Are You Geared Up To Embrace A Connection Based Economy?
The first question of course is “What is a connection based economy?”
It stems from the growing impact of people not liking being sold to, though they love to buy. This in itself is not a new idea. But the truth is, we live in a world where communication is largely-funded by advertising, and we are overwhelmed by flood of promotional materials constantly. So it isn’t surprising to see that we are becoming more and more unresponsive.
The Millennials, the group of people born between the early 80s and mid to late 90s and early 2000s, are particularly sensitive. They can spot when they are being sold to a mile off and it is a huge turn off for them.
This ‘problem’ has given birth to a new way of doing business, which is the ‘connection based’ model, which many businesses, or any size, can adopt and adapt. In an odd sort of way, it’s not really a way to do business, it’s a way to facilitate business.
Humans are connection machines
Humans are very good at communication, it’s essentially what we are built to do. As part of that, we are very good at connecting things. The idea of a connection based economy is one where the effort is focused on helping your customers connect with one another.
Take Uber for instance. Their business model has no physical assets, it relies on providing a service where two groups of people come together to do business - people who want to get others from A to B and those who need to get from A to B.
The online take-out food services are another example - companies like Deliveroo and Just Eat. These services allow you to connect two groups of people to each other. It connects people who want restaurant food without going out for it and the restaurants who want their food to reach more people.
This is one reason why the market for smartphone applications has grown exponentially over the past few years; Candy Crush acknowledged of course. Smartphone applications are an easy-access, convenient way of communicating and connecting with others without location or time being an issue.
Food For Thought
Our business world and the ways people do business is evolving at a rate which few can keep up with, but those that do stand to reap huge rewards.
The challenge is to step back and reassess your own business and how it interacts with customers. Look closely at how your market is evolving and in particular how the technologies your customers are using can lead to new ways you can do business.
This may open up opportunities where developing an environment based on your particular market expertise can lead to you benefiting from simply facilitating other people’s businesses.
So embrace the connection based economy.
HMRC Trialling New Making Tax Digital Scheme
As most businesses should be aware of by now, HMRC’s new ‘Making Tax Digital’ (MTD) initiative is due to begin in April 2018, where companies are required to report tax digitally each quarter.
At the beginning of this month, HMRC began a pilot program to test out this new digital system. The pilot involves some businesses and agents that have been invited by HMRC to sign up for the trial. It is expected that those participated in the trial would be able to test out the new accounting software to record their business income and expenses and send in summary reports.
The trial is not without its critics though, even the Treasury has raised concerns about the value of information collected by an invitation-only approach. The treasury cited concerns that those companies more likely to be affected by the new MTD scheme could decline to participate. However, HMRC has said that the pilot would involve smaller numbers of companies initially, but later a more substantive trial involving hundreds of thousands of companies would be rolled out prior to launching the new systems.
Amid these, there is a piece of good news for smaller businesses who aren’t VAT registered; HMRC has extended the deadline and you will only need to start filing quarterly digital updates from April 2019. Businesses with a turnover of less than £10,000 will be exempt and not be required to file digitally.
Not invited? You can still trial MTD
For businesses that were not invited to take part in either pilot, you would still be able to use the new software if you wished, to test out record keeping and integration with any existing systems.
In addition, the Chancellor has previously stated that businesses using existing spreadsheet software to maintain their records would be able to continue to do so, but that their software must be able to interact with HMRC’s new accounting software. If not then they will have to change their spreadsheet software to one that is compatible.
An Integration Nightmare?
If you have experienced integrating different IT systems before, then you know first-hand the challenges. We’re concerned that businesses, particularly the smaller ones without any internal IT support, may struggle to integrate their spreadsheet software with HMRC’s new accounting software. If you think this is an area which you need help, talk to us today. We can help.
At Tax Agility, we also understand that MTD may be adding some extra work for you the business owner. It may be a challenge for you to fill out quarterly reports using new software that you aren’t familiar with.
The good news is, our dedicated team at Tax Agility has been helping clients planning for the MTD transition. We work with XERO, a cloud-based accounting software, to prepare our clients of all sizes for a smooth transition. With us, you will get honest discussions free of jargon. There won’t be any hidden agenda or hidden charges.
Give us a call on 020 8780 2349 today, or fill out the contact form.
Do You Have A Brexit Plan? You Should.
And so it begins. Article 50 was triggered by the Prime Minister and the two years of negotiations with the EU have begun, albeit unceremoniously with early jabs from either side on where their respective red lines are and even a little early sabre rattling concerning historical disputes such as the future of Gibraltar.
The PM has even said that “No deal is better than a bad deal”. We wonder how our clients feel about that? And of course that leads us to the question about what plans our clients may start putting in place? How they have faired since the decision to leave was originally taken?
Little impact on small businesses so far
As far as we can tell and also from the results of numerous surveys taken last year, including one from Company Check, over 50% of small businesses have said that there’s been no impact on them, 30% had reported a negative impact largely due to the uncertainty Brexit has caused, and 15% said they have experienced a positive effect.
Another report from Opus Energy claims that many SMEs are unfettered by the Brexit result, with 29% of the 500 SMEs it surveyed reporting they were more confident about their business outlook than they were before the decision to leave was made. Only 20% felt less confident. These results do reflect the great British spirit we often talk about: “From adversity comes opportunity”.
Whether you are a Brexiteer or a Remainer, the die is cast and it’s time to get on with business. We believe that Brexit should be viewed as a form of ‘Creative Disruption’, seen as not just a significant challenge for many companies, but also a sizeable opportunity too. The UK is still the world’s fifth or sixth biggest economy, depending on how you look at the value of the pound. We are a strong nation with a limitless desire to succeed and it would be foolish to believe that the UK need be entirely dependent on EU trade agreements. Can we expect pain? No doubt. But often, businesses that are very comfortable in what they are doing - “making hay while the sun shines”, as the saying goes, can become complacent and end up an industry laggard rather than a leader.
Start Planning For Change
So, for many businesses, maybe this is a wake-up call. Start planning for change, because ready or not, it is coming.
How do you plan? The first potential impact is staff. A lot of companies have become used to employing people from other countries in the EU. We have taken for granted the Italian Chefs, the Romanian fruit and veg pickers and the Polish builders. But, in recent months over 50,000 EU nationals have left the UK. Is this the beginning of a ground swell of people voting with their feet? It’s too early to say, especially there are many EU nationals in non-seasonal or cyclic work have invested personally in this country, much in the same was as those Brits who now live and work in other European countries.
Have you spoken to your EU staff? Have some open discussions and see how they feel. Many may be permanent resident holders and not so inclined to move.
What plans can you put in place to offset the potential loss of staff with training for local employees instead? Consider new apprentice schemes for instance.
Are you overly reliant on the EU for raw materials? Are there alternatives you could explore?
Manufacturers in the UK are some of the businesses that are most optimistic, with over 73% reporting as such in a report by Albion Ventures. IT and Telecoms are next at 65%, with retail SME at 53%. A weaker pound has it’s upsides for these companies, as it makes our products cheap in comparison, as long as labour and raw materials are sourced competitively.
Seize the day while you still can and get planning
So, our advice is to look very closely at your business operations and it potential vulnerabilities. Conduct what the banking world calls ‘stress tests’, by analysing ‘what if’ scenarios and exploring the potential for new, non-EU, partnerships.
You have plenty of time, two years in fact.
Carpe Diem!