Business Baron

The research behind a business you can lose

Researching business simulation accuracy means separating what is documented from what is plausible. Where our figures come from, and what we simplify.

, The games

Somebody wrote to tell us that a haulier in our 1974 scenario should not have been able to run at that level of fuel cost, because of what happened to diesel prices after the oil shock. He was right, we had smoothed the curve, and we changed it.

That exchange is the honest version of what research on this project looks like. Some things are documented and can simply be correct. Some things are not documented, and the best we can do is build something plausible and say openly that it is a construction.

The rules come from the statute and the guidance, not from memory

Anything that is law, we take from the source. The rate of corporation tax in a given financial year, the small profits rate and the marginal relief bands, the VAT registration and deregistration thresholds, the standard and reduced rates and the dates they changed, National Insurance classes and their thresholds, the Construction Industry Scheme deduction percentages, capital allowance pools and rates, business rates multipliers and the reliefs attached to rateable value bands.

These are published. HMRC publishes current rates and, for many taxes, historical series. Legislation.gov.uk holds the Acts and statutory instruments. The Valuation Office Agency publishes rating list entries you can look up by address. Companies House publishes filed accounts. The Office for National Statistics publishes price indices, wage series and regional output. The Bank of England publishes the Bank Rate going back further than the game does.

When a figure enters the engine, it enters as a table with an effective date, not as a constant. That is more work and it is the only way a game spanning 1930–2040 can be anything other than approximately wrong for most of its length. It also means the game teaches something true: thresholds are not fixed, and a business that was below one last year can be above it this year without doing anything differently.

A documented rule and a plausible rule are different things, and we mark the difference

The gap between the two is where all the interesting decisions sit.

That a VAT-registered business must account for VAT on standard-rated supplies at 20% is a rule. What proportion of customers a corner shop loses when it raises prices 5% is not a rule. Nobody has published that number for a corner shop in Wigan in 1993, and if they had, it would describe one shop.

So we build it. We take what is known about how demand behaves for the category, we take the ratios that public sources do give us, we set a shape for the relationship, and we tune it until the simulation produces outcomes that a person who has run that kind of business would recognise. Then we say, in writing, that this is a model rather than a measurement.

We also refuse to dress it up. We do not attribute invented numbers to studies. We do not cite a percentage we cannot point to. If the game's help text tells you something about how a market behaves, it is describing the game's model, and it says so.

Some of it is fieldwork, which mostly means listening to people complain

Public data tells you what happened. It does not tell you what it felt like to be the one it happened to, and the second thing is what makes a simulation worth playing.

So a fair amount of the research is conversation. Publicans about wet-led versus food-led trade and what happened to both. Builders about retention and the month it does or does not arrive. Shopkeepers about what a business rates revaluation did to them. Hoteliers about the difference between occupancy and profit. People who ran businesses through 1990, through 2008, through 2020.

What comes out of those conversations is rarely a number. It is a shape. The order in which things go wrong. The cost that nobody mentions in the trade press and everybody mentions in a pub. The reason a decision that looks obvious on a spreadsheet is not obvious at the time. Several of the mechanisms in the game exist because somebody described a problem we had not thought to model.

Trade bodies, regulators' published guidance and industry codes fill in the middle ground. A licensing authority's statement of licensing policy will tell you more about how a late licence application actually goes than any summary of the Licensing Act 2003.

We simplify on purpose, and the choices are not random

Every simplification is a decision about where the interesting part of the game is. Ours, stated plainly:

  • Demand is modelled per market segment in a place, not per customer. A thousand individual shoppers would cost a great deal to simulate and would average out to the same answer.
  • Employment is costs and constraints rather than procedure. You carry wages, employer National Insurance, pension auto-enrolment, statutory sick pay, holiday, notice and redundancy. You do not run a grievance meeting.
  • Tax is calculated properly and filed automatically. There is no game in remembering to submit a return, and there is a great deal of game in the cash you have to find when the bill arrives.
  • Historical macroeconomics is scripted. Inflation in 1975 and the credit conditions of 2008 happened, and we are not going to generate a counterfactual Britain.
  • Personal life is kept to what touches the business. Other games do lifestyle well. It is not what ours is about.

We would rather have five systems that are deep and honest than thirty that are decorative.

The corrections come from readers and they are welcome

We get emails. Most of them are people who know one thing extremely well and have noticed that we do not. A licensee on how a designated premises supervisor transfer actually works. A quantity surveyor on the difference between an extension of time and loss and expense. Somebody who remembered the exact week a rate changed because it cost them money at the time.

Because the engine is deterministic, those corrections are easy to act on. A reader sends a seed, we replay the identical game, we see the figure they saw, and either the model is wrong or we can explain why it is not. There is no argument about what happened.

Several dozen changes to Business Baron came in through that route. We do not consider it a flaw in the process. It is the process.

Why we care about this

The whole premise of Business Baron, in every one of its business types, is that the constraints are real ones. If the VAT threshold in the game is not the VAT threshold that existed, the decision it forces you into is not a decision anybody ever had to take. Getting the checkable things right is the minimum. Being clear about which parts are invented is the rest of it.

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