Avoid Making These 4 Common Startup Mistakes

If you’re planning to start a business, you’ll find there are way too many opportunities to learn the hard way. Inexperienced entrepreneurs end up hurting themselves financially when they start a business and fail to avoid common mistakes.

Experience is a great teacher. And someone else’s experience is an even better teacher. One way you can avoid unforced errors in business is to learn from the painful lessons of other business owners.

Here are some common startup mistakes.

1. A Failure to Understand Your Clients

If you’re considering a business-to-business (B2B) operation, be certain you’ve walked a country mile in your potential client’s shoes before you start dispensing advice about how to travel.

You might think you’ve found the perfect market. You might believe you understand exactly what people in a certain line of work truly need. But unless you’ve been in that line of work, you should think again.

Zach Clayton is the owner of Three Ships, a digital marketing company. He says he spent way too much time showing clients detailed reports about how his company delivered a strong return on investment (ROI).

One day, a client company offered him a role as an interim chief marketing officer.

“I had no idea how hectic and overwhelming that job actually is. You’re in marathon management meetings. You’re arguing with the head of sales about the right lead goals. You’re hiring a new PR firm for the West Coast,” he says. “I realized clients were too busy solving other problems to go three levels deep on understanding all the technical work we do.”

Now, he operates with clients on much simpler terms.

2. Allowing the Perfect to Become the Enemy of the Good

Not every project is going to launch perfectly. Accept that while you’re new at this.

Entrepreneurs struggling for a first-class level of presentation in a new release or product launch often allow themselves to say no to something that is good, but not perfect.

Sure, your brand name is on the product and you certainly want to leave a good impression. However, you’re also faced with competition. Some of your competitors in the same space may capture market share because they don’t allow themselves to be caught up in perfection.

If you have a great product, go ahead and release it. If there are some wrinkles that can be ironed out, do so in a way concurrent with your launch. Don’t lose money because you’re stuck on absolute perfection.

3. A Failure to Prepare for the Regulatory Environment

Strictly speaking, your business will have two sets of enemies. The first set of enemies will be your competition. The second set of enemies will be the various regulatory agencies that insist on forcing you to spend money to comply with current laws.

Many entrepreneurs go into business fully aware of the first set of enemies and are ready to tackle them. But many forget about the second set of enemies and end up paying costly fines or, worse, being shut down for a while.

Hire a good attorney to be sure your business is compliant with prevailing regulations. This is one area where you must be proactive. You simply can’t afford to wait until something bad happens and then hope to fix it after the fact.

If necessary, seek the proper training for your employees so they can perform their jobs in line with government standards, and able to maintain OSHA compliance.

4. Being Too Stingy

It’s easy to fall into the “cutting corners at any cost” trap, especially when you’re first starting out and want to stretch each dollar as far as it will go.

The old adage about it taking money to make money is still valid. You have to spend money to earn money. Get used to the idea.

That’s why you should seriously consider opting for a “go big or go home” strategy when it comes to new purchases. Sure, you can buy refurbished equipment and second-hand, lower quality hardware and still launch your business effectively.

But you should also think about the future cost. If that equipment depreciates faster and needs to be replaced sooner than higher quality equipment, have you really saved any money?

Also, what’s the opportunity cost associated with the extra effort required to ensure older equipment functions properly?

In many cases, your best choice is high quality. That doesn’t mean you need to spend an extra 50% just for a brand name, but you want to ensure that you’re getting a great product for the money. Many entrepreneurs don’t do that, and regret it later.

Starting a business can be a wonderful, fulfilling experience. Be sure you do it right and avoid some of the common mistakes made by your fellow entrepreneurs.

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[Event] Business Matchmaker, The Helix, May 7th

Many companies have said to me that once they have got over the setup phase they know they need to think about where to next? – how can they be innovative? how can they bring R&D into their business?

One way to start looking at this is by working with a university and leveraging their expertise to bring you along that path. It can however, be difficult to get access to the right expertise and it can be a bit daunting to navigate complex university environments.

To address this Dublin City Universtiy wants to help companies to see how it all works. We want companies to come and have an informal chat about their business and their ideas directly with researchers to see where the conversation takes them. Companies can also find out about the best mechanisms to fund R&D in their business through access to Irish state and European funding.

