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An Ernst & Young Entrepreneur of the Year 2010 and CEO of technology company Asperity Employee Benefits - Number 2 in the 2011 Sunday Times Tech Track, Glenn Elliott shares his thoughts and advice on starting a business, building a team and culture, focussing on clients and keeping investors happy.

After 14 years, 2 successful startups (plus a few failures "that didn't count"), an acquisition from a big bank and a £25m acquisition for his own business, Glenn's got experience and battle scars to share.

Running a business that services over 700 clients globally including many household names, he's built a business with an amazing culture (two stars Sunday Times Best Small Companies) and an amazing team of happy people servicing happy clients

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3 posts tagged Business regulation

Repeal the Sunday Trading Act. Not to benefit consumers, but because it is a restriction of our freedom to choose.

Sorry we're closed - an argument for free Sunday Trading

I’ve talked before here about how I think that business needs effective and appropriate regulation and restriction in order to protect people and have a positive impact on society. But as it’s Easter Sunday, one of two special days in the UK where all shops that are bigger than 3014  square feet are legally banned from opening their doors, then I thought I would write specifically about a piece of regulation that I think we need to be without. This is all topical right now, not just because it is Easter Sunday, but also because our government has announced its intention to suspend The Sunday Trading Act during the London Olympics which has caused quite a storm.

A brief history of Sunday trading in England

The Shops Act 1950 started the restriction of buying and selling of goods and made it illegal to sell most goods on a Sunday. 36 years later, it was nearly repealed by The Shops Act 1986 which would have ended legal regulation of Sunday trading and left it for shops to decide, but the bill was defeated at its second reading in the House of Commons.

Eight years later, a compromise was reached with The Sunday Trading Act 1994 which allows shops to open, but restricting opening times of larger stores (over 3,014 sq ft) to a maximum of six hours, between 10am and 6pm only.

In Scotland, shop opening hours have been deregulated for longer, and workers’ rights to not have to work Sundays are protected by separate legislation.

Is shopping every day a good thing? No, it’s not.

The keystone of the movement to keep shop hours regulated on a Sunday is that Sundays should be kept special. Actually I don’t really disagree with this. I think if you spend every day of your life shopping you’ll end up exhausted and will lose out on some really important things in life such as parks, exercise, family and friends. I often refuse to go into the West End or shopping at all because I’ve already done it two weekends on the trot and I don’t want “that sort of a weekend again”.

But whilst I think it’s important to have balance in my life, and I would suggest to anyone who asked me that I think shopping every day is a bad thing, I don’t think it is the place of the state to enshrine a particular day in law that is reserved for the nation simultaneously to have their shopping rationed. And that is where I think this issue is important - it’s not about shopping, it’s about freedom and what is appropriate for a state to control.

If I was to describe the role of the state using the Two Things principle, then I think it is:

  1. To protect the vulnerable in our society and those without a voice, helping them to become less vulnerable where possible and find a voice where they can.
  2. To protect our future from our present - i.e. to prevent short term benefits from creating long term problems, as we could see if short term profits were made with long term environmental impacts, for example.
And I don’t think either of these apply to Sunday Trading. Not everyone agrees with me, and there is an interview with Justin King, CEO of Sainsbury’s supermarkets in The Telegraph in the UK today where he says that he doesn’t see consumer demand for longer Sunday hours and he thinks the compromise that we have right now is fine for everyone.

But as I said, it’s not because of consumer choice, that we need to repeal The Sunday Trading Act, it’s about freedom. I just don’t believe it is right for the state to restrict something without good reason. Whether you personally want to shop on a Sunday, or think others should, or think others even want to, I don’t believe the state should be involved in restricting things that do not cause significant harm to those unable to stand up for themselves.

The Keep Sunday Special campaign

There is an emotive campaign by the Keep Sunday Special group that uses many surveys and statistics to demonstrate that Sunday trading is undesirable. But when you really look at them, they don’t really stand up to much scrutiny. Here are the first three that I noticed on their website:

71% of people say that they would not be bothered much or at all if all shops were closed on a Sunday”. Well that’s fine then, if there is no demand the shops won’t need to open and if they do, the 71% who are not bothered won’t need to go. A claimed lack of demand (which I am certain is over-stated) does not mean the state should ban something. 

