I have just returned from a month in Scotland and England. It was good preparation for a wet winter here. It was also interesting to see the ever increasing volume of printed brochures promoting the tourist attractions. I have commented on this in earlier articles and it must be a growth specialist market here. One hot topic was the ageing of the population and that too is a matter of major concern here. It means that demands on super funds are going to increase quite quickly and by large amounts so talk is about the need to increase the age of eligibility. The aim is to increase it to 70. The British sense of humour is alive and well and there were some great cartoons on the topic.
All population projections show that we will have the same problems. They will be wide reaching and you need to think through how your finances are likely to be affected. One obvious response is to increase your savings and investments now so that when you do retire you will be able to enjoy a reasonable standard of living. That is not the purpose of this article.
What I want to concentrate on is the effect of this ageing on your business. In my view it is likely to make it more difficult for you to sell when your time comes to cash up and retire.
The main reason for this is that the numbers in employment are likely to drop as a proportion of the population so there will be fewer buyers about. Immigration is well down and continuing to drop so the buyer of your business is likely to be a local. If there are fewer buyers then prices are likely to drop. If there are fewer workers then unless there is a drop in living standards there will have to be an increase in productivity. That probably means greater investment in plant and equipment and keeping up with technology. Both these activities are expensive.
It would appear to be a self defeating cycle with higher capital costs and lower ultimate selling prices because of reduced demand. I may be wrong but you need to think about the problem and work on possible solutions. Each personal situation is different.
Changes in the value of our dollar already increase competition for our manufacturers and there is no reason why it should not be a problem for the printing and other service industries. The present flavour of the month for cheap imports is China but once they cost themselves out of the market it will be India’s turn. The problem is not going to go away. How are you going to deal with it? One easy answer is that if you cannot beat them then join them.
That means running down your plant and equipment and employment and becoming a close associate of a firm in China. It will take time to train them as to what you want but I am sure it can be done. The airlines are putting on more freight capacity so timing of deliveries is not likely to be a problem.
If you decide to fight back and not join them, then you need to have a speciality which makes people want to deal with you. That comes back to the right equipment and knowledge combined with top service. It is usually true that if the service exceeds expectations then the price will be of secondary consideration.
No one knows what will happen to the value of our dollar and so much will depend on what happens in America They are running enormous deficits and while they are increasing interest rates that tells me there should not be any major changes for quite some time. In other words the problems will remain with us.
You need to take steps to increase the attractiveness of your business for a buyer. You have to make it easier to buy. If you own your own premises then move the premises to another company so any buyer becomes a tenant and not initially a property owner. That is cheaper for them.
Look at a long term deal where a younger person buys in over a number of years on some pre arranged basis. They then know what they have to do to complete a purchase. You in turn know how and when you are going to be able to cash up.
Retirement is too important to leave to chance. You have to plan for it and right now seems to be an excellent time to start. Get cracking!
