There is a common tendency when business people of any ilk get together to stress their devotion to the big ideas - their marketing skills, their people skills, and their cleverness in spotting the next big opportunity and having the courage to take a gamble on it. That’s the essence of capitalism and it has been the driver of economic success for centuries.
The flip-side of this coin is a tendency to decry the red tape and to complain that the rules and regulations are there to stifle any profit-making creativity and burden them with the one thing that they hate most - administration.
Unfortunately no business can survive, let alone prosper, unless someone has done the ’boring’ stuff and organised the admin so that the entrepreneurs can get on and do the creative stuff.
Admin is generally most effective when it’s not seen. When it’s running smoothly in the background, making sure that money’s collected from customers, suppliers are paid on time, employees are paid the correct amount, etc.
This need to balance ’creative’ retail skills with the ’boring’ administrative set-up seems to have slipped out of the thinking of some petrol retailers in recent years. They’ve concentrated on expanding their sales activities across whole mini-networks without paying much attention to the administrative infrastructure needed by any business - let alone a business that might be handling £40m a year and employing some 80 or more part-time or full-time staff. The prevailing attitude seems to have been that somehow the administration would ’take care of itself’. And this sort of attitude hasn’t been restricted to small entrepreneurs either; some of the oil majors seem to encourage the same view. The shared fallacy is that as long as you have a PC, all of the administration will do itself, while you go expand the business. Somehow the idea that if you expand the business you’ll almost certainly expand the need for administration, doesn’t seem to have occurred to anyone.
So we get the ludicrous scenario where our prospective operator finds that when the oil company presents him with its forecast or budget for next year, there’s an allowance of maybe £1,000 per site for the year to cover all of the accounting, admin and management costs of running this multi-million pound business. In any comparable size business you might expect to find some form of HR function dealing with payroll preparation and related issues. You’d probably find an experienced accounts clerk and you might even expect to find a fairly experienced accountant to actually pull all of these functions together. But let’s face facts - you’ll be lucky to get a part-time bookkeeper to do just some of this stuff for the £7-8,000 a year that’s in the so-called ’allowance’.
Reality is that there’s quite a number of retailers out there who are apparently very successful at ’retail’ so their oil company is happy. So happy in fact that they’re likely to be offering the retailer even more sites in the near future. What we see is quite different. We see a number of these successful retailers who don’t actually know whether they’re making money or not. They don’t know whether the cash in the bank is really theirs or the oil company’s or should have been paid to one of their major shop suppliers - because nobody’s had the time to check the hundreds of bank payments and receipts through each account for the last three or four months. They don’t know what they really might owe the VAT-man because they haven’t had time to put all of their accounting information into the PC for several months so they work off estimated VAT figures for each return. They can’t even begin to think of real year-end accounts because they haven’t managed to enter all the data into their accounting system. All of this because they’ve got this notion into their minds that admin is just an expensive optional extra.
Well, we suspect that some of these people are about to find out that the ’optional’ bit doesn’t apply any longer. There are signs that HMRC is looking at the retailers whose VAT and business tax returns are always estimated. The real choice for many retailers in the near future will be between employing the right people to do the administration in-house or simply paying someone outside to take the admin burden off them - and then let them get on with ’retailing’.