“The Ursula dividend is a shot in the arm for the UK” so wrote Matthew Lane in the Sunday Telegraph on the 4 April 2021. “Ursula von der Leyen’s most significant achievement in her first year as President of the European Union has been the creation of a British vaccine industry”. It is probably fair to say that was not her intention!
The UK hasn’t been a major manufacturer of vaccines, but in response to the threats from Brussels we soon will be. In effect this is the Ursula dividend as the UK works out it cannot rely on suppliers from the other side of the English Channel, and we need to make our vaccines at home. It may remind us all of the importance of being careful for what we wish. The law of unintended consequences can be far-reaching.
The very real issues arising with the Brexit Northern Irish Protocol (NIP) are being widely discussed. As long as it was agreed that a real border between Northern Ireland and the Republic of Ireland wasn’t going to happen, then the real border had to move elsewhere ie to the Irish Sea. The EU were adamant that a hard border along between Northern Ireland and the Republic of Ireland was never going to happen. That is until they decided that it would happen and began to introduce it – only to withdraw it when there was an outcry from the Taoiseach.
Under the NIP, generic medicines (which account for 80% of NHS medicines used in Northern Ireland) are not to be allowed to move freely from Great Britain to Northern Ireland (a short delay is currently in place before this rule is implemented). This is another tricky issue.
It has been said with some cogency that the UK’s fraught relationship with the EU over the years is because of different mindsets. One mustn’t conclude that one mindset is right and another wrong but they do seem to be significantly different. In good humour (but with some truth) it was sometimes said that the UK gold plated EU laws that the UK had voted against. Meanwhile some of our EU neighbours ignored the same EU legislation for which they voted!
The admission of Greece to EU membership whilst Greece had a significant budget deficit greatly in excess of the 3% maximum allowed under the rules being a case in point. It is accepted that Greece’s admission to the EU was fraudulent per the rules. It will be interesting to see how Scotland fares should it ever become a sovereign nation and seek EU membership for itself. It has a potentially large budget deficit (being exacerbated as it will be without the Barnett formula).
Lest on this side of the English Channel, we fall into any sense of pride, we acknowledge in recent days the fallout of the Greensill Capital lobbying scandal. A scandal that appears all the worse because no rules were broken. The sight of a former British Prime Minister lobbying in a tent in the desert in Saudi Arabia beggars belief given the context of the death of a Saudi journalist dissident and allegations of whom lay behind his murder.
Why, you might wonder, is a blog for SME business owners venturing into such sensitive and difficult territories? Our current issues with the EU over vaccines and a former Prime Minister in the Saudi desert might seem far away from the world of many of us running SME businesses! (Although we do know that the Northern Ireland Protocol is a very real issue to many SMEs).
As owners of firms in the huge SME sector that is critical to UK plc, we might do well to reflect on our own fudges, protectionism, values and culture. As we come out of lockdown and many firms start up again or pick up to full capacity, a whole host of business decisions will need to be made. A number of which will be decided directly from our mindset, culture and values.
1. “Don’t put all your eggs in one basket”
This saying contains so much wisdom. Time and again small businesses have come unstuck when they put all their hopes on one key supplier or one particular customer. Many a company has been over the moon to win a large contract with a business such as Tesco or M&S. Yet they may go on to find that the contract terms get changed and suddenly the contract from heaven is one from hell. A small business can quickly get into big trouble as their golden goose turns bad. So it’s good, essential even, for us to ensure that we have at least two (or preferably three) routes for everything we need in both our supply chain and also routes to market.
None of us can do everything. Working with others who have a variety of skills and experience different from ourselves should be our aim. It should also help us to work within our competency whilst being exposed to new ideas and thinking. None of us knows all the answers. By talking with a cross-section of people with different ideas to us, we are likely to make wiser decisions. Being open to challenge can be very tough. It is natural for us to feel defensive if we feel we are being criticised especially when we are under pressure. That is when trusted friends and colleagues can be so invaluable in helping us to see things which may be before our eyes yet are eluding us. Two pairs of eyes are so often better than one.