“Almost half of people surveyed thought shopping on a Sunday could add to overall weekend stress”. I could’t agree more! I think shopping on most days adds to stress. But that doesn’t mean it should be outlawed and made illegal or restricted in any way by law. I’m an adult and it’s for me to manage my shopping habits and my stress levels. I often go a whole weekend or even weeks without going shopping - I don’t need the state to protect me from myself by making it illegal on one day a week.

87% of people thought it important for family stability and community life to have a common day off each week”. This is complicated - and its applicability to the Sunday trading argument assumes that everyone works in retail, and that people outside of retail don’t work on Sundays - neither of which is true. The entire service industry is working their nuts off on a Sunday as everyone piles in to hotels, restaurants and cafes for lunch and snacks. Many call centres and other office locations are open on Sundays. And stores are open on Sundays already (except for Easter and Christmas Day) so that does’t really wash.

Ultimately I think the arguments of the Keep Sunday Special campaign reflect accurately the selfish arguments of their biggest supporters. The Christian religious right want to keep their particular hold day holy - not just for themselves, but for everyone. Which I just don’t see fitting in multicultural, multi-ethnicity Britain. Everyone should have the right to have their own religious preferences and have them respected, but they should not force them on others - that is a foundation of a free, respectful society.

The other strong force in this seems to come from USDAW, the union for shop workers. They are there to protect the rights of their members, but I suspect are looking for a hobby horse to jump on to demonstrate their value to their members, rather than really contributing something useful to society as a whole. Will they have done their job in protecting their members when their members lose their jobs because the shop has closed and people are buying online? High street retail is already under enough pressure from the structural change brought on by internet shopping that it does not need its hands tied further by law. Store owners and their customers should be the ones to decide, not the government.

This is about freedom, not shopping. Freedom to choose.

Campaigners against the suspension of The Sunday Trading Act during the Olympics are worried that it will be the precursor to a wider relaxation of the laws and in time, that we might end up like the lawless Scotland where they allow shops and consumers to make their own minds up on when to open and when to go shopping (how daring). They think it will erode the fabric of family life that they are trying so hard to promote. And that’s where I get cross - it’s the thought that a group of people are using the law of the country that I live in, to tell me what “family life” should look like and how I should spend it. My family life is not the same as theirs, and not the same as yours. We should all have the freedom to define our own view of family life as fits us, as long as it does not impinge unduly on the rights of others to enjoy theirs. This sort of regulation is the enemy of freedom and tolerance.

I’m happy for any group to talk, promote and discuss whatever they want and share whatever is their view of a good family life. But not to restrict my freedom, or the freedom of a society as a whole to fit in with their particular viewpoint. And that is why The Sunday Trading Act should be repealed - because it is a compromise that is wrong.

Erosion of freedom always comes in small steps, and for seemingly good reasons. That is why it must be challenged.

If you have 5 more minutes, I would urge you to read a Guardian article called “How the US uses sexual humiliation as a political tool to control the masses”, it’s a fascinating and frightening article about the limitations on freedom that we accept and endure for what we think of as reasonable reasons. Many people have fought for freedom, but we need to remember it is fragile and must be protected against constant incursion.

VAT free retailing from the Channel Islands? It might be cheap, but it’s not fair.

Amazon screenshotI’ve blogged before about how Capitalism allows us to make money at any legal cost and I really believe that good regulation is required so that capitalism can work properly - for the good of everyone.

Last week, a high court judicial review, found that online retailers must stop despatching CD’s and DVD’s from the Channel Islands in order to avoid paying VAT, which is now at 20%. The ruling, which is still likely to get a final appeal so don’t expect things to stop immediately, marks the end of years of campaigning by many of our high street retailers who complained that they couldn’t compete with the 20% lower cost base of their online competitors using this loophole.

The important thing here is, that their competitors were without question, using a loophole. They weren’t using a government provided scheme for the use it was intended for, they were using a piece of legislation for something it was not intended for.

How does VAT free retailing work?

Tesco, Asda, Amazon, HMV, Play.com, Sainsbury’s, Moonpig and others all used a loophole called “Low Value Consignment Relief” (LVCR). LVCR enables goods under the value of £18 to be shipped to UK customers VAT-free from countries outside the EU. The Channel Islands are outside of the EU so retailers would ship goods from their warehouses to the Channel Islands, then have them re-packed individualy and sent back to the UK (imported legally) without any VAT charged. 

