Should you be promoting luxury or premium in the new economy? I recently read Seth Godin’s newsletter that addressed this subject.

According to Seth a luxury is a needless expensive priced product that does not relate to top performance. A premium product is an expensive variant on a commodity product where you pay more, but you also get more.

Selling premium products must be part of your strategy and marketing mix. Consider what premium products you have in your range and cut down on the luxury.

Irrespective of the impact of the recession, it’s a fact that that accountants earn far less than they are worth. Why is this?

Perhaps the answer is that accountants think too little of themselves that they suffer from something called the “I’m not worth that” syndrome. Maybe lack of self esteem is the reason.

Colin Dunn, a chartered accountant formerly with Results Accountants' Systems (later RAN ONE) in the UK and now with ReNew Group Pty Ltd, based in Queensland, Australia thinks that lack of self esteem is the reason why accountants don’t earn what they’re worth.

Read Colin’s article “Why Lack of Self Esteem is Suppressing Profits in the Accounting Profession” and let us know what you think.

On 1 September 2009, the Bank of England reported that the total amount of personal debt in the UK in July 2009 had fallen for the first time since records began sixteen years ago:

Mortgage debt and other forms of borrowing such as bank loans, fell;

• The numbers of loan approvals for house purchase (50,123) and for remortgaging (35,206) were both higher than in June and above the previous six-month average, suggesting property sales will continue to rise;
• Consumer credit fell by a net £0.2 billion, below the previous six-month average. Credit card lending increased by a net £0.1 billion and other loans and advances fell by £0.3 billion. The annual growth rate of consumer credit continued to fall, to 1.4%; the three-month annualised growth rate fell by 0.8 percentage points to 0.2%:
• People repaid £635 million more than they borrowed during the month, reducing outstanding lending to £1.456 trillion;
• The amount outstanding on mortgages fell by £400m as people repaid more than they borrowed during July;
• The amount accumulated on consumer credit (such as loans and hire purchase debts)  dropped by a net £217m, even after a rise in credit card debt of £92m was taken into account.

Separate figures from the Building Societies Association showed that mortgage customers repaid £577 million more during July than was lent, the seventh consecutive month during which the figure has been negative. Gross lending by building societies in July 2009 was £2.1 billion, the highest monthly figure this year, but 42% lower than the £3.6 billion lent in July 2008.
 
The figures suggest that many people are choosing to pay down their debt as the economic downturn persists, and that banks remain picky about extending new lending - despite the Bank of England’s unprecedented efforts to get cash flowing around the economy. The negative net mortgage lending figure, the first on record, reflects the ongoing problems in the mortgage market with lenders struggling to find the funds they need to advance to borrowers.

The Council of Mortgage Lenders commented on the data from the Bank of England saying that the lending activity still remains weak, but has improved from the historic low levels of turnover at the beginning of the year. They expect volatility in net lending levels over the rest of the year and there may be other months in which negative net lending occurs as the recovery is likely to be sporadic and shaky at first.  Overall however, the figures are consistent with their view of a slowly improving house purchase market, yet still constrained by a lack of available funding and the fragile economic backdrop.
Main source: wwww.bankofengland.co.uk/statistics/li/2009/jul/lendind.pdf   
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