Negotiating hairpin bends

A combination of recent market volatility, the continuing spectre of failure in
the Eurozone coupled with latest pronouncements from politicians and economists alike have done little to restore confidence and now more than ever is the time for good housekeeping and firm controls.

Constant monitoring of counter party risk is the order of the day combined with disciplined inventory control.

Just because a customer has always being reliable in the past is unfortunately no guide as to future performance. Look out for tell tale signs such as unusual
ordering patterns, delays in payments etc. Very few businesses fail overnight
and there are usually enough warning signals which should enable a supplier t
reduce its risk.

The coming months will continue to test but undoubtedly there will also be opportunities for those placed to take advantage of less efficiently organised
companies. Make sure that when the dust eventually settles that your company emerges in a stronger position.

 

The overhead monster getting hungrier by the day

The UK offers a very attractive market for companies wishing to export their products. Counter party risk is identifiable and can be successfully managed.

However one barrier may be the perception of high operating costs.

 

There is no doubt that to commission and run a UK operation can prove a costly commitment. The lists of outgoings such as rent, communications, staffing costs are daunting, particularly in a start up situation where income streams are lagging far behind these costs.

This is where we can assist you, as an established independent company, we have experience of representing overseas organisations in marketing product into the UK.

In addition to opening up new markets for your products and services we can also police the all important areas of logistics and payment of your invoices.

An introduction to our activities can be seen on our web site www.glbconsulting.co.uk or alternatively why not contact me at gordon.blackburn1@btinternet.com to arrange a meeting to discuss how we assist you in entering the UK market.

 

No time for sentiment

There is a growing trend for companies to bully their suppliers over the question of payment terms. It is not unusual for Buyers who hitherto had paid on the basis of 30 days to now demand switching their Suppliers to 90 day payment terms.
 

Such terms can only be served by larger organisation with adequate cash reserves.
 

For the small to medium supplier it further ratchets up the pressure as Banks are unwilling to increase their credit lines.
 

For some time companies have sought to stretch the length of their payment terms by all manner of means both fair and foul.
 

As profit margins are further squeezed by increased operating costs the importance of maintaining cash flow is vital.
 

Business is hard-won in the current climate, but above all there has to be a commercial raison d’être for any transaction.
 

Mutual reciprocity has to be the basis for the Customer/Supplier relationship for it to remain worthwhile.

 

Innovation key to survival

The retail sector is particularly challenged at the moment as domestic spending is reined in.

 Facing continual squeezing of operating margin the quest is for innovative ways to drive sales.

The new buzz phrase in retailing is "multi-channel", loosely defined as a strategy that involves selling through stores, websites, mobile phones, catalogues, social networking sites, et cetera.

 Basically it is an all encompassing process designed to maximise sales revenues.

Recent data from the Office of National Statistics for December indicate the amount spent online accounted for 10.1% of all retail spending, excluding fuel.

In the food sector, the proportion of online sales rose 27% on the year. That meant that online sales now make up a record 3.7% of all food sales.

Not all business models can embrace this system but there has rarely been a time when the old adage of “work smarter” has been more relevant.

 As more and more obstacles are thrown up to threaten operating margins everyone in any commercial organisation must ensure that they are operating at optimum efficiency.

Retailers are pinning their hopes on “multi channelling” – but they are not the only sector having to radically re-think strategy in these turbulent times.

 

From Triple A to Triple Dip?

 

Every business transaction contains an element of risk, yet at the same time how satisfactory are the mechanics for managing risk?

 

In recent years we have witnessed just how costly the laissez faire attitude to risk and burgeoning debt has been for many institutions be they large corporations or smaller SME’s.

 

In the never ending quest for larger profits many of the saner measures of business were abandoned. An analysis of recent disasters from the subprime fiasco in the US through to the Greek Debt debacle all have one common denominator – the architects of these calamities went hurtling over the cliff like lemmings.

 

The UK has lost its Triple AAA status with most forecasters still failing to properly capture the negative impact of "deleveraging" - or households, businesses, banks and the government trying to cut their big debts – coupled with a serious risk of a further worsening in the Eurozone's mess.

 

Against this back drop it is questionable whether even the anaemic recovery expected by the Office for Budgetary Responsibility in 2013 will take place.

 

A forensic analysis of your company’s current Debtors Book at this time might make for uncomfortable reading but like most unpleasant tasks it should not be ducked.

 

Better to take remedial action such as a write down whilst you are in control of your own destiny rather than have a 3^rd Party appointed to do it for you.

 

Juggling Jelly

J

Managing a business in today’s environment is a complex affair – it has been likened to spinning plates whilst juggling jelly. 

Particularly for the owners of SME’s it has never been harder to keep track of the various elements which are buffeting the business. 

Now might be an appropriate time to run a check over those areas of the business most likely to cause problems in the coming months.  

It is a self evident truth that many a crisis could have been averted by timely intervention. 

It is worth remembering that a spectator always sees more the game. This is where an independent appraisal can identify areas of potential concern but more importantly the ways and means by which to address them. 

The question that needs to be answered initially is – for how long can I keep all those plates spinning?

 

Finding the philosopher’s stone.

When trying to improve the bottom line, there are 2 obvious strategies, (a) cut operating costs and (b) Increase revenue. If you’re the FD it’s the Holy Grail.

 

The Sales Director only has one shot in his/her armoury namely increase sales. Sales targets can always be raised but a sense of commercial realism also needs to be applied.

If you are marketing a totally unique product or service the task is easier but for the most part there are many companies offering a similar range of products in a broadly similar price range.

As such for most companies it is about getting back to the basics – ensuring orders are processed efficiently and in a timely fashion. Following up on customer satisfaction, in short providing what in old fashioned terms was called “service”.

This is where a difficult balancing act comes into play, in cutting costs the net result is very often a reduced / demoralised workforce. If those involved in the support work aren’t performing then results inevitably suffer. It is a question of striking the correct balance.