If this is of interest you should come along to our Business Matchmaker Event in The Helix on May 7th. Register your company online and tell us a bit about your company and if you have any particular area you would like to discuss. A matchmaking facility will be available where you can request to meet specific researchers or they can request to meet you.

It’s a FREE no obligation conversation that may yield results now or in the future for you.


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Mindfulness for Business People

Mindfulness is the new (jack) black in business. It is everywhere. And not just as part of personal or self development, but as part of the DNA of businesses. We doing quite some work on briefing companies about happy, mindful staff with a sense of purpose. It makes perfect business sense. Happy staff is 25% more productive.

Focus on self development

There are lots of books on being mindful as a person. From “The secret” to “The Celestine Prophecy” or from “The road less traveled” to “The monk who sold his Ferrari”. Not much in business books. Maybe “Coherence” or “Reinventing organisations”, but nothing that crosses the self development chasm to business development.

The old masters

We have always found that in those cases the old masters are worth studying. Management theory is only 50 years old and Drucker is still the godfather.

Mindfulness is a lot older then management theory. It is part of every religion and was part of ancient cultures as a way of life. The first person who brought this all together in a book was Jack Black. Another old master and also ahead of his time.

Coming to Dublin

And he is coming to Dublin too. On the 11th of June. Talking about mindfulness and business. So we decided to look at his first book, which is “Mindstore, the classic personal development programme”.

Read it

If you are into personal development, you should read it. If you are a start up, you should read it. If you are an owner manager of a small business you should read it. Everything that is now fashionable and “new” is in that book.


A balanced view on your life. Family life, social life, health, personal development, attitude, career, finance and spiritual life. His theories and advice is not confirmed by neuroscience. You are what you think. PMA is important. You are limited by your beliefs. The need to manage stress. The importance of setting goals. The importance of writing them down (only 4% does). The need to use all parts of your brain (dualbrain).

Mindfulness for business people

The need to avoid being managed by the hypothalamus. Apparently we come with 20,000 inbuilt programmes when we are born. All based on evolution and social biology. A lot are no longer that relevant. The programming in the schools (way before Ken Robinson identified this) doesn’t help either. The trick is to start doing some of your own programming. Your brain is a bio computer.

Start with attitude

It needs to be positive. So you ban negative words (and people) and you keep smiling. The mind can only hold one thought at the time. So negative thought can always be replaced. And neuroscience will tell you that it does wonders.

Quantum physics

If you belief that the mind is a quantum machine with decides on what your reality is going to be, you can see how powerful it could be. Suggest you read “The future of the mind”. Predicting Mindtech as a hotspot.


The importance of a vision. A powerful one. Forget achievable and realistic. You need to dream. Making is as visual and detailed a possible. Burning it into your brain (like burning a CD). Burning the pathways. The same way your create habits.

Vision is more important then planning. But you need to commit to that vision. Belief it. Helping your quantum computer to make it happen. You are what you think. Our thought become our realities. You are creating future history. And it become part of the programming of your bio computer.

The software to programme your brain

He gives you the software as well. The meditation techniques. The mental structures. Literally. He helps you to build a mental house space where you can apply a whole range of techniques. A mental house with a shower, a library, an editing suite, a sleeping room and anything else you can imagine. As the metaphor for relaxation, the re-energising, the mental cleansing, the affirmation and PMA, the visioning, the remembering and the dreaming.

No short cuts

The point is the burning. It has to become a routine. You need to practice and maintain your mental house. There are no short cuts. You need to take the time to do it. Regularly. The way you would exercise your body. Bruce Lee said “Knowing is not enough we must apply, willing is not enough we must do.”

There is one short cut, the famous tip of your tongue at the back of your from teeth. To bring you in a better mental state almost immediately.

It all works

I am interested to find out how this will work in a business context. Being mindful together as a team? Collective business consciousness? Inter-connectedness with communal wisdom? Business 5.0? Brainstorming in alpha waves? It sounds weird. But so did Mindstore over 20 years ago. Can’t wait to find out. You can book your place here.

