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Theresa May’s lessons for accountants

12th Jun 2017
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At first sight, the Prime Minister’s recent electoral implosion would seem to have little to do with our day-to-day activities. However, I see obvious parallels.

It is easy to forget that two months ago, Mrs May was a happy new Prime Minister clearly excited about her role in leading Britain out of Europe. Her power base, both within the Conservative Party and the country (as represented by the media), was seemingly unshakeable, even if her parliamentary majority was nothing to write home about. It certainly helped that Jeremy Corbyn was (regarded as) a joke, meaning that there was no credible opposition.

Unlike Gordon Brown, who missed out on a heaven-sent opportunity to consolidate his position by calling an election, Mrs May then decided to change the law and strengthen her position by bringing in another 50 or so Conservative MPs, almost all in Labour seats.

Other than those who have been living in outer space for the last few days, everyone now knows that things did not quite go to plan.

So, ignoring my own experience in seeing a managing partner disastrously do exactly the same in an election on a much smaller scale, what has any of this got to do with accountants?

The first basic message that I hope all of you will have spotted is that you have to do the sums before making any big investment. Many firms of accountants have come a cropper when their big decisions were ill-informed. This can come about when you employ the wrong person or, worse, take over an ailing practice and only discover afterwards why it was falling apart.

Basically, unless you know with almost complete certainty what the outcome of any big decision will be, it is generally far safer to stick with the status quo unless that will be damaging in itself. If this sounds prudent, sorry but I’m an accountant and have been trained to think that way.

The other failing that I would attribute to the unfortunate Mrs May, who might soon be looking for alternative employment, is arrogance. She knew that she was right and I have little doubt that failure on the scale that transpired didn’t even occur to her.

We should be able to learn from this. If you keep putting charge out rates up then eventually, clients will cry wolf and go elsewhere.

Similarly, if you take your best members of staff for granted, don’t pay them properly or fail to promote them at the right time then, if they are any good at all, the competition will snap them up.

Finally, empire building is all very well and great for the ego. However, if in attempting to build your empire you destroy it, then perhaps the quiet life is a safer solution.

Now all that Mrs May can do is sit back and wait for the knives to come out. Unless you want to go the same way, learn from that lesson.

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Hallerud at Easter
By DJKL
13th Jun 2017 12:03

"Basically, unless you know with almost complete certainty what the outcome of any big decision will be, it is generally far safer to stick with the status quo unless that will be damaging in itself. If this sounds prudent, sorry but I’m an accountant and have been trained to think that way."

I think it edges slightly too much to the prudent, I would more tend to go by the more traditional 3-4 outcome approaches and then weigh these with probabilities and look at payback periods. I would further measure if the risk of the worst outcome was a price worth paying for the reward of the best.

There appears to me to be very few almost complete certainties in business, in fact if I ever constructed a scenario that I believed was a complete certainty my first thought would be I had missed some significant risk out of my calculations.

This is currently especially true with processes potentially capable of future automation, whilst we should not cease striving forward because the "bots" will take over the world nor should we gear up to such an extent with current working practices (staff,property, tech) that we will be tied in to the old model when the new model arrives; to me payback periods are currently critical, the secret being to spend funds but get them back before the industry shift arrives making said spend obsolete, in effect business pass the parcel-do not get caught when the music stops.

We just need to say look at how retail is being impacted by online and remember that few people really anticipated the full impact of the rise of Amazon etc before it more fully arrived.

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