate franchisees, unless they misled me completely while I was researching the last edition of Guardian Books’ “Britain’s Top Employers”, which I edit (I could of course be mistaken about that, but the website doesn’t make any mention of franchises either). Mostly, though, it raised an important principle – what happens when the culture of a franchise changes an you’re stuck running part of the business?

I’ve spoken to people in this position before. One former head of a large food chain, which did operate as a franchise. He’d started running one of the restaurants in the 1970s, and when a chance had turned up to open his fourth one his funding fell through at the last minute. He called the franchise owner, said he was £20K short (at a time when you could have bought a house for that sort of money) and the man simply asked when he needed the money and how he could help. Managements came and went and the current owners would in no way have put up that sort of capital.

He felt that the current owners were missing out on the original culture of the business, which they undoubtedly were. Whether they were right to do so or not is a little beside the point; the question in my mind is what does someone do if the ethos of an organisation in which they have invested so much time and effort changes suddenly? Let’s consider if something big happened – say, if you worked for a food franchise that sourced all of its materials ethically and suddenly it decided factory farming was cheaper and there were no proven health benefits to organic food.

The answer to an employee would be simple – start looking elsewhere for work. For the branch owner in a franchise it’s different. Do you close down? Sacrifice the franchise and risk losing the customers you’ll have gained from the global brand? I’d be very interested to hear from any franchise owners who’ve had to face that.

Readers of this blog will realise I’ve been banging on about the Government’s indecision in the case of Northern Rock, so you can understand why I’m a little relieved that they’ve at last done something. Granted it was only because plan A had failed several times, which is infinitely less than ideal, but at least we now know where we stand. Existing loans won’t be hit and the bank is open for new deposits. I’m not exactly rushing to put my life savings into it.

That they’ve come to the decision at which they should have arrived months ago is evident to many. The Times’ Anatole Kaletsky explained the events in his column yesterday with his customary lucidity and also points out that the Government’s apparent objective is out of sync with any likely outcome. I can’t help agreeing.

More interestingly there’s a precedent. I’ll leave it to the BBC’s Evan Davis to explain it in his blog, but it seems this whole bank loses people’s confidence-state tries to find a buyer-state fails dismally and nationalises has been gone through at least once before.

Which makes it all the more bewildering that the Government didn’t take this step when it first became apparent it’d be a good idea – when, in the favourite word of our Prime Minister, it was prudent.

…regular readers who want to see more on franchises (Wednesday used to be franchise day on this blog but we expanded it to include finance as well) could do decidedly worse than to click here. You’ll find a podcast from The Franchise Show.

There are interviews with high-turnover franchisors and franchisees, as well as a blog dedicated entirely to the subject. Don’t imagine we’re abandoning franchises here, not a bit of it, but if you want more specialist information more regularly it’s a good starting point.

A few missives ago – here to be precise – I said I was taking a client to court for non-payment and would report on it regardless of the outcome.

I won. Cheque in the bank today. It looks as though they screwed up the court paperwork but I won nonetheless, whatever the reason.

I won’t bore you with the details but the interesting thing, to me, is how simple the process has been made in a practical sense. If you’re owed less than £5000 you go to the Moneyclaim site and fill in your details and the information about your claim. You enter your credit card details and pay £40 in costs upfront, and this is added to your claim.

In my case it went a little further because the defendant put up what looked like a spirited defence, denying that my claim had any merit. So there was a second round of paperwork, this time sent to me by Croydon County Court. I filled in my part and it’s here that the defendant failed to fill in their form, which effectively lost them the case. I formally wrote to the court asking for judgment in my favour, got it in writing and ten days later the former client was on the phone – not the individual with whom I’d been dealing before – promising immediate payment which was indeed with me in less than 24 hours.

What’s really interesting is the psychological impact this had on me. Yes, I was owed the money (the client denied it but the result speaks for itself). Yes, I was convinced of my case. But immediately I’d issued that first form I felt like the aggressor. It was now I who was taking action, which made me in my own eyes the ‘bad guy’. Had they not paid I would have had the option to send bailiffs in, try to freeze their account, all those things. Even had I not bothered, they would have ended up with a CCJ against them which could have hampered growth in the future.