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Are you Prepared for a Revenue Audit?

A Revenue audit covers income tax, corporation tax, and returns submitted in respect of PAYE/PRSI, VAT or Relevant Contracts Tax. Every employer needs to keep a full and accurate record of business transactions for a period of 6 years. As a customer of Tailored Payroll we will guide you through a PAYE Revenue audit should you be selected. We ensure your payroll is processed in compliance with Revenue requirements in line with the latest legislation changes.

There are three methods of selection for audits which include:

  • Screening Tax Returns –Revenue examine the returns and review tax compliance history.
  • Projects on different business sectors – Projects are conducted to examine tax compliance levels.
  • Random selection – means that all tax payers have a possibility of being audited.

Once you have been selected for an audit:

  • The auditor will explain the purpose of the audit and give an indication of the length of time it will take to complete
  • You will be given the opportunity to disclose any inaccuracies in your tax return
  • An inspection of your records will be undertaken to confirm if figures have been correctly filed and the tax declarations are exact
  • If it is found that the majority of returns are correct you will be notified
  • If adjustments are required, this will be discussed verbally with you and you will be notified in writing.
  • The auditor will ask for your agreement to the total settlement figure before finalizing the audit.
  • Once agreed, the full amount should be paid to the auditor and you will be issued with a receipt

Contact Tailored Payroll today for a competitive price. Our flexible service includes:

  • PAYE,PRSI and USC Calculations
  • Registration of Employer with Revenue
  • All employer Revenue submissions to include: P30’s,P45’s, P35, P60’s and registration of new employees
  • We provide email Payslips and P60s to employees
  • Creation of Bank file for payment to employees
  • No hidden costs

For more information about this business visit their website or email to payroll@tailoredpayroll.ie. Tailored Payroll is part of Use SBC as a channel initiative. If you want your business to be featured, click here.


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Scam Alert: TeamViewer the Fraudster’s Newest Tool

In my previous blogs I have written about the different social engineering techniques used by fraudsters to trick people into handing over online banking credentials, enabling the fraudster to gain access to the funds of your business.

The public continues to be on high alert to the dangers posed by unsolicited emails containing malicious software but it would seem that fraudsters have found a new way to trick people into handing over those all important security details.

The latest scam involves the use of TeamViewer. TeamViewer is a genuine piece of software which allows the user to gain remote access and control over any computer or Mac within seconds. The key selling points of the software are:

  • Remote Support – no need for any installation on the client side
  • Remote Administration – 24/7 access to remote computers and servers
  • Remote Access – access your data and applications – anytime, anywhere
  • Home Office – access your office computer from home

And most importantly, it’s free to download thus making this piece of software a valuable addition to the fraudster’s ever expanding toolkit.

How does the Scam Work?

The fraudster will make contact by phone and claim to be calling from your Bank. You will recall from my earlier blog on Vishing: Know the Voice of the Fraudster, these guys have done their homework and can sound extremely convincing. As is the norm, the aim will be to create panic by claiming that there is a virus on your computer and that the person (the fraudster) on the other end will assist you in removing the virus from your computer.

You will then be asked to download the TeamViewer software onto your computer. This gives the fraudster full remote access to your computer enabling them to take over your online banking session; informing you that they are removing the virus but the only thing that is being removed is the money from your bank account!

A Bank will never ask you for remote access to your computer or to download TeamViewer.

Please share this post and help fight cyber crime!

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Improve eCommerce Conversion Rate

Poor user experience is one of the top reasons that people leave websites without purchasing. In fact, 25 percent of shoppers will leave a website if it is too difficult to use. One of the areas where customers find a website offers a poor user experience is during the checkout process. If the process is complicated, lengthy or intrusive, a consumer will leave that site and purchase from a competitor with a better checkout procedure. If you want to make the purchasing process easier for your customers, there are a few adjustments you can make to your system that will lead to a sale. Keep reading for a few helpful tips to improve eCommerce conversion rate.

Do Not Require Account Setup

It is understandable why an online business may want to have customers set up an account with them when they checkout. In fact, 24 percent currently do so. However, by requiring consumers to register, you may be alienating a large number of them. Signing up for an account means more steps to the checkout procedure and consumers are already exhausted by trying to remember a myriad of user names and passwords.

