pensions

Small business employers are missing a trick! The fools? It’s right under their noses.

Incredibly, there are 5 million businesses in the UK. Even more incredibly, 99% of them are SMEs (small or medium sized enterprises). Collectively, all the SMEs together employ many more workers than the big corporations, in fact, two thirds of all UK workers (18.5 million) are either self-employed or work for an SME. Another interesting fact you should know is that only 25% of all UK-registered business actually employ anyone. In other words, 75% of the SMEs have just one worker – the self-employed boss, salesperson, project manager, business strategist, secretary, ops manager, invoice chaser and bottle-washer – all rolled into one.

It’s not difficult to see why new business startups fail on such a spectacularly massive scale. That only one in three new businesses is alive to see its third birthday. It’s not only that starting a new business needs a brilliant new idea at the right time and at the right place. It’s also not only because starting a new business takes money and time (time also being money for the entrepreneur between salaries). I believe it is largely because, as a sole trader or a micro-business, there are simply not enough skills and experience in the business to enable it to operate to its full potential.

Big businesses have divisions. In each division they have departments. In each department they may have business units. Each business unit will have one or more managers, each with a team of multi-skilled and experienced people at his/her disposal, each with specialist job roles. Each team will have administrative, secretarial, financial, HR and other support staff at their disposal. Imagine what a micro-business could get done with that sort of human resource muscle.

Instead, small businesses spend most of their time delivering products or services to their clients. They typically don’t have enough time to do their marketing, and certainly very little time to strategise. They’re too busy achieving service delivery excellent, fire-fighting and chasing payments. And they certainly don’t have the money to build a multi-disciplinary, multi-skilled and experienced team. Or so they think.

The vast majority of small businesses grow their staff (profits permitting) in increments of permanent specialist employees. The founder’s first plus-one would typically be the sales manager or the office administrator, employed on either a full- or part-time basis. This might be followed by a personal assistant or financial controller or ops manager. Hiring is expensive and spending a minimum of £10K to £15K per annum for each part-time specialist skill quickly adds up to a large annual wage bill, made even larger by tax, National Insurance and additional overheads. How can a small business generate enough extra revenue to cover these costs, and is it sustainable, i.e. is the new team able to deliver more than the sum of its parts?

Along with technology and communications advances which make operating a small business cheaper and easier, and the recent innovations of ‘Agile’ and ‘Lean’ startup approaches, small business also need to embrace a much more flexible approach to building a dynamic impactful team capable of rapid and sustainable growth. After all, in the modern business world, the cost of human capital is the greatest single business cost. Period. Imagine if small businesses and business startups could build an effective multi-disciplinary team with all the skills and experience they need, and could do so affordably. Wouldn’t that give them the best chance of success? Wouldn’t it enable them to grow and achieve their full potential? Of course you agree, but I also hear you say that it would be nice if it rained £20 notes too.

The reality is that this is achievable. You just need to know where to look and what to look for. Let me pose some questions to you:

  • Would small businesses benefit from skilled, committed workers? Obviously.
  • Would small businesses benefit from highly experienced workers offering discounted rates? Sounds too good to be true.
  • Would small businesses benefit by only paying for these workers when, and for as long as they need them? Clearly.
  • Would small businesses benefit from hiring more self-employed, contract or freelance staff? Yes, provided bullet 1 above wasn’t jeopardised.

Well then. Here’s the answer.

Skilled, experienced, flexible, dedicated, committed and wise: the Plus50 workforce!

Demographic shifts have opened up a new population group – and an amazing opportunity for small businesses. When retirement was invented, people went straight from a career into old age. Now, as life expectancy has moved towards 90, a 10- to 15-year healthy life space has been created between the full-time career and older age. Research has indeed proven that people in this space are as productive as those in their twenties. People coming into retirement now are IT literate (many have been emailing and internetting since their 40’s, and Facebooking along with the rest of us). They’re as likely as not to be able to out-hike, out-jog, out-crosstrain, out-swim many half their age. They are also more positive, balanced, emotionally intelligent and resilient than younger workers. And typically they’re not looking for full-time careers – just to keep active, stimulated, keep their hand in, and give something back. They’re also usually available flexibly and at short notice, and equally happy to be employed, self-employed or work as a freelance contractor. It’s amazing the early-retired skills available on your doorstep – offering 30, 40 years of work experience.

Build the team of your dreams. Make your business awesome. Tap into the plus50 resource pool today. It’s common sense!

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Retirement can be 1/3 of your life. What do you intend doing with it?

now what

I need your help here. Responses, comments, ideas, insights, epiphanies – all eagerly welcomed. This discussion is starting to resonate nationally and we should all be participating in it. After all, it’s our lives and our futures that they are talking about.

Is the retirement cliché true? Is retirement all about golf, cruises, gardening, grandchildren and blissful chill-time?