Normally when you send goods from outside the EU to a country in the EU they get held up in the post whilst the courier or Parcelforce asks you to pay the 20% VAT that it then hands to the government. The origins of Low Value Consignment Relief started in 1973, when the UK started charging VAT and it was originally designed to avoid flowers and cream spoiling on route from the Channel Islands to the UK whilst customs paperwork was completed.  LVCR was later enshrined in EU law to stop VAT being collected where it was adminstratively cumbersome and “not worth the trouble”, but no one imagined at the time that UK based businesses would ship their goods out of the UK to the Channel Islands, only to have them shipped back again to avoid the tax.

Saving VAT lets companies offer lower prices, but it isn’t good for us.

The problem with this isn’t just the tax that we lose out on but the unfairness and uneven playing field it creates in business and retailing. Both this government and the last are always talking about how they are “business friendly” and want to remove “red tape”, so why they have taken so long to deal with this is anyone’s guess. It hasn’t exactly been under the radar -  back in 2006, the activity was described by Jersey’s then economic development minister as “a complete sham” and Tesco and others were expelled from the island. The VAT savings were too attractive to give up, however - Tesco switched its CD and DVD website to Switzerland before quietly returning to the Channel Islands via an outsourcing fulfilment firm, The Hut Group. Others, including Amazon, used special partners such as Indigostarfish to handle their off-shore business.

The unlevel paying field forced HMV to join their competitors on the Islands, but others such as the independent music retailer Fopp, who campaigned for years to have the loophole blocked, collapsed under the weight of technology change and supermarket competition before they could see their victory. The VAT avoidance situation was not the only thorn in the side of high street brands such as Virgin/Zavvi, Fopp and others, but it did little to help and certainly contributed to their speedier downfall. And this stuff does matter - I was in Bristol last weekend and it was grim, and you can really see what is happening on our high streets - endless rows of mobile phone shops and not that much else. 

Competition and progress are one thing, but its about having a level playing field and government needs to react quicker if it is to help us to have a thriving and fair digital economy. The companies involved here are, I think, not to blame - they are just doing what their shareholders expect, to make money wherever sustainable and legal. A practice that is legal will be exploited - as soon as one company does it, their competitors are compelled to follow. It is not businesses duty to stop it, it is the regulator - in this case the HMRC. 

Capitalism allows us to make money at any (legal) cost. But we don’t have to let it.

Last week we learned that “payday lenders” are to be investigated by the OFT amidst concerns that they have been pushing loans to people who cannot afford to repay them.

The short-term, high-interest loans that these companies provide are really expensive. They are supposed top “just get you through to pay day” but too often people end up rolling them on and getting into a vicious cycle of debt.

I have my own experience of this - long before the concept of payday lending was commonplace, I and many of my friends - all students in London at the time, discovered the idea of cashing a cheque at one of the many Bureau de Change outlets in London’s West End. We learned that a £50 cheque could be cashed on a Friday night for a cost of £3.50 and, in those days (I’m going back to 1991 here) there was no check on your available balance so you got the cash even when you were up to the limits (or past) on your student overdraft. The party would last all weekend (come on it was 1992 and drinks prices were lower) and it wasn’t until the next Wednesday or Thursday when the hangover had passed that we’d all get a letter from our bank pointing out the breached overdraft and the £20 admin fee as well. 

A £50 night out would cost £73.50 in total, buy hey ho we were young and there were clubs to go to.

It took me until I was over 35 - working hard and reasonably successfully to pay off the debts of my 20’s and I remember the feeling when I actually had no debt - it was great. Suddenly when I got paid, the money in my account was actually mine. A simple pleasure - financial freedom from debt. I’ve never had a credit agreement since.

Payday lending is loosely regulated and is ripe for abuse. There are good companies operating in the space with ethics and integrity and there will be bad ones as well. The most financially vulnerable in our society need to be protected and we have a duty to ensure that regulation and the law steps up quickly when business “innovations” get going. Payday lending does “meet a need” from consumers, but that isn’t the only test that business has to live up to. Just because someone is desperate enough to agree to something does not make it right to exploit it. We need action and regulation quickly before lives are ruined.

If you’re thinking about borrowing money, watch this - Borrowing Money in Plain English from our friends at CommonCraft


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