Customers also don’t understand the need to set up an account since when they visit a brick-and-mortar store, they are not asked to create an account. If you want to build a database of customers, adding a registration section is fine, but always include the option to purchase as a guest as well.

Multiple Payment Methods

When consumers check out on a website, as many as 58 percent of them expect a variety of payment options. Although it is impossible to offer every conceivable payment option, not all consumers use credit or debit cards to purchase items, even online. Offering a third-party payment processor, such as Paypal or Venmo, electronic checks and debit or credit card payments gives a consumer multiple methods for purchasing from your website.

According to professionals who specialize in credit card processing services for businesses, it is also a good idea to make sure that your payment process is acceptable on several different devices, and that the mobile pay is up to date.

Don’t Let Errors Slow them Down

When people are typing in information, they often make mistakes. Either they miss a number in their credit card, misspelled their email address, or added an extra numeral somewhere on accident. Make it easy for them to find and correct any errors that are made on the checkout page. If an error is discovered by you checkout system, have the screen scroll directly to the error with an explanation of the problem.

Also, when an error occurs, be sure that the data that is correct is not eliminated. Nothing frustrates a customer faster than spending ten minutes to fill out all of their information, only to have it deleted because they added one letter too many.

Don’t Overload them by Asking for Too Much Information

No one wants to fill out forms full of information when they are buying something online, especially if the information has nothing to do with the purchase. If you are asking for an email address, you probably do not need a phone number as you can ask the consumer any question you may have via email. This applies to credit card payment fields as well.

Always add a click box that allows the customer to automatically fill in the billing information when it is the same as the mailing information.

Security Concerns

One of the biggest reasons that customers leave at the checkout page is concerns about the security of their payment. In a recent study, 58 percent of customers said that they had left a website when they did not feel as if their payment would remain secure. Be sure to offer Secure Sockets Layer (SSL) certificates that provide a secure connection and encrypts credit card data. You also should comply with the PCI Security Standards Council requirements as well.

Don’t Let Distractions Get in the Way

When a customer arrives at the checkout page, they are finished with your website and ready to purchase their items. Do not place advertisements on your checkout page or make customers click through pages with items similar to what they have purchased in hopes they will buy more.

Allow customers to navigate easily from the sales section of the site to the checkout section. Most customers will see through any gimmicks that try to get them to buy more, so when they are ready to check out, make it easy for them to do so.

If you want to keep your customers from abandoning your site and going to a competitor, do everything you can to make the purchasing process as easy as possible. There are plenty of tactics you can use to drive traffic to your site, and to keep visitors interested once they are there, but the checkout process is not the time to try these methods.

Whether your customers purchase products or services online, in the store, or through mobile payment, they are more likely to go through with the purchase if the process is convenient. Do what you can to expedite the purchasing process and enjoy happy customers that are willing to come back again and again.

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Earning Money Online Tips

Earning Money Online Tips: These days it has become more and more common for people to make money online. This means you could get many more avenues that you could utilize to build the wealth that you want depending on how hard and smart you are willing to work.

Once you make money, you should treat your hard-earned money with some respect in order to have more than you spend in order to build wealth.


Below are 6 ways to earn money online;

  1. Online surveys

Online surveys don’t usually earn you a lot of money per survey, but the advantage is that they are usually short and relatively easy to complete. If you set a target to do several every day, they can add up to become a healthy revenue stream.

  1. Transcribe audio

Just like online surveys, transcribing audio is not a high paying job, but it has several advantages, transcribing jobs are plenty, relatively easy and fast and don’t require much commitment.

  1. Edit audio

If you happen to have or if you can purchase or freely download sound editing software, you can use your computer to clean up webcasts and interviews before their posting for online viewing or listening.

  1. Create online content for blogs and websites

Many websites and blogs require content that will make them relevant and drive online traffic towards them. You can look for the several online websites and blogs that need such content written for them and negotiate for some pay for creating content.

  1. Create stock photos

There is always need for photos in any online content. Making use of your digital camera and uploading pictures to certain forums can be an easy way to benefit from a hobby of taking photos and earn some money.