Logically, none of this should have mattered and yet I found myself shuddering at the thought. I didn’t want to be the person who inflicted damage on someone’s potential, regardless of what they’d done to my cash flow (and four figures short of where you thought you were going to be both in the run-up to Christmas and in the run-up to 31 January wasn’t fun, I can confirm).

I was relieved and somehow grateful when they settled in full, including costs, with the cheque that arrived this morning. I can now – no, I must now – tell the court it’s paid so they can lift the CCJ and no record is kept, so the company isn’t harmed at all. Why I feel they’ve done me some sort of favour I don’t know – any amateur psychologists with any thoughts are welcome to comment!

People who want to enter franchising might like a quick glance at the 2008 British Franchise Directory which is now available, and before you ask, neither I nor SmallBizPod have any connection with the publication.

One of the best things about it is that the publishers have made it so much more than a simple directory. It has articles on what you need to take into account when entering a franchise agreement and how to work out a decent financial projection among other topics. These things are actually more important than deciding which franchise you’d enjoy running.

Better yet, these two articles and one on business planning are available free on the link above. I recommend them highly to anyone who’s just starting up; if you also want the items on dispute resolution, turning your business into a franchise and several other useful bits then you have to cave in and buy the directory. If the standard is the same then it’s probably worth doing.

The only section whose value I’d query is the directory itself. There are now so many websites dedicated to finding the franchise that will work for a particiular individual, and these will be updatable from minute to minute. They should, logically, be more up to date than a hard copy directory which has spent time being printed.

It does seem a good book for the other reasons, though – it should be bought by anyone considering franchising as a way forward.

OK, it’s got to be faced – there is going to be some sort of slowdown in the UK. The Prime Minister will say it’s largely because of American influence, which will be largely true, but will we care? The fact is that we’re going to be finding things tougher, Northern Rock support or otherwise. Evan Davis has an excellent analysis of what’s gone wrong on his BBC blog.

The question therefore isn’t whether things are going to get tight – it’s how bad it’s going to be and how we can cope. My own answer is to look at this guide from the Times and apply as many of the principles as you can. It’s prudence, Jim, but not as we know it, you might say.

For example, how many business insurances do you have that are actually over the top and unenforceable? If you’re one of the self-employed population like I am then many of the employment interruption style of insurance will almost certainly not be worth having – you’re only unemployed when your employer lets you go, and if you’re self-employed then you can only let that happen deliberately. Likewise the insurances for illness and long-term disability – check your life assurance, you might already be covered.

Check also any purchasing plans you might have in place and how necessary they actually are. Managing debt in business is actually easier than in your personal life as you won’t have the same emotional attachment to your outgoings – it should be simpler to make ruthless decisions to force your business to work.

The most important point, though, is to remember that a slowing of growth isn’t a recession. Forecasts currently suggest that we’re going to grow 0.5 per cent instead of 0.7 per cent. This is not, repeat not, a reason to panic.

Wednesday’s post late again this week because I was waiting – no, don’t laugh – for the allegedly imminent decision on nationalising Northern Rock. Which with the inevitability of so many of the Prime Minister’s decisions, hasn’t quite been firmed up yet. The BBC’s take on it is here.

The difficulty to my mind isn’t so much with whether or not it gets nationalised, although the news on Tuesday evening had enough aggrieved and potentially aggrieved shareholders to persuade me someone’s going to suffer. The real problem is that as we saw in the lead-up to what turned out not to be a general election, nobody’s actually making a decision. This doesn’t bode well for the economy overall or business matters in general.

There’s every sign of a recession brewing. In the last week Marks and Spencer and other retailers have posted less than glittering reports of the Christmas period – the usual last-minute surge simply didn’t happen and the money taken was less as a result. On the one hand if this means we’re going to stop living on credit so much that’s probably a good thing. On the other hand, fewer sales mean fewer jobs. It’ll be what the economists call a ‘correction’, which is a euphemism for an extremely painful stage for a lot of people.

This would be easier to bear if the people at the top could actually tell us what’s being done. Yes, we’re going to nationalise Northern Rock or no, we’re not going to do it. Simple as that. My guess is that for the majority the outlook would look infinitely less bleak if only it had a name and a certain direction. Not knowing breeds uncertainty – and if you check my previous posts you’ll realise I believe the whole Northern Rock problem arose from perceived uncertainty rather than actual problems in the first place.