Or is it something else? Something more challenging, productive, meaningful. Something more akin to college graduation with your whole life before you, than to the waiting room of redundancy prior to old age?

A new debate is required and the old concepts, and indeed the language of retirement, need to be updated to reflect modern demographic, economic and social trends. People are living longer and will continue to do so. In the last 100 years, the proportion of the population between 65-89 years old has tripled from 5% to 15%. There are now 12.5 million pensioners in the UK, a number that will grow by 30% to 16 million in 20 years.

People are also living healthier. Life expectancy at the age of 65 is roughly another 20 years, almost 11 years of which are spent in good health, body and mind. When retirement was invented, people were only expected to live another 10 years at best, and these years were mostly ones of ill health. Now we have a bonus 11 years – equating to 25% of the average 20-65 year working life! Can we really sit around, watch telly, coffee with friends and play with the grandkids for that long?

There is another pressure that is building and that will also influence how we spend these 11 years. In 1950 there were 12 working-age people for every person over 65. In 2011 this was down to 8.5. In 2050 it will be 4. This begs the questions: ‘How will so few workers pay sufficient tax to provide State pensions for so many for so long?’. Will the Government increase retirement age so that the 11 years shrink towards zero? Or, will retirees be forced to work to supplement their pensions?

There are now more than 1 million workers over 65 in the UK, many of whom are self-employed or have become start-up entrepreneurs. Interestingly, 70% of over-50 startups are still operating at 5 years (vs. only 28% for under-50s). These employment statistics are set to grow rapidly, and the Government is encouraging this through initiatives such as: ‘Extending working lives’ (due for launch March 2014); ‘Extended right to request (flexible working)’; ‘Midlife career review‘; and employer toolkits for soon-to-be retirees (currently in development).

Retirees are more vital, productive, motivated, experienced, educated and healthy than at any time in history. Why is it then that many pre-retirement adults think that retired people play no part in the economic prosperity of the UK? Is UK’s ageing population a threat to our economic and social prosperity?

Below I provide two descriptions of retirement. Which one suits you best? Why? Is it a neat fit, or is more complex than that? Are the clichés true, or have we moved on to a new reality? If you can expect retirement to be a third of your life, and for much of that to be healthy, what do you intend doing with it?

John:

After a long and fulfilling career, John is now looking forward to a relaxing and untaxing retirement. He has saved diligently and has a good pension so that, if careful, he will have enough to support his and his wife’s modest lifestyle. John is looking forward to spending more time with family and friends and spoiling his grandchildren. He’d also like to discover a few more hobbies and do some last-minute-bargain travelling. Gardening, DIY and friends can fill in the gaps.

It is a year later now, and all the activities and constant scheduling have become a little tiresome. Family and friends are great, but in moderation, and John’s knees are requesting a slowdown in the hiking and exercise. He’s been on a cruise and a few trips to Europe which were great, but expensive. John is beginning to feel like he’s a hamster on a wheel. Like none of the activities are really able to replace the emptiness he felt after leaving work. John really liked working. He liked feeling needed, and that he had purpose and structure. He feels an increasing sense of being redundant and he thinks he’s becoming a little depressed. John’s still relatively young, fit and healthy. He needs something more challenging and meaningful – like he’s not quite finished building his legacy. John decides to rethink his retirement plan…

Jane:

‘Retirement’ has been looming large for Jane for some time now. She hates the word and resents the label even more. Jane doesn’t feel like a pensioner, but her State pension confirms that she is. Jane hasn’t worked for a while and has been largely occupied by her family, friends and caring for her sister who lives nearby. The last of Jane’s three children has just left home and so she now has much more time on her hands. She decides to get on with it and plans to make the best use of the time she has left. Jane used to work as a financial controller, but she’s a good amateur photographer and has always wanted to do garden design or landscaping. She decides to explore both and approaches the local colleges to see what courses are available.

It is now six months later  and Jane has enrolled on a computer skills training course and has just completed the PRIME self-employment startup course (Prince’s Trust). She is very excited about starting her own small garden design consultancy and is going back to college for a 6-month crash course in garden landscaping. Jane still finds time for her family and picks up her grandchildren from school twice a week. She’s spending much more time with her friends who are like-minded and equally keen to push the boundaries. In fact, they seem to be inspiring the best out of each other. Jane is a little nervous about starting her own business, but at the same time she’s never felt more excited or alive. Her new camera lens and tripod have just been delivered and she’s in the garden taking pictures for her new website.

Use the comment section below to add to the discussion. What are your plans, ambitions, hopes and fears? What does retirement mean to you? I’ll be publishing a follow-up blog with the findings, and some of your choice quotes. Who knows, we might have the makings of a national newspaper article!

Statistics obtained from the “Ageing, longevity and demographic change: A factpack of statistics from the International Longevity Centre-UK, July 2013“.