Sunday, August 16, 2009

Rip off Ireland.... not RIP just yet.

At Groome PetVets I have reduced the price of many of our key services in the last ten months.
I began with a pre-Christmas offer of a free microchip with every booster.
In February I looked at our price list critically and reduced the price of six key services by one third. In July I addressed the fall off in week-day customer numbers by introducing a deal of one third off everything -for OAPs- on tuesday and wednesday. In August I have begun a campaign to reverse the decline in preventative pet health care ( for example Vaccination numbers are well down) by introducing a Loyalty card for booster vaccination and puppy primary vaccination and a clubcard for Propak pet food.
The unfortunate fact though is that the only reason I can afford to make these price changes is because my pay roll costs have halved by my reduction in staff numbers from 15 , just a year ago, to only 8 working in the practice now. Those now working at Groome PetVets provide a better sevice to our clients in many ways and do so more efficiently and cost effectively. That I can now identify those improvements is symptomatic of the difficulties the entire economy created for itself by the high cost-spiral which we all contributed to and accepted- then passed on to customers. That I was able to radically shift business strategy and realign staff to new behaviours and a new business culture is a reflection of the flexibility that small private sector business can take advantage of when there is a will and need for change.
However I am only in control of parts of my own cost base and most of my costs of doing business have not reduced and some have even increased. Animal remedies and medicines comprise about thirty percent of my costs. The major medical wholesalers and manufacturers increased prices by between 4 and 8 percent in September/October '08 and have not reduced prices since. The markets two main specialist pet foods increased prices in October 08 and april 09 respectively and needless to say did not reduce prices as the economy further shrank into deflation this summer. Energy and communications costs are often cited as having fallen this year. In practice however I have found that the newer entrants to these markets tout for business with lower base charges but running charges will amount to about the same month by month- and I have tested this by moving my service around. Despite the ongoing lowerECB base interest rates, Bank overdraft rates and business charges remain punitive within the big two in the Irish bank market. Commercial rates have not reduced as budget-stressed local authorities seek revenue from the limited sources available. Many small businesses are simply unwilling to pay rates this year and will remain in arrears of rates, I predict into next year and the year after, as the rates bill joins a pile under a paper weight on the owner-manager's desk. My PRSI contributions have not reduced, neither has the rate of VAT I am required to pay and then pass on to my customers. Rents have reduced as the smaller commercial property owners have become increasingly anxious to keep their tenants- though unfortunately many retailers and other small business tenants are now falling behind in their rents, while in many sectors the concept of upward only rate review remains the norm. Rising waste disposal costs, implimentation of parking charges even in small towns, consistently high motor fuel costs, road toll costs and so on- these all form parts of the cost base of the Irish small business and can broadly be blamed on either the pressures of the macro-economy OR the pressures of government costs- boh of which are being brought to bear on the SME sector as externalities beyond our/my control.
In the macro- economy world business forces are governed by multinationals with revenues often in excess of a small country's GDP- these forces now must extract the penalty for share-holder driven growth strategy from wherever they can. In the case of our budget obsessed Irish government; government and public sector costs- driven up by years of appeasing unions amidst complacency about ongoing revenue- will be brought down by Bord Snip implimentations , but will be brought down slowly In the mean time small business have been targeted to foot the bill.
Recent media reports about the demise of "rip-off Ireland" may be greatly exaggerated. I believe balance within our economy cant be acheived until Banks, Government, Government employees, Trade Unions and Share-holder driven Big Business bring their own cost base and ransom-like tariffs into line with the new economic reality that small businesses envisage.
There is an appetite for change of the political landscape in Ireland and some debate on the need for a new radicalism in political thinking. I believe that radicalism needs to come from the centrist mindset of middle society. Those who believe in neo-liberalism but wont stand for free market control by the big business economics of the Thatcher, Reagan, Karl Rove/Bush tradition any longer. This is very much radicalism with a small r. I believe we must be very careful not to allow the debate for change to be ambushed by Left , or right, ideological forces who if allowed grow to become relevant could polarise the electoral process, create dysfunctional and paralysed coalition government and alienate much needed foreign investors. In the face of the body politic's poor handling of public relations, seeming imperviousness to the plight of indigenous small business, tardy decision making and those continued embarrassing revelations about expenses and God knows what else opportunists on the socialist fringe in particular now have the climate to thrive. But I believe as a small business owner and employer that their agenda for self-interest would prove as damaging as those big business forces now hoist by their own petard, though still looking for the rest of us to pay!

Des Groome.

No comments:

Post a Comment