  1. Become a freelance web designer

You could also become a freelance web designer. Depending on your skills and the technologies you are able to implement in websites you design and/or develop, you can earn a good living from this kind of work.

Once you have earned money through your online endeavors, you should try and keep as much of it as possible and focus more on re-investing it.

There are several easy strategies that you could use to keep track of your money and save more than you spend as described below:

  1. Create a list of essentials

You should list down all the budgetary items that you usually spend money on.

  1. Approximate your income

Find out how much money you currently earn.

  1. Evaluate your current expenditures

Find out from your listed expenses what you spend most of your money on.

  1. Get rid of unnecessary expenditure

Once you know what you spend most on, get rid of expenses that you could do without.

  1. Set targets for savings

Keep focused on keeping your money by setting targets to keep most of your hard-earned money

  1. Create an emergency fund

It is a good idea to set money aside for eventualities, so that you are prepared if they happen.

Author Bio

Charlie Brown has been a certified credit counsellor for the last 5 years. He loves to share his financial expertise with anyone who can listen especially those in debt. He has written several articles for the national debt relief program. Visit his blog for more information

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This post was originally published here - http://www.smallbusinesscan.com/earning-money-online-tips/ on thinkbusiness

Ways to Strengthen Customer Relations

Regardless of whether you run a PR agency or a fashion boutique, customer loyalty plays a key role in your company’s success. After all, the energy it takes to retain your current clientele should be substantially less than the necessary effort to recruit new buyers. What’s more, a fiercely allegiant customer base can be the best marketing tool at your disposal; no matter how much money you spend on advertising, no promotional message will ever be quite as impactful as word-of-mouth. The below tips provide insights on how to foster enduring relationships with your current customers to ensure loyalty and longevity.

1) Make Customer Relations a Priority Amongst Staff

As a business leader, you’re not able to micromanage every single interaction your workers have with clientele or the public. Therefore, instill solid values within them and, more importantly, firmly cemented plans of action for different scenarios. Make company policies on how to handle disgruntled customers, both in-person and online. Remember, contended employees will naturally bring a positive energy to communications with others, so also take steps to invest in your staff’s satisfaction.

2) Give Incentives for New Customers to Become Repeat Customers

Email and social marketing are affordable ways to further nurture customer relationships. Let people know about new inventory or sales, and perhaps reward loyalty with special, exclusive coupons. Depending on the nature of your product or service, consider whether you could start a membership program. Would signing up allow participants to accrue “points” with each purchase? Would they receive a monthly rate to use your facilities rather than pay per visit? Would there be special VIP privileges? Such bonuses seal the deal with customers to keep them coming back for more.

3) Provide Branded Mementos

By furnishing loyal customers with goods that display your company’s logo, you accomplish two goals at one. Firstly, you’re able to strengthen preexisting relationships and provide the clients with a lasting, positive impression of your organization every time they use the items. Secondly, others will see the recipients writing with your pen, opening up your umbrella, donning your t-shirt, or pulling out your mints. This will serve as a silent endorsement for your company and raise overall awareness. This is why it’s important you put great thought into the chosen gift that will display your logo. Find pieces that align with your overall brand identity. The items should ideally be used on a regular basis and in public forums where they can receive greater exposure.

For example, a customized watch that displays your logo will be seen by others, especially when the wearer shakes hands. Similarly, an attractive tote bag can be handy in a versatile range of settings. Goods that are poorly made, are easily disposable or are essentially useless will serve little purpose, so avoid paper weights, bookmarks, matches, etc.

4) Collect and Incorporate Feedback

Everyone likes having their opinions heard and respected, so why not use customers’ input to make your business better? Not only can you use the knowledge to circumvent troublesome issues, but it can help your clientele feel a sense of pride in your business. For example, if you own an ice cream shop, you can encourage customers to vote for which new flavors they want to see on the menu, the ones that select the winning ice cream will undoubtedly appreciate that their views hold substantial weight in your mind.