Here’s a laugh to start the year off. Jeremy Clarkson, whom God preserve, has been slating the security freaks – his view is that the Government’s loss of data was nothing to worry about. He said it in his column in the Sun newspaper, and so confident was he that he…giggle…published his bank details. You hand them over to anyone to whom you send a cheque, he argued, so there couldn’t be a problem.

Except a reader decided to prove him wrong, which is why he now has egg all over his face following an unintentional donation to a diabetes charity. They went in, they helped themselves and he’s now uncharacteristically humble.

Which is an amusing story as it stands but it does raise some interesting issues as a press list in which I take part has pointed out. First, surely all banks are bound to reverse payments if the payer complains and they are not signed for? Recovering the money should have been simple. Second, aren’t direct debits supposed to get confirmed in writing by the bank – and according to the rules (which aren’t always obeyed) aren’t they supposed to remain unenacted for ten days precisely so that someone can quibble over whether they want them any more?

The Clarkson thing is an entertaining story on the surface. It’s always fun to see the terminally arrogant getting taken down a bit, rather like Gordon Ramsay being caught not catching a fish. The underlying story, though, is that a bank isn’t doing its job – and that’s a rather more unsettling start to 2008.

We’re short of an announcement. As outlined in the Daily Telegraph’s blog, we were supposed to know by now whether Mervyn King is staying on at the Bank of England before June.

Christopher Hope in the Telegraph clearly thinks Gordon Brown will keep him because there’s so much at stake, for both business and personal money as well as that in the public sector.

It will be no small relief to Mr. Hope that I agree entirely. The real issue, though, isn’t whether King stays on. It’s not even whether King misjudged the Northern Rock affair. It’s that we were supposed to know by now and we don’t.

This is becoming a pattern. Brown vacillates over an election, we gear up for it, he backs off, his personal ratings fall alongside that of his party. Now here we are again – King’s tenure should be confirmed or discontinued and there’s no decision forthcoming.

I don’t think I’m being unduly party political when I say this is going to become a problem over the next couple of years if Gordon Brown keeps it up. If there’s going to be a mini-recession, and let’s hope not, it will need someone decisive to take action to limit the damage. If there isn’t, then anyone seeking to remain in power needs to make it clear that this was their doing rather than a fluke of events.

2008 is going to be decisive for many reasons; the availability of credit, inflation, the consequent movement of interest rates, it will all have a marked effect on every businessperson in the UK. We need reassurance that the guy at the top is able to do more than say ‘oh yeah, I’ll deal with that in a minute…’

This is getting disturbing. I know, I know, I should be spreading Christmas cheer and with a bit of luck and a prevailing wind I’ll do so next week. You’ll be preparing for tonight’s office party (fact: more companies have this Friday as their office party than any other night) and want a bit of light relief.

I’m talking about the development widely reported yesterday in which our Government, as well as several others, has agreed to step in and help banks when they run into trouble. The Times comments on it here, the Telegraph comments here and there are of course others.

So the Prime Minister thinks it’s a great idea, no surprises there. And the Telegraph is critical of the PM’s apparent policy – no surprises there either.

My fear is that things are slightly worse than we thought. There have been recessions before. The Depression in the thirties, now slipping from living memory, was appalling. At no stage, however, did anyone turn around and ask the world banks to pump money in to shore things up. Just how bad does it have to look before the UK and several other countries insist on pumping loads more money in? I have an unpleasant feeling we’re being treated as the patient who hasn’t actually been told the whole truth, but who can see the massive amounts of treatment going on around him. I hope I’m wrong. As Jeff Randall points out in the Telegraph piece, this isn’t a cancellation of a load of debt, it’s a postponement.

Oh, and I take it everybody noticed this? Good. ‘Tis the season to be cautious…

It’s December so I’m going to allow myself the use of the ‘C’ word. No, I’m not going all festive just yet, bah humbug to that until I start my Christmas shopping next week. However, there are things we need to consider about Christmas in terms of financials.

