The New Broom at the Bank of England

The new governor of the Bank of England, Mark Carney, is already making his presence felt. Although he is relatively young, Mr Carney comes with a good pedigree. With a career that culminated in the post of Governor of the Bank of Canada from 2008 to 2013, he is also the Chairman of the Financial Stability Board. This is the international body set up to promote effective regulation and financial sector policies, and to coordinate the different national financial authorities and international standard setting.

In the UK, his announcements and intentions are all interesting, but contentious. Your outsourced bookkeepers will be watching developments to see how his policies will end up affecting you and their other clients.

The Base Rate

His recent statement that the base rate of interest is to be held at 0.5% until unemployment is reduced from its current 7.8%, to 7%, is a continuation of his policy of ‘forward guidance’, which he introduced in Canada in 2008. He believes it will give both mortgage holders and small businesses confidence about their debt management for several years, and therefore boost the economy.

It has, of course, elicited much criticism. He may or may not be able to carry it off, depending how inflation and other aspects go. His focus for our central bank is said to have swung away from the traditional one of controlling inflation, to an emphasis on growing the economy. His own predictions are that it might take about three years to create the 750,000 jobs needed to arrive at the 7% unemployment figure.

The Chief Economist at the Institute of Directors, Graeme Leach, certainly doesn’t agree that forward guidance will boost the economy. He believes that after “a moderate growth spurt over the next 12 months” we’ll settle back to something like a GDP growth of below 2%.

Another worry is that it will encourage people to borrow more than is sensible. Your outsourced bookkeepers will be happy to give you an independent opinion on how much debt your business finances can stand. Meanwhile, The Institute of Economic Affairs has suggested that Mr Carney is ‘playing with fire’, because inflation could run amok as it did in the 1970s, causing worse recession and having the opposite effect to the one intended.

Stance on Women

Speaking on BBC Radio 4’s Today programme, Mr Carney discussed the fact that there are no women on the Monetary Policy Committee. He said that the best female economists should be supported to develop all the way through the ranks. He will be encouraging female candidates for positions on the Committee and even for the post of governor when the time comes for him to step down.

Life at the Bank of England is not going to be boring under Mark Carney.

Non-bank Fundraising via Funding Circle

Are you fed up with waiting to hear if your bank will lend you the cash you need to take your business to the next stage? Or just daunted at the very prospect of asking for it? If you are a limited company or limited liability partnership with two years accounts filed and a turnover that has reached £100,000, you may do better through Funding Circle.

Advantages for Borrowers

Loan deals with this non-bank online funding facilitator are often better than you would get from a bank supposing it did offer you a loan, even factoring in the initial fee once a loan is agreed.

Goodbye to reams of forms, almost impossible security arrangements and other hoops to jump through before several months of waiting for a reply from the bank. You apply on-line with Funding Circle, which normally takes about 20 minutes. Then you have a chat with a decision-maker and get an answer in a couple of days. Why not ask your outsourced bookkeepers what they think of the system, and whether they know of anyone who has used it, either as a borrower or investor.

You can borrow between £5,000 and £1 million depending on your position and what you want to achieve. Your request will attract investors who bid in an on-line auction with the amount offered plus the interest required. You then have up to 14 days to accept the lowest interest offers. The funds will then be transferred to your account or they can go straight to a supplier if they are to purchase one or more assets.

Typical interest levels are around 7-10% for those who are prepared to wait out the auction for 14 days. The levels are usually much lower than you would incur with a bank. The total amount you repay includes the one-off fee to Funding Circle. In an example, a company borrows £40,000 over 4 years. Its total repayment of £46,165 includes a fee to Funding Circle of £1600. Monthly repayments are £962.

Advantages for Lenders

If you are in the fortunate position of having some spare cash you would like to put to work, you could instead become an investor with Funding Circle. You could spread your money around among a number of small businesses which have been assessed for their ability to repay. Get your bookkeepers to look into this and they may report that it is relatively low risk. The company claims that the average net return, before tax but after fees and rare bad debts, is 5.8% - possibly more than it would earn in a bank account these days. You would also have the feel good factor of knowing you were helping other small businesses to develop.

For anyone who needs early and swift access to their money, Funding Circle also facilitates the selling on of parts of loans to other investors – again for a small fee – which normally only takes a few days. You can even start your account with Funding Circle by purchasing some of these part loans at the level of risk that is comfortable for you.

Whether you want to borrow or invest, Funding Circle may well be the way to go.

Do you Have Favourites Among your Staff Members?

If you have favourites amongst your staff members, whilst you may be keeping a few of them happy, you could be alienating the rest. Some bosses don’t even realise they have favourites, and wonder why there is so much tension in the team.

Even if you think it doesn’t apply to you, it could be worth asking someone independent of your in-house workforce, such as your outsourced bookkeepers, what they have observed. They will probably have seen how quickly a seed of discontent can escalate and cause real problems in a business.

Know All your People

In a small operation, it’s usually possible to think about how every individual is performing, and get to know their characters and their ways. If you want to get the best out of your personnel, it’s also worth doing this, and then considering your reactions and responses to them.

It can be tempting to favour those who are confident, attractive and outgoing. They make their achievements obvious and you know they are deserving of praise. But they may not deserve it any more than a steady plodder who quietly gets results. It’s important for an employer or manager to look behind the façade of what is going on and recognise those who don’t push themselves forward.

Don’t Risk the Discrimination Accusation

When favouritism of one or two is noticed by other workers, they may feel aggrieved, even angry. They may come to believe they are being discriminated against – something every business owner needs to avoid to comply with the law.

In the Ceridian July Connection poll, more than a third of respondents actually admitted to having favourites, so if you are guilty of the same, you’re not alone. And once you realise it, there are things you can do about it.

Make Some Changes

Stop singling out your favourites, and look at how you can set goals and challenges more fairly. Only give praise publicly when it can also be awarded to several. A good idea would be to arrange regular update meetings where everyone has a chance to report on what they have been doing, what they have achieved and what has been getting in the way.

This would also be an opportunity to make sure everyone has the big picture and to exchange ideas. You would need to be a good leader and draw out the quiet ones, asking the questions that would show the rest of the team their value as a member.

You could find this would be a big boost to morale overall, and have knock on effects on production and eventually the bottom line, as your bookkeepers would be able to report.