Twitter is not for Accountants – Yes it is

I just had to write this after a response by BookMarkLee to my previous blog "Can Twitter work for the smaller business?" I'm grateful to Mark for writing such a controversial blog and setting off this healthy debate. His response was to refer me to an article he wrote here.

It should be obvious by now that I disagree with the contention that Twitter is not for accountants and here's why.

Marks first assertion is that there is no pressing need for them to use twitter, so therefore why bother. They don't need it, true, but the same argument has equal validity with Tax Advisors or commentators, or like, me consultants. Following this line of argument; just who does have a pressing need to use Twitter? - well, not many actually, which rather defeats the object of a social network marketing site.

We then get list of business issues where Twitter won't help; well to assume that Twitter was ever designed to address any of these specific issues is tantamount to putting it in a blue cape and red underpants. So lets be clear Twitter is a social network not a panacea for company issues. I would say further, having coached a number of accountants as well as other businesses that the list could be applied to almost any business. So is Mark suggesting that virtually no business should explore Twitter as a business tool, seems a bit extreme to me.

So why should accountants use Twitter? Well firstly lets not forget that Social Networking is big, really big.

More than two-thirds of the world's online population now use social networks and blogs, according to research firm Nielsen Online. This makes it the fourth most popular online category after search, portals and PC software, putting it ahead of personal email for the first time. More importantly, their usage is growing more than twice as fast as any other of these leading categories: last year it accounted for 9.3% of all times spent online around the world, which is half as much again as the previous year.

The UK is one of the most enthusiastic adopters of social media: Facebook has a greater market penetration in the UK than anywhere else, while social networks and blogs more generally now account for one in every six minutes spent online in this country. We're also more likely to access these sites via our mobile phones than anywhere else in the world. If you think this is hype, note that ASDA, Debenhams, Carphone Warehouse, Ebuyer, Dixons and Ebay UK have very recently entered this market, especially in using Twitter. It is now in the mainstream.

You use social networking to build your brand, reputation and build a community, by increasing your profile you'll also encourage recommendations and business. On the specific point about gaining more business I ask why not. If you set out to have fun and play then you'll most likely have fun. If you set out to get more business then you'll get more business. The results from Twitter depend on your focus not Twitter itself. Fortunately because of its ease of use and simplicity there are a number of add on programs which can help users make the most of Twitter; to name two there Twitter Local an application where you can monitor activity in say a 25 mile radius from your business office, and the recently launched exectweets which focuses on business rather than social Twittering.

I can't say how successful people will be using because it depends on how you use Twitter and if you use it in isolation or in conjunction with other social networking activities like blogging (something else Mark doesn't think is for accountants) or articles. It will be a difficult transition for many accountants who are actually artisans rather than business managers but the world and future clients are moving to social networking, they should not be as so often happens on the trailing edge of this change.

How We Use Twitter

Following a number of comments recently about how we or others use Twitter I set up a simple poll asking four questions. Do you use twitter for Purely Business, Purely Social, Mainly Business or Mainly Social. This is how you answered:

Not surprisingly it seams that half of us use it mostly as a business tool, whats interesting I think is that that it is only 50%. The hype around twitter would suggest more. 5% of us use it purely for business which is significantly larger than some commentators have suggested and 32% use it as a purely social network.  Admitedly the sample was small only 120 participants. However I intend to run the same poll next year to see how we might have changed our usage patterns.

I look forward to your comments

What Is Quantitative Easing?

As it is the topic of the day, I thought you may like to see this explanation. It is kindly provided by Peter Kelly of Pegasus Funding a finance brokerage specialising in providing financing options for SME's in the UK.

 

What is quantitative easing?

 

Usually, central banks try to raise the amount of lending and activity in the economy indirectly, by cutting interest rates.

Lower interest rates encourage people to spend, not save. But when interest rates can go no lower, their only option is to pump money into the economy directly. That is quantitative easing.

The way the central bank does this is by buying up assets - usually financial assets such as government and corporate bonds - using money it has simply created out of thin air.

The institutions selling those assets (either commercial banks or other financial businesses such as insurance companies) will then have "new" money in their accounts, which theoretically should boost the money supply.

 

How would it work?

 

Even economists who agree with the quantitative easing policy often disagree on how exactly it will work. But there are two main ways it could boost the economy, which are really two sides of the same coin.

The first channel is through the direct effect on the banks' bank accounts. With more money sloshing about in their accounts, the banks may decide to lend more to businesses and individuals, and increase the amount of activity in the economy that way.

The second channel is through the effect on the cost of borrowing. When the Bank buys bonds, it reduces the supply of those bonds in the economy. That should increase the demand for new bonds and, at the same time, make it cheaper for businesses to borrow.

Having taken very short-term interest rates as low as possible, the idea would be for the Bank to push down longer-term rates as well (which are the rates that companies and individuals borrow at).

 

Are there any risks?

 

Quantitative easing is a high-risk strategy. If it is not done aggressively enough, banks will remain unwilling to lend and the crisis could drag on. To some extent that is what happened in Japan when this was tried 10 years ago.

Like old-fashioned money printing, QE also runs the risk of going too far: pumping too much money into the economy and causing high inflation - even hyperinflation - as seen in 1920s Weimar Germany and modern-day Zimbabwe.

But in those cases, the government was printing money simply to pay the government's bills. They were not responding to the risk of deflation as the Bank of England is today.

 

Is this printing money?

 

Of course, these days the Bank of England doesn't have to literally print money to do QE. It's all done electronically.

However, economists would still argue however that QE is the same principle as printing money as it is a deliberate expansion of the central bank's balance sheet and the monetary base.

Why is it different from Weimar and Zimbabwe?

Printing money can be defined as the central bank financing of government debts. This is what happened in both Weimar and Zimbabwe and what the British government will insist it is not doing, although the short-term effect is similar.

According to the Maastricht Treaty, EU member states are not allowed to finance their public deficits by printing money. That is one reason why the Bank of England will buy government bonds from financial institutions, not directly from the government.

The Bank believes this form of QE is different because they are "printing money" as part of monetary policy - to prevent deflation. They are not printing money to help the government finance its deficit. Also, unlike Zimbabwe, this is a temporary policy: the Bank expects to sell the government bonds back into the market when the economy recovers.

How do we know if it has worked?

If QE works, credit growth will pick up and businesses will find it easier to get credit. That, in turn, should help stimulate the economy and help push inflation back up to the Bank of England's target figure of 2%, thus staving off the threat of deflation.

 

Pegasus Funding Resources,

01932 244810

www.pegasusfunding.co.uk

Thanks, look for further updates soon Laurence Ainsworth www.exigent-uk.com