First, how much do you spend on entertaining your employees? The tax authorities say it’s all tax free but the smart money such as the tax advice network says keep it to £150 if you want to avoid your customers getting hammered for receiving a benefit in kind. Entertaining clients and prospects, meanwhile, is not tax deductable any more than during the rest of the year. So you can feed them by all means but whatever you do don’t buy any presents or cards and expect HMRC to help.

Another soiund financial practice if you’re the type that has office knees-ups in the office – or ‘buys a crate of lager and hopes that’ll do’ – is to check your insurance is up to any breakages and damage that might happen if someone gets carried away. Personally I’d be more inclined tokeep any celebrations safely away from the office, but what do I know.

Anyone with any useful insights into managing money over the Christmas period – particularly getting payments out of people when they think their accounts department should be on holiday – is more than welcome to comment to this blog entry!

‘Tis the season to be jolly, well almost, and to get the season off to a flying start I’m a day late with the blog entry. I won’t bore you with excuses, I just won’t draw attention to it and with a bit of luck no-one will notice.

Joking aside, they probably won’t because there’s enough in the economy to take someone’s mind off more or less anything as trivial as a small business blog. The economy is suddenly rocky now that Dear Prudence has taken over as PM and few people seem to understand why.Yes, there’s been sub-prime borrowing but there always has been. So what’s changed?
To me there are two means by which the economy has always been measured and which contradict each other dramatically. You’ll have heard, no doubt, that we’re all borrowing too much money? Of course you have. You’ve probably accepted this as a fact, principally because it is one.

On the other hand when the economy shrinks we’re told this is bad news. This is an odd one because a shrinking economy means people are buying less. In other words they are spending their money on paying back their plastic friends, not stretching them even further.

This is why, to me, the renewed rigour with which loans and credit cards are being scrutinised is excellent news even if it does work against a jobbing freelance like your correspondent. There will be a slightly rough time in which the economy will ’shrink’ while we all get our houses back in order. One side effect may be that interest rates will fall, which is good news as long as the benefits are passed on (which looks unlikely according to yesterday’s papers). Then eventually, with any luck at all, we’ll emerge with an economy based on what we’ve produced and earned rather than what we can persuade people they should lend us.

And that will be a lot less vulnerable to the American sub-prime market than our existing model.

Ouch. Someone loses a couple of CDs and HMRC – and the Government – have to admit that two twenty five million [edited] sets of details have gone missing. Very much an ouch, although there appears to be no need to panic as there’s no evidence to suggest anyone is misusing the data. My best guess is that the CDs went missing in the internal post.

The problem arose, you’ll remember (oh come on, you’ve read the story as avidly as the rest of us) when someone sent a couople of CDs in the internal post at HMRC and they didn’t get to their destination. So they re-sent them, and it was only when it emerged that the original CDs had gone missing that there was any outcry.

OK, let’s re-cap. Someone sent two CDs in the ordinary internal post which had 2,000,000 25 million address details on them, and plenty of bank account information. They didn’t record or register the delivery, send by courier or a security firm, it went in the internal post.

I don’t suggest there’s any deliberate wrongdoing in here. But funnily enough, my records are held by HMRC as well. And I can’t help but feel really quite strongly about it when I hear that if someone in another office needs them they’re likely to be whacked onto a disk and stuck in an envelope, then trusted to an ordinary postal system.

I’d guess we’ll be getting an announcement about a significant upgrade to the process any time now.

For the first time in 12 years as a freelance operator it’s happening – I’m taking someone to court over non-payment of an invoice. They insist there’s a misunderstanding of the original commission, I insist there isn’t – we’ll let due process take place and see who comes out on top. I’ll blog the process if it’s interesting (and yes, I do mean if I lose as well). More detail would be redundant at this stage – the thing’s going to court.

It did lead me to reflect, though, on the different methods people adopt to obtain money they are owed. ‘I happen to be passing your office, can I pick up the cheque’ was a favourite of a colleague of mine; his face fell a bit when it was pointed out that if they were amenable to his dropping by to get a payment, they were probably going to cough up anyway. Actually as a means of keeping contact going with a client it was probably not a bad idea, even if they did end up with the impression he was flat broke all the time. (As a freelance this was almost certainly the case).