3. Pick your battles
There are plenty of things to occupy our time and energy in running a business. We we need to concentrate on where our efforts will make the biggest positive impact. Firefighting will be an activity familiar to many a business owner. I am working with a client at the moment who has made some tough but very smart decisions to avoid a Pyrrhic victory. That is especially true when we get into contractual disputes. Legal costs aside (which are always huge), the other financial costs and the drain on our energy and emotion can mean that a victory still comes at a heavy price.
4. Always check your contracts
It’s all well and good to have a signed contract but dotting the “I”s and crossing the “T”s within it, is all important. Watch the fine print especially who is responsible when things go wrong. I have seen unscrupulous contracts in construction written by a household name developer for their subcontractors where any problem, for any reason, is the fault of the sub-contractor! Not only might the contract ultimately be worth less than the paper on which it is written, it might bankrupt your company.
5. Get your messaging right
Having the best ideas and the best products are of little value if they are not communicated well to your audience. It’s often said that our brand is “What people say of us behind our back.” Small businesses sometimes overlook the power of a strong brand message. We all know that brand is conveyed via logos, type face etc. If I mention Tesco, Waitrose, John Lewis or Ryan Air, it is likely that their respective logo will unconsciously come to mind instantly. You may well also associate the name with other attributes such as ‘quality’ for Waitrose or ‘endless add-on extras’ in the case of Ryan Air!
When our customers see an email pop up from us, do they instantly welcome it as a likely piece of good news or useful advice? Or have they got used to emails from us telling them why a project is delayed or that costs have overrun? There is a way of communicating even bad news well. Better still, good communication and strong messaging may reduce the amount of bad news that occurs in the first place.
6. Plan ahead
So much of business is sorting out day-to-day matters. But we need to carve out and preserve quality time to plan the business for the future. The speed of change is accelerating. Covid-19 has brought about a number of changes to the way we work that we never thought possible 18 months ago. Planning for the future, which will in all probability be fundamentally different from the past, is essential.
7. Don’t necessarily just follow the crowd
We should be aware of what is going on around us but we don’t just have to copy others. Instead, we can ask ‘What are the areas where we can lead the way?’ ‘Where we can be innovative and show our flair?’ Whilst there is much to be said from learning from the mistakes of others, there’s also a great opportunity when we are first to market with our idea. What is it about our business that differentiates us from our competitors? For SME businesses, it is the owner of the business who is often a key differentiator – her/his style, passion and knowledge can all make for a unique offering that simply cannot be copied by anyone else.
8. Have integrity
Integrity is not about embarking on a moral crusade, often it is down to no more than treating others as you would like to be treated yourself. The profit motive is key to capitalism, but profits do not have to come at the expense of all else. Treating staff, customers and suppliers with respect should be a given. Doing so is likely to make our business work better and be more profitable but we don’t do it for profit alone. Sometimes in business we just do something because it is the right thing to do.
With hindsight, it is to be hoped perhaps that there might be some regrets by the people involved in the Greensill Capital lobbying scandal. When a former First Lord of the Treasury (the Prime Minister) is perceived (and perception really matters as it is part of our brand – see point 5 above) to be ‘on the take’ in an unseemly way we have a problem. For it is then not unreasonable for the average taxpayer to wonder if they might also find a way to be ‘on the take’ such as avoiding paying tax to HMRC. If we are not careful, the breakdown in public trust in our leaders could be colossal.
Thankfully, most SME business owners in my experience are made of better stuff. Our staff in our SME businesses will sniff hypocrisy at 100 paces but respond powerfully to consistency, openness and fairness.
9. Be generous
As well as paying our taxes to fund public services without which our society could not function, many SME businesses support local community projects in a variety of ways. It can be direct financial support, by offering training, perhaps it is through office support to a charity or in some other innovative way. This ‘giving back’ reaps great dividends (although if done only for that reason, inevitably people will see through it and the initiatives will backfire).
We began by thinking about the ‘Ursula dividend’. It is a reminder of the need always to think ahead and ensure our decisions as business leaders are well thought through and not just for short-term gain. Unintended consequences happen all too often. Honesty and rules which are fairly set and fairly enforced do matter. Sometimes though difficult choices have to be made and that is where our integrity really matters since our decisions will come from our beliefs and values. If we get those right, they may give us the best dividends of all. When the chips are down, our beliefs and values might ultimately decide the destiny of our business.