Saturday, 31 May 2014

A Cafe Owner Writes...

Spotted from a local cafe to me

Our landlord allowed us the first six months rent-free but the minute we started to trade we, like all similar businesses, became liable for a terrible trinity of taxes - VAT, National Insurance and local business rates. Only now, far too late to save us, has the government allowed a £1000 reduction on rates and £2000 (maximum) on NI. We've been waiting months for an additional revaluation of the business rates, which has finally come through, just as we're having to close, so we'll never benefit from it.

If we'd managed to make any money, we would have had to pay corporation tax on that, of course.

We don't object to paying our fair share of tax but what we owe - and cannot pay - the taxman is far outweighed by the value of the state benefits that will be paid to our redundant staff. That looks like madness to us.

I'll never understand businesses complaining about having to pay the tax bill. It's the one thing that you absolutely 100% know up front and should factor into your calculations. If you didn't like how it worked out, why did you go into business?

We did everything and more that the government encourages businesses to do - renovated and brought back to life a property that had been empty for years, employed otherwise unemployed people, paid minimum or living wages unlike many employers, took on apprentices, invested in training and operated ethically.

If you go into business to do what politicians thinks you should do then you shouldn't even be going into business in the first place. I run my business based on 4 things: what the law is, what I don't lose sleep about, what I like doing and what makes me money. That's difficult enough. Doing what grandstanding politicians would like me to do would destroy it.

At the same time, every day we read in the news examples of tax avoidance by excessively wealthy individuals or multinationals, the taxman's sweetheart deals with particular businesses, the scandal of zero-hours contracts, banking malpractice, massive and undeserved bonuses, overcharging by energy never seems to stop. We are not all in this together. It really is one rule for them and another for us. And by us we mean all small businesses, including our rivals.

I did wonder about these people when they first started this cafe. Couple of ex-council officers, I wondered if they were maybe Guardian reader types. Sounds like I was maybe right.

It's funny how their rivals are all in business still, and have been for years. I think one of them must be coming up on 20 years in business.

The simple fact is that to start any business, you need experience of that business. And that's doubly so for cafes and restaurants. Even if I knew that business, I'm not sure I'd want to go into it. I know there are two things that make it work. One is having a good product. The other is having a good location. And the second is generally the most important. OK, if you're Raymond Blanc, you can buy a place out in the country and have a successful restaurant and people will travel miles to you (and even then, his location is in the wealthy bit of Oxfordshire). If you're a cafe doing lunches, location really matters.

This cafe is on the edge of the Old Town shopping area in Swindon. It's further than almost all the shops from the main parking area, meaning that people are rarely going to be at their last shop and go on to it. If they want a coffee, they'll go on their way back. Even if it was well run (and I'm not sure it was), it wasn't like to succeed.


Bayard said...

Pubs are another area where you find similar incompetent whingers.

Lola said...

Classic. Ex council employees moaning about business rates. Double fail. One, not understanding about rent/BR dynamic and two, not realising that it was rates that used to pay their wages.

Mark Wadsworth said...

Yes, agreed, nothing to add.