My own favourite was Mr. Smelly a few years ago. You might have heard of him and I hope you never met him. The idea was that if you had a late payer you’d hire him, he’d roll around in something appalling and go and sit in reception until the client gave him a cheque to include his expenses. I suspect that’s not entirely legal.

The small claims court – as it’s colloquially known – is a rather drier alternative. The claim has been issued, they’ll receive it probably tomorrow and make their case and we’ll thrash out what’s actually gone wrong. One of us will walk away either relieved at not having to pay or richer, if I win.

Interesting thing, taking people to court – at least for the first time. I’m genuinely convinced I have right on my side; on the other hand I suddenly feel like the bad guy. Odd, that.

Not much in the Queen’s Speech to cheer businesses this year, I’m afraid. More training for younger employees, funded by…er…anyway, also there’s going to be an inquiry on whether we need all the red tape introduced by Gordy and his predecessor.

I’m all for an inquiry into red tape. The only problem that I can see is that an inquiry can yield the result, ‘you’re doing fine, thanks’.  More worrying is the increase in flexible working.

I’m completely in favour of flexible working. As a jobbing freelance I consider myself a living example of how it can be made to work. You might notice this blog entry is timed in the evening – so I can put my daughter to bed with a story. This is all good stuff but I’m self-employed so I don’t have to work out how to hit deadlines while I’m doing it. Not all employers are so fortunate.

There are two bad things going on here. First, the assumption that getting both parents to work is a good thing per se. No doubt this is true when they have to pay off the credit card balances we’ve all been encouraged to build up over the past few years, but overall does it really go without saying that parents should put their careers first? If it were affordable for me I’d certainly consider taking a long break.

Second, it seems this is a classic example of the Government introducing legislation with no real idea of who’ll pay for it. They’ve done it before and confounded expectations when it didn’t hurt, of course – many people predicted mass unemployment in the light of the minimum wage, which turned out to be far from the case. Nevertheless the idea of learning management skills for flexible policies when everyone who has kids up to the age of 17 wants a break is a substantial change and failing to offer a costed means of achieving it whilst proposing legislation allowing it looks like an amazing oversight.

Just a quickie this week. I have a colleague who had a mail. “Lucky winner”, it told him, “You’ve won a prize draw”, it said. So, what sort of spam was this, you’ll be wondering – who was trying to harvest his details no doubt with a view to rifling his bank account later on?

Actually you’d be wrong in this instance. It was from the National Lottery and he had indeed won a tenner. Note to Lottery organisers: if you ever want your e-mails to be taken seriously, try to make them look less like a scam from someone doing a bit of phishing…

I had an interesting discussion with a commissioning editor last week. It was, you’ll recall, shortly after the mini-budget. Anyway, I had a case study of a company that had saved loads of money with remote technology rather than physically visiting people to do its work, and a nice study from the Carbon Trust about how small business could be saving billions if only it would get its act together and put some green measures in.

I’m the first to admit it’s a perennial story that had been told a number of times before. I couldn’t help but be surprised, though, at the answer – if it wasn’t about the shift in capital gains tax, the paper wasn’t interested.

So, do we assume that when there’s a single major event that it’s officially deemed that nothing else is happening of any interest? At all? The funny thing was that on the same day I had the polite turn-down I was chairing a meeting of small businesses, a focus group thing, and asking them what issues were affecting their day to day activities. Granted my pushing of a green agenda didn’t deliver anything they wanted particularly – green issues were a sidshow, they reckoned. You don’t have to agree with the view to accept that it exists. However, CGT didn’t come up much until they were pushed, either.

I’d be very interested to hear from readers about just how important the CGT debate was to them, and whether other financial considerations are actually more important.

Those of you who are telly addicts like I am will have spotted that Dragon’s Den is back (yaaay!) with a new dragon who seems actually to listen to what’s being said to him. Odd idea, it’ll never last.

The most interesting point of the programme, though, for me, is what gets left unsaid or more likely on the cutting room floor. This week new dragon James Caan gave a guy an investment for a gold plating business, which he wanted to franchise out.

What I found odd was that the man in question didn’t own the intellectual property behind his offering. He’d bought a plating machine and walked around gold plating things. He also had no substantial brand name just yet.

