Stabilising the BCP economy doesn’t have to rely on outside subsidies or lobbying government.
In such a time of instability a clever community will appreciate that there are many ways to skin a cat, and will realise that maybe it’s time to consider a new way when it comes to stabilising its economy.
Why do companies go out of business? Because they run out of money. What does a community need to be stable? Money. Fiscal resources are one of the cornerstones of a stable community, so how do we become fiscally stable?
Fiscal stability is not rocket science, it’s a very simple concept. We, as a community, need more money coming in than going out. Here’s a simple diagram showing money movement into and out of a local economy such as the BCP.
In the diagram above we can clearly see that we’ve got some money coming in, but about the same amount going out. The majority of it goes straight back out. Some of it sticks to the local economy, but don’t be fooled into thinking that just because the money is spent at a local business, that it automatically goes into the local economy. If you like, you can learn more about why “Spending locally is only half the story”.
In our diagram above, money out represents individuals spending money with businesses outside of the local economy as well as businesses spending money (costs) with businesses outside the local economy. It is the second of those two spending patterns that can needs to be addressed.
For a community like the BCP, to become fiscally stable it has to increase its money in, while reducing its money out. So, we can talk a little bit about increasing money coming into the community, but it’s not our main focus.
The BCP, specifically Bournemouth, has a traditional reliance on retail and hospitality. We’re a famed tourist hotspot, so tourism has been one of our main sources of revenue and that’s great when the sun is shining. However, when economic downturns caused by any number of factors, such as pandemics, result in tourism drying up we can see just how brittle those industries can be, by no fault of their own.
In a situation like that you look to the local community to pick up the slack and they absolutely would except you’re already employing a quarter of them, so if you’re not making money they’ve lost their jobs, and another 50% would love to, but they work in low-income jobs so they simply can’t afford it. [NOMIS]
Look at any example of a country that relies on tourism for its economy and you’ll find an LEDC (Less Economically Developed Country). When you rely on other people coming to you so that you can put food on the table, your fate is never in your hands.
Reducing Money Out
Reduce costs for businesses & Localise them (Step 2)
The biggest costs are of course premises (rent), business rates, staff and VAT. If we put staff aside and consider the others, reducing those costs is a very good idea, but also a very long and drawn out process. There’s also no guarantee that any changes made won’t be reversed in the future.
A clever community will not wait for those costs to come down. It will target a reduction of as many other costs as possible in the meantime to buttress the stability of local businesses until that time. So what other costs can we reduce?
The most common sales costs are a Point of Sale system (POS), card readers, payment authorisation, inventory system, delivery system, e-commerce system. Depending on the type of retail business you might also have a booking system.
Many businesses want to up their game and also have engagement costs. Some of these include; loyalty system, gift card system, customer relationship management system, and then of course your marketing and advertising costs.
A clever community will notice that all of the costs mentioned in the previous two paragraphs are essentially digital costs in today’s world. It will also recognise that the digital business world is more than happy to work with the concept of wholesale prices.
A clever community would recognise that to drive itself forwards toward economic and financial stability its business community needs to work together. Yes, hospitality and retail businesses are competitors on the local scale, but on the national and even global scale it serves our community much better when we work as a team.
This concept can be utilised in lobbying government for changes, which organisations like BAHA and The Wonky Table are doing. We also now need to consider working as a team when dealing with all of the digital costs mentioned above.
A single, local, sales and marketing platform that provides all of the above services to any and every business in the BCP that uses it will dramatically cut those costs.
By using the platform to facilitate payments, both on site (POS) and from a distance (e-commerce), through a single payment processor like Stripe, we as a community can take advantage of volume discounts. Whether it’s a debit or credit card, in a card-present or card-not-present transaction, if you only ever had to pay 1%, wouldn’t that be great?!
What if, as a business, you could access all of the digital services mentioned above for something ridiculously cheap like £100pcm, wouldn’t that be amazing?!
Not enough? Ok, what if all the revenue generated by the platform was put directly back into the BCP economy (tax-free) to be invested in commercial infrastructural growth projects to create new jobs and wealth for residents?
Interested? Reach out to us on Twitter or via email. We’d love to talk to you about it.