5) When Possible, Provide a Human Touch

Automation is quick and efficient, but also impersonal and can backfire. Go above and beyond to interact with your customers. For example, let’s say you offer businesses’ an online file storage and sharing system; you or your staff could follow up with any email-based tech questions by offering to hop on the phone to help the person figure out the situation step-by-step.

Essentially, people are more likely to share an emotional bond with a fellow person rather than a faceless corporation, so add personality and an emotional component into your customer interactions whenever possible.

In regards to all five points suggested above, always be seeking out new possibilities rather than staying with the tactics that seem to work year after year. Just like human relationships, the connections customers have with your business will naturally shift over time, and your strategy should evolve with it. Consistently seek out feedback and new ideas to figure out whether there truly are ways you can improve the bond your clientele shares with your brand.

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B2B e Commerce, the Emerging Market

B2B e Commerce: Are you looking forward to acquire established and high-paying B2B clients? Be it B2C or B2B customers, both the segments demand a few basic values- transparency, immediacy and convenience. When we are considering the B2B category, remember, business buyers are also consumers. They’re acting on behalf of their business. As they have more resources at their disposal, they look forward to sensibly invest in long-term success of their company.

So your aim should be able to build a strong B2B brand. With a well developed strategy, you can outweigh your competitors and win better B2B clients.

Understanding the B2B eCommerce

Frost& Sullivan analysed that there are several reasons for B2B eCommerce to top the list and increase pressure on businesses. The UK online sales are predicted to reach £52.25bn in 2015, which is a 16.2 percent increase from the last year. This indicates that on average UK consumers will spend £1,177 online in 2015. It has been found that 89 percent of B2B consumers indicated that their business increased annual revenue by 55 percent through eCommerce business. No wonder more and more B2B companies are making move to online sales.

The key Drivers of B2B eCommerce

Optimized Procurement Process
If you’re electronically well connected with your suppliers/vendors, you can

  • Get the best price deals
  • Lower inventories
  • Reconcile your procurement and accounts in real time.

The B2B eCommerce infrastructure allows you to constantly monitor the inventory level of your own products as well as of the suppliers. In addition, the system can also trigger an order to the best suppliers automatically.

Enhanced Mobile Commerce
Research shows that the majority of the customers are using Smart devices to research products for their businesses. Mobile is an integral part of your brand and Omni-channel commerce strategy. With the rapid emergence of mobile commerce opportunities, B2B online business can offer in-the-field sales opportunities and personalised customer service.

Flexible Payment Option
Unlike B2C, B2B transactions use diverse payment processes and channels. B2B buyers usually prefer paying with e-checks, purchase orders, or physical checks instead of making credit card payments. When the payment process system is based on the convenience of the buyers, it becomes easier to run an online business.

The Choice of Open Source
B2B sellers opt for open source. The majority of the businesses are integrating open source technologies in order to gain the benefits of flexibility. The technology allows businesses to modify any open source codes according to their requirements. Every eCommerce solutions offer a host of features; some are crucial to the business while some are not. However, with open source, B2B merchants can have granular control over user experience.

Reduced Cycle Time
With the availability of real time data exchange, auto-triggered business process or well-monitored algorithms, cycle times reduce substantially. This leads to low cost, high productivity, improved quality, and faster delivery.

The Three Key Components of B2B Brand

1. High-Quality Content

Content drives commerce. A good piece of content can get your business placed well in search results. Keeping in mind that B2B eCommerce deals with large and complex organisations, combination of the right topic and the variation of keywords can invoke genuine interests.

2. Presentation of your Brand

Before you believe in your goal, consider the types of audience you’re about to interact. You can successfully brand yourself to attract more customers through

  • Proper communication
  • Establishing your company’s motto
  • Customising and personalising your message
  • Providing real value through networking
  • Maintaining your online and offline integrity
  • Following the right email etiquettes.

3. Mobile-Centric Business
Mobile commerce is the latest buzz. Consumers demand for more mobile capabilities and personalised shopping experience. Your business should have that capability to connect with live video and chat to enhance customer experiences across all the channels. With more and more web browsing happening away from the desktop computers and on Smart devices, focus should be shifted towards the use of responsive design to make your site more mobile-friendly.