He certainly seemed a switched-on, nice guy. But if someone’s being asked to hand over £10,000, which every franchise will have to do, they might at least be expected to ask whether they couldn’t just go and buy the same equipment and offer the same service locally with a drastically reduced overhead.

My guess is that there’s something we didn’t see in the programme. And an incomplete view of the pitching process, given the nature of the programme, is a bit of a flaw.

So, what did we all make of that nice Mr. Darling’s speech yesterday? Odd not to see Gordon Brown telling us all what we won’t be able to afford for once, seems he’s found someone with even less presence to deliver the thing. Not that this should matter; a number of commentators have barracked Brown for not having much of a personality and twitching a little when he speaks; personally I’m delighted to have someone at the top who’s less concerned with their appearance than with what they actually have to say.

The problem is that for the business community not all of what they had to say was particularly helpful. The BBC has a point by point summary here, and two points apply in depth to entrepreneurs. The first is a unified rate of corporation tax. Believe it or not I’m quite fond of this one. It’s easier to keep track of where you stand and for once involves less red tape.

The other measure is a good idea on the face of it – increasing capital gains tax. The idea is to prevent wealthy people becoming even wealthier at the expense of everyone else by hammering them for tax when they sell a company. So buying a company for a song, cutting out some of the deadwood and flogging it on ceases to be the moneyspinner it was – if you want to buy a business you might as well do it for the long term.

Which is fine and an excellent thing. Only…there’s no real incentive to keep running it, either. There’s no tax break for longer-term business owners. My concern is that instead of simply discouraging the chancers, the private equity community and the asset strippers (I have reservations about condemning the private equity people out of hand but that’s for another time) it will discourage the genuine entrepreneur – the person who wants to set up a business, run it for half a decade then sell it to get their house in the country and let someone else take over. These people exist and are very good at starting companies – and we do need those ’starter’ people as well as the longer-term managers.

So, my view is that it’s not a bad start but if that second measure could be tweaked by the time it comes into an actual budget so that it looks like more of a precision instrument than a blunderbuss, that would be a good thing.

(And yes, I know what people are really watching is whether this not-quite-a-budget can restore Brown’s credibility after the not-quite-an-election debacle last week, but this isn’t the place to discuss that. Also, I’ll bet people will be interested in the financials for longer than they’ll care about Gordy’s career prospects…)

Well, a former dragon anyway – Rachel Elnaugh, late of Dragon’s Den and Red Letter Days, is holding forth on the subject of franchising on her blog.

She makes a number of points that will be familiar to several franchisors. It’s not a proper business, we often hear. It’s a substitute for doing your own thing because you can’t make your own decisions about stuff. On the other hand it’s the sort of business people often opt for when they’ve seen the alternative, of building your own brand from scratch, which is very difficult indeed.

Well, yes, up to a point. But even this can give the impression that it’s the people who aren’t quite good enough that end up running a franchise, if you’re not creative enough to imagine your own business then you’ll end up in the franchise market. I don’t actually accept that (and I should stress it’s not what Elnaugh says, just a conclusion one could reach). But there is a difference.

My instinct is that the franchise option appeals to the person who loves business but who hates the start-up phase. Typically they won’t underestimate their tasks but they’ll want to bypass them – they’ll see no particular reason to build a brand of their own, they don’t want to empire-build.

Ultimately they’ll be lifestyle entrepreneurs. They might not have a colossus to sell when they reach retirement but they’ll have been pleased enough to earn a living doing substantially their own thing. They might even (PREPARES FOR ROTTEN EGGS) be nicer people than the ones who ruthlessly build something up from nothing and end up trampling all over the competition.

Oh, and if you ever look into it for yourself and see what the initial outlay is, you’ll find they have a lot of money to start off. Oh boy do they have a lot of money…

It had to happen sometime, and as a jobbing freelance I’m lucky it hasn’t happened before – but it looks as though I’m going to be involved in pursuing someone for an unpaid invoice.

This isn’t going to be pretty. It’s not a huge amount – 400 gold pieces plus VAT – but it’s worth having (and don’t forget as a sole trader there’s no company involved so that’s genuinely my money).

