The recent Barclay review of Non-Domestic Rates has again brought into focus the need for businesses to remain agile, and be able to pivot. (This article first appeared in the Winter 2017/18 edition of our Connect newsletter.)
The Barclay review sought to enhance and reform the system of Business Rates collection in Scotland and, while many will point to the positives of ‘efficiency and transparency’ we, as business owners and consultants, will naturally gravitate to the less rosy side, i.e. “what is it going to cost?”.
The headlines focused on independent schools, but it is the lesser-known private member organisations that will suffer the most. By “private members”, principally we mean golf and athletics clubs, some of whom could face losing their rates relief entirely. The planned introduction of the new measures loom as early as 2019, with most clubs facing an almost minimum five-figure cost. How will they maintain sufficient cash reserves to operate, when the golf sector has only recently stated an 4% contraction of memberships?
What they must do now is plan. But what constitutes planning today, and is it merely reserved for crisis situations? Planning in this context is being aware of your surroundings, from which you chart a path or ‘scenario’ to succeed. Very rarely will this be the path of least resistance, but it is a path nevertheless. ‘Scenario’ captures the essence of there being more than one path to select and, therefore, the need to contrast and compare paths.
Private member organisations stand to pay thousands of pounds more for the exact same privilege they had the year prior. To do this, their planning must focus squarely on financials. When supporting these organisations, we commence with a strategy session followed by a financial model. The model will provide outputs in the format of a profit & loss account, balance sheet and cashflow statement. The model will seek to replicate the impact of these changes and by carefully altering the assumptions, the revised outcomes.
Clients benefit greatly from the strategy session. This is the no-holds-barred outlook on the problem: never will there be a wrong answer, nor will there actually be a right one. What this session provides is the stimulus for the model and the traction to drive it forward.
For a lot of businesses, financial planning will not always be the primary objective. Some may quote strategic objectives, others commercial, but one term that is synonymous with planning is ‘pivot’. To pivot is simply the process of changing direction, and management consultants have been quick to adopt its relevance here.
As we look ahead to a new year full of legislative changes, financial consequences and potentially global altering outcomes – is your business ready to pivot?
At Chiene + Tait we pride ourselves in this area, and every element of our service proposition includes such planning. We provide strategic, operational and tax planning led by specialists in each area. We plan for your needs to help you stay on your chosen path and when the time comes to pivot, you have the toolset on hand to execute.
So, the next time you sit at a Board or Investor Meeting, ask yourself if you would benefit from understanding the consequences of pivoting. The process is both engaging and thought-provoking, which we are sure you will find rewarding.