B2B eCommerce is poised for resurgence. The buyers’ expectation has increased with its improved technology and powerful automation process. B2B brands are known for their customers and their ability to deliver relevant, contextual experience to the customers.

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Sterling Confounds the Sceptics!

While I wouldn’t describe myself as a Sterling (Stg) sceptic, I have to confess that back in January my forecast for the beginning of Q2 2015 was that Stg would be trading around the .8000 level, a spectacularly poor call when compared to today’s .7150.


Where did I go wrong?

Looking back at the article I wrote in January, I forecast that the economic factors were on balance likely to be slightly supportive of the pound. However this has not really transpired, the following indicators have disappointed with the exception of the unemployment rate:

  1. Q1 GDP comes in at +0.3%, expected +0.6%
  2. The construction sector has shrunk in two of the last three months
  3. Consumer price inflation has been zero for two months in a row
  4. Average weekly earnings (ex bonuses) have come in at 1.8% for the three months to February – remaining stubbornly below 2%, not to mind the Bank of England’s forecast of 3.5% for 2015.
  5. UK Retail sales fell 0.5% in March giving up most of February’s 0.6% rise.
  6. UK unemployment rate drops to 5.6% for the three months to February 2015, the lowest rate since 2008.

The economic indicators out of the UK in Q1 have been uninspiring; some might even say they were disappointing. Certainly apart from the unemployment rate, none of the indicators were supportive of the pound.

The unemployment rate is the one economic indicator that is out -performing, hurtling towards the Bank of England target of 5.3%. It is undoubtedly the star performer in the UK’s economic locker, however one suspects that the unemployment rate alone is not enough to explain the more than 10% increase in the pound against the Euro in Q1.

The chart below is the economic surprise index and measures data surprise relative to market expectations. A positive reading means that data releases have been stronger than expected and negative reading means that data releases have been worse than expected


The performance of the Euro is undoubtedly a significant factor, as the currency collapsed against the majors in January, losing 8.6% against the dollar between the 5th of February and the 12th of March and 6.94% against the Yen between the 11th of February and the 13th March.

So it’s no surprise given the weakness of the Euro that the pound has strengthened against the single currency, the surprise is that it has maintained this strength while the Usd and the Jpy have given back some of their gains. It is also a surprise to see Stg as strong as it is with less than ten says to go the British election.

UK election – sell the pound?

My central argument going back to mid 2014 is that Stg would weaken into the general election. My thinking (undoubtedly flawed) was that political uncertainty, the prospect of a hung parliament and one alternative – a Conservative victory with its promise of a vote on Europe would all serve to weaken the pound. Why have we not seen an exodus from the pound? I can think of two possible explanations – the first is that a hung parliament in all probability defers any vote on Brexit for good or at least to the distant future.

The second explanation is that I was not alone in thinking that the pound would be entering stormy waters ahead of the general election and that to short Stg was the obvious trade! I suspect this is a crowded trade and the market may well be very short of Stg, if this is the case then that may explain Stg’s strength against a recovering Euro Zone.

So what are Eur/Stg prospects for the remainder of Q2 and into Q3?

I think the following factors will come into play:

  1. The outcome of the general election – likely hung parliament and Stg neutral given the comments above
  2. Quantitative easing is likely to copper fasten the Euro Zone recovery – giving some support to the single currency
  3. The Greek situation – the markets are convinced that a solution (fudge in the best European tradition) will be found – could provide a relief Euro rally
  4. I believe the UK economy recovers from it’s Q1 slowdown and meets growth forecasts of 2.5% this year – Stg supportive
  5. The market quickly unwinds it’s short Sterling positions after the election – initially Stg supportive but longer term removes an obstacle to Stg weakness

I think a resolution of the Greek issue and continued improvement of the Euro Zone economy will the key drivers for Eur/Gbp in the months ahead. I see Eur/Gbp trading a range of .7000 to .7410 for the remainder of this quarter, moving to the top of this range as we enter Q3. The big danger to this forecast is political risk, the Greek situation and an unexpected outcome in the UK elections.

As ever if either you agree with my forecast or if you have an alternative viewpoint as to where Eur/Gbp will trade in the months ahead, I would love to hear from you.

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