The small claims court is the obvious route but there’s also the issue of interest. The law is quite straightforward. If someone is late for a payment you charge £40 and then a daily amount of interest. They are obliged to pay it.

Unfortunately I’ve never known anyone else in my field to get that interest even when they charge it.  Proprietors fall over themselves to say ‘I never agreed this’ (hint: you never had to, it’s in the law) and they pay the original amount if you’re lucky, with a promise never to use the freelance again. It’s not a satisfactory way of doing business.

There’s one exception of which I am aware. The Guardian messed up payments for a colleague a while back; he ended up having to go to the small claims court. His case was a simple one and the Guardian caved in immediately. On the way out – and this is the important bit – the newspaper assured the freelance that this was a simple procedural matter, they were glad to have it behind them and he should feel free to continue pitching ideas to them. Which he has, rather successfully.

That’s real professionalism in my view. I suspect the smaller company that owes me money will be a little less amenable. I’ll let you know.

…it was the 1970s. This was a time of great fun, space hoppers, Parka coats and later on Doctor Martin Boots if you weren’t rough enough for Punk. There was other stuff going on too, of course.

Like queueing.

I remember very well having to queue with my mother in the shops because someone had spotted a bag of sugar in the local supermarket. This was big news at the time because there was a sugar shortage. Well, I say shortage; what I mean is a perfectly adequate supply of sugar accompanied by some idiot spreading rumours that the sugar mines or whatever were going to run out, so we all started stocking up. One Internet correspondent tells me that when his granny died in the mid-1990s they found she still had a bag of unused sugar in her cupboard she’d hoarded since the seventies.

It wasn’t just sugar. In the early seventies (forget the Winter of Discontent, we had power cuts interrupting Doctor Who when he was fighting Sea Devils and that’s when you’ve got it tough) there were, equally, ’shortages’ of bread and of flour. People queued, hoarded the stuff and the prophecy became self-fulfilling; there wasn’t a shortage as long as everyone didn’t want more than they could actually store in their homes.

So what’s all this retro waffle about, you’re wondering? Actually no you’re not, you know perfectly well I’m going to start drawing parallels with the Northern Rock situation, but first another comparison: the Wall Street Crash in the 1930s. I studied this for history ‘O’ level (younger readers might want to know that ‘O’ level is Elizabethan English for GCSE). At the time the dollar and the pound were on something called the Gold Standard. That meant that for every piece of paper money in circulation the bank was supposed to have gold, and you could if you wished go and hand over your paper cash and demand gold at a branch.

Until someone did it, found the bank didn’t have the gold and the whole system collapsed through lack of confidence overnight. I imagine that was simplified for the school kids’ attention span but I remember it 26 years later so I learned something.

So to Northern Rock. Many businesses as well as individuals will have had money with Northern Rock and for all I know they were among the people queueing up for their cash over the last couple of days. I can only hope this will have gone away by now. Because here’s a secret: the money was never in any danger, and the Government’s promise to underwrite existing savings is as close as you’ll get to proof of that. There’s no way they’d have offered to stump up significant amounts of money if they thought there was a serious chance they’d actually need to pay it.  What they needed to do was to restore the confidence and stop the queueing.  Only when there was a run on the money and a perceived crisis was there actually any danger something might go wrong.

And now Northern Rock’s share price has been recovering. Based on what I’m not sure; it went down when it had secured a loan against its mortgage lending and it went up when it has a loan plus a bit of underwriting from another third party, in this case the Government. At no stage did the price reflect what was actually going on inside the bank or the competence of its managers – the Stock Exchange, which I’ve always thought of as a posh betting shop anyway, simply thought it would stand a better chance of recovery with the new underpinning. This is only temporary relief, though. The trading position hasn’t changed and NR will still make the recovery I believe it was always going to. What’s changed is the confidence.

So if anything happens in any related way over the next few weeks and months; if any other bank looks as though it’s going to have to borrow money for its business (which loads of other businesses do anyway), if anyone starts to feel like queueing visibly and attracting the inevitable headlines, just try to remember where some of the real damage to economies has actually happened in the past.

OK, I have to admit this entry is less about pure business finance and more about a subject that affects us all – taxation. Specifically that sort of taxation that’s going to make us all go terribly green, if that nice Mr. Cameron and his friend Mr. Goldsmith have their way.

