Prospero Blog

Forthcoming Seminar

2012-03-01T09:00:00.004-08:00

As Finance Directors, the question we most often get asked is 'How do I reduce my business costs?' There's a free guide to this topic available on our website at http://www.prosperofd.com/download-guide.asp

At the end of April, we'll be running a free seminar at which our experts will explain these concepts in a little more detail. There'll be lots of tips and guidance on cost reduction approaches which do and don't work. As it will be early evening there'll also be some drinks and snacks available along with some networking opportunities.

If you'd like to register your interest, please email info@prosperofd.com

Can you trust a spreadsheet?

2012-01-10T07:43:00.000-08:00

Recent research suggests 90% of spreadsheets prepared for business contain serious errors. That sounds far too high a figure. If really true, it would rapidly bring about the collapse of capitalism. There's some welcome perspective in this article from Simon Hurst. Extract:

...the spreadsheet on its own is rarely the ‘result’. Instead, the ‘result’ is a Frankenstein like amalgam of human and spreadsheet. The spreadsheet creator is intimately and inextricably linked to their spreadsheet. They know its problems, its weaknesses, its strengths and its vulnerabilities and they almost subconsciously allow and correct for these when they unleash it to the wider world. This highlights a key spreadsheet concern – once the spreadsheet escapes the complete control of its creator, all of its previously disguised horrors are unleashed on an unsuspecting world. The situation is almost always made worse by another similarity with Shelley’s fictional creation – the lack of adequate user documentation.

Euro debt crisis explained

2012-01-10T07:37:00.001-08:00

Steve Jobs pitches on Dragons' Den

2012-01-10T07:31:00.000-08:00

Pension Compulsion

2011-11-01T08:45:00.000-07:00

I went to a great presentation by Neil Mutton of Q&A People Matter on Pension Compulsion.

The Government is getting very serious about making people save for their retirement. Among the points that stood out:-

Employers must enrol all their employees (with very few exceptions) into a pension scheme
There are 43 different dates at which this can take effect for individual employers. Big companies start in October 2012 & all employers are in the boat by October 2016.
Contributions are 8% of pay, of which 3% comes from the employer.
Employees can opt out, but doing so is difficult and bureaucratic, and only lasts for 3 years. Then they are automatically re-enrolled.
The administration and compliance burden falls on the employer.
Penalties for non-compliance are draconian. Up to £10,000 per day!! Beyond that, even prison sentences are possible.
Penalties also apply to advisers. For a recruitment agency or financial adviser to make a statement like:- 'You could employ two part timers rather than one full timer and save the need to enrol them in the pension scheme', would be illegal and subject them to penalties. So much for freedom of speech!

We can't ignore this. If you're not sure what to do, then you must get advice.

Thanks again to Neil Mutton at Q&A People Matter

The Euro debt crisis explained

2011-10-30T09:27:00.000-07:00

In animation.

Problems with your Blackberry? You're not alone...

2011-10-30T09:26:00.000-07:00

Inflation worries

2011-10-30T09:13:00.000-07:00

Headline inflation recently reached a worrying 5.2%. However, we can expect the rate to fall quite sharply over the next year or so as the one off effects of the VAT rise and the surge in commodities drop out of the calculation.

A good explanation of how this will play out is here.

At the Pearly Gates

2011-10-30T09:08:00.000-07:00

The IMF on what caused Europe's debts

2011-10-30T09:06:00.000-07:00

From http://touchstoneblog.org.uk

Earlier this week the IMF released its Regional Economic Outlook for Europe.

The press picked up on the fact that it was reiterating its call for some countries (including specifically the UK and Germany) to slow the pace of cuts if growth falters.

They made the same call in the most recent World Economic Outlook and Director Christine Lagarde urged policy makers not to ‘slam on the fiscal brakes’ in an FT article back in July.

Given that this isn’t a new call I thought the chart below was perhaps the most interesting bit of analysis in the report.

It shows what has driven the increase in public debt between 2007 and 2011 in four selected European countries.

The red segment is fiscal stimulus – what becomes clear is that the UK’s fiscal stimulus (the VAT cut and the bringing forward of investment) was relatively small – especially when compared to ‘austere’ Germany’s much larger direct stimulus.

The yellow segment is support for the financial system – the direct costs of bailing out banks. It’s interesting again to note that Britain’s costs here – although higher than those of France or Italy – are well below German levels.

The grey segment is the ‘interest-growth dynamics’ – the effect of higher interest payments (due to either a bigger stock of debt or higher rates) adjusted for growth. Here we see that the UK and Germany are doing relatively well but Italy is really suffering – it’s these dynamics that are a major driver of market fears about Italy’s debts.

Finally the blue segment is ‘accommodated revenue loss’ –as the IMF explains are ‘revenue losses associated with output losses from the financial crisis’ – which was clearly the driver of the UK’s increase in public debt.

So there we have it – according to the IMF the reason the UK has experienced a large build up in public debt is because of the costs of the large loss of output following the crisis. Not quite the story of public sector profligacy the government is usually so keen to tell.

2011-10-06T11:46:00.000-07:00

What does one TRILLION dollars look like?

All this talk about "stimulus packages" and "bailouts"...

A billion dollars...

A hundred billion dollars...

Eight hundred billion dollars...

One TRILLION dollars...

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

And $1 BILLION dollars... now we're really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

You ready for this?

It's pretty surprising.

Go ahead...

Scroll down...

Ladies and gentlemen... I give you $1 trillion dollars...

Notice those pallets are double stacked.
...and remember those are $100 bills.

So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about.

Thanks to www.pagetutor.com for this blog post

The Eurovenn

2011-10-02T10:05:00.000-07:00

Diagram of the Euro problem by New York Times

50 years of economic history

2011-10-02T09:59:00.000-07:00

Brilliant chart that succinctly explains where things have gone wrong. Excerpt...

How to recover from a blunder

2011-10-02T09:57:00.000-07:00

You've screwed up in a big way. This is how to get over it:-

Admit the mistake. Fessing up expedites the recovery process. While it's tempting to shirk responsibility or slink away, it only makes matters worse.
Try to laugh at yourself. If it's appropriate, go ahead. Joking around gives others permission to do the same. After all, nobody wants leaders who take themselves
too seriously.
Reframe the discussion. People will want to talk about the mistake forever. Give the blunder its due, but refocus the conversation on what matters most: moving forward.

Credit to Harvard Business Review