Billionaires, Bullies and Budgets

I attended three excellent events recently, one I got to meet with  Catherine Mann from Bank of England (BOE) along with about a dozen representatives for engineering, retail, construction and service businesses here in the North so she could hear first hand our input re the current state of the economy.  Secondly I attended the Club Tyrone event where we got the chance to meet and hear from the billionaire JP McManus. Finally I attended the Ulster Society of Chartered Accountants along with about 130 other accountants to hear from Business and Trade representatives in Canada.

Firstly meeting a billionaire, to my knowledge this is the first Billionaire I have met and like all good business people he had an immediate charm and comfort in his own skin.  JP walked around the event modestly introducing himself to those attending and immediately made you feel at ease. JP provided some advice for anyone in business 1) be true to yourself – his own advice. Be who you are and do what you enjoy doing as to be successful you are going to be doing this all the time. 2) Money was not built round to go round it was built flat to build on – this was his Mum’s advice – and 3) His Dad told him he didn’t mind what he lost as long as he didn’t get into debt. It’s difficult to imagine anyone building a business in this generation without any debt but if taking risks you have to be prepared to lose but you shouldn’t leave yourself with debt you cannot cope with.  The balance here is the Debt to Equity ratio and interestingly I saw someone publish Warren Buffet’s rule of thumb recently where his benchmark was that Debt to Equity should be below 80%.

Meanwhile worldwide other billionaires are currently behaving much differently, invading other countries and punishing those not agreeing to do things their way with tariffs and other barriers to trade. Likewise the UK government appears to be punishing the small business with minimum wage increases, making tax digital, increased admin for business, more taxes on rents, higher tax on dividends and then taxing a business and pensions more by the removal of inheritance tax reliefs at the end of someone’s life- all items representatives here put to Catherine Mann. The BOE take on board what everyone is thinking and what is happening around the world when they set their interest rates, they are constantly assessing the economy and everyone’s perception of it.

So what do Billionaires and Bullies have to do with our business. Well the wars are having a direct impact on our businesses we only have to look at fuel costs alone and the implication of same. Virtually all the businesses I met at the BOE meeting were all talking about how they had to build this into their budgets and plan accordingly. The tariffs likewise are forcing people to change their plans and look at alternative markets.

Those in Canada told us they had historically been far too reliant on trade with the US and the tariff attack on their economy has left them having to look for new markets. Short term this is going to be difficult for Canada but like JP they don’t find themselves in debt they cannot manage; they can fund this crisis, they can invest in infrastructure and building new business and they believe when they come out of it they will come out stronger and better with less reliance on the US.

The question for each of us is are we taking similar steps. Ae you revisiting your budgets? Assessing emerging risks? Planning reserves to cope with difficult times? Investing for the future so you are not too reliant on any one part of your business?

Budgets or plans will help you cope with the bullies and while only a small minority will become billionaires everyone can be true to themselves, focus on what they do best,  build on their business and plan to come out the other side stronger and better.

Julian McKeown is a fellow Chartered accountant and business owner at Abac Chartered Accountants.

This article is for general information only. You are recommended to seek professional advice before taking action on the basis of the contents of this article.