I’ve just paid one, in fact – the congestion charge in London – and you can probably see from the time of this entry that if it’s preventing congestion then I’m a monkey’s whatsit. Never mind, this isn’t about my frustrations.

Except it sort of is. The congestion charge works as a revenue raiser purely because it isn’t working. Confused? Then let me explain. If the C-charge really, really did something about congestion then people wouldn’t come in to London. It had that effect at first but it no longer does. People come in and pay, and if TfL is really, really lucky they forget to pay their charge and have to cough up even more.

If they stopped coming in to London, of course, the whole system would collapse because of an absence of money.

It’s the same with these green taxes with which we’re all being threatened (I assume there’ll be a business levy as well as one on consumers). Use up more consumables and you’ll pay more tax. In theory this should encourage businesses and individuals to consume less.

Except if they actually do so, the money coming in will shoot down. Quickly. Offer tax breaks for positive moves towards greening the planet and the problem multiplies when people really start to get things right. People become green, money goes down.

So we end up, under these proposals, working under a system whose financing depends on our causing damage to the environment. To me, it doesn’t make sense – but hey, they’re coining it with the congestion charge.

As promised last week, a little more on what successful entrepreneurs said to me about what they wished they’d known when they started up. The most interesting, financially, had to be the person – I won’t name them as the magazine that commissioned me naturally has first dibbs – who said that you should take as much money out of your business as you can legitimately, as soon as possible.

I find this interesting because it contrasts dramatically with just about everything any business school or advisor will tell you – when they’re on the record. Off the record it can be a very different thing indeed.

About ten years ago I tried to start a business, selling newsletters on saving money on technology to the small business community. It covered the stuff you didn’t see in computer magazines at the time – less on buying a new system and more on using the system you had, like using your PC as a fax (all terribly revolutionary ten years ago). The Internet more or less strangled it at birth but I’d followed all the rules like paying suppliers (good thing) and keeping money in the business where possible.

When the subscriptions dried up I still kept the money in there, hoping for some new input or sponsor, which never came (nowadays I’d just have asked the original sponsors for more money in the first place, which they’d have stumped up). So I had a couple of thousand, then it started to whittle away – because of bank charges for the privilege of keeping any finances in the account at all.

Did I do the right thing in keeping the money there? Certainly no businesses or suppliers (other than the bank) benefited from the company’s protracted end, it just didn’t have enough money to trade so the pittance that was left got swallowed up over time. Do I regret not winding the company up and having at least a few hundred to show for two years’ effort? Of course I do, but that’s hindsight – I know how it finished, I know there wasn’t any hope of resurrecting it. At the time it didn’t look that way.

So, do I agree that people should take whatever cash they can from their business on the principle that when things get worse other people will help themselves first? Ten years ago I would have said categorically not. Nowadays it seems a little less straightforward. I suppose what I really wish is that I’d spotted the early signs of death and recognised them for what they were rather sooner…

I’ve been writing an article on small business for one of the men’s glossies (OK, journalist writing article, it’s not exactly a surprise I realise). The thrust is to ask people what they wish they’d known when they first started up – hindsight’s a swine but it could help readers thinking of starting up themselves.

The reason I mention it here is the sheer number of people who are pointing to money as their main cause of difficulties as they began. I’ll link to the article in full when it appears (if the mag puts it on the Web) but here are some of the more interesting if obvious-with-hindsight financial tips people are offering:

* Don’t borrow more than you have to. If you do, you’ll pay interest on it and your debt early on will dictate the shape of your business later.

* Keep as much cash in the bank as you can. You might be doing well on paper but if an unexpected bill trips you up you can still be unable to trade.

* Check all the non-obvious routes for finance BUT look out for the catches – if you get a regional award, for example, make sure you know when it’s coming as they can take some time.

I can add one of my own which I’d stress for everyone considering starting by themselves and freelancing (it’s less of a trap for companies) – never, ever, mistake the fact that you’ve done some work and issued an invoice for having cash in the bank. It’s so easy to spend it on stuff you’re convinced you need, in advance – then spend a little more, then a little more…(CONTINUED AD NAUSEAM)

More of these tips next week if any more come in.