Know when to hold – know when to fold

In business as in poker there are times when discretion is the better part of valour.

Put simply, some of the best business deals are those you turn away.

All organisations operating in today’s climate need to have constant and rigorous focus on their commercial exposure.

Against the current competitive background it is obviously difficult to contemplate turning away business especially from a customer of long standing.

However an objective assessment may well lead to the conclusion that in this instance the business would be left to others.

It may well be that turnover suffers when stricter controls are in place over such elements as payment terms and credit limits.

The reward for such fiscal discipline is obvious. Avoiding defaults by customers not only protects the company’s bottom line whilst allowing focus to be placed on more profitable activities.

KYC- know your customer

KYC - know your customer.

In the US this basically refers to a due diligence process undertaken by Banks and financial institutions to combat fraud, identity theft and general scams.

It is however a mantra that most organisations would do well to adopt.

Rapid advances in technology continue to transform the way we do business. Everyday business tools would have been regarded as flights of fancy not so long ago.With the unstoppable rise of e-commerce come challenges.

One of the biggest dangers is the lack of personal contact between a company and its customers.Obviously this is not an issue for online retaillers selling product over the net and being paid via a Debit card or Pay Pal etc.

However the is an increasing trend for B2B ales to be concluded by email and even SMS.With the loss of the personal contact the identity and customer relationship suffers.The surest way to avoid problems is by knowing your customer and understanding their business.

This realtionship and mutual understanding cannot be acheived via a key pad and electronic ordering system.

Do you want to jump start your business?

Pressures on the business sector continue to mount and this is especially true for those running SME’s.

The need to achieve operating efficiencies has never been more acute. This is a time when a fresh appraisal of your business could return significant dividends.

As an independent business consultant I am confident that I can assist you to ride out these difficult times and build a strong base from which to expand.

Why not drop me an email at gordon.blackburn1@btinternet.com or alternatively check out my video link which will give an insight into my experience:

http://www.youtube.com/watch?v=qvIHWrB5BWI

‘tis the season to be – focussed

In recent times there has been the tendency for the Christmas holiday season to stretch out over a number of weeks and therefore with just over a month to go to Christmas it would seem an appropriate time to consider the implications for business.

Without doubt of biggest concern to SME’s will be the impact on cash-flow. Many companies are operating very close to the edge and any delays in payment could have serious consequences.

In some instances invoices which fall due for payment after the 16^th December could well not be settled until the 3^rd January – giving an at worse scenario of 3 weeks delayed payment.

It would therefore seem prudent to look at your last half December receivables and make a realistic forecast of just how much cash will “come in”.

Similarly with “just in time” inventory it would be sensible to ensure that sufficient stock will be on hand for the early days of January when there will be inevitable disruptions to the supply chain.

Trying to get things done in the UK during the latter half of December will undoubtedly prove to be a challenging task so it would be best to ensure you are positioned accordingly. 

As always, the usual suspects - fear and greed

Currently with all the talk of gloom and doom in the financial markets, fear is the overriding factor with a sense of panic gripping many operators as witnessed by the sell-off in Thomas Cook stock Tuesday which saw the share price plummet by nearly 80%.

Politicians seem to be hell bent on outdoing each other as to who can send out the direst warnings.

Now is the time to remain focussed and consider the implications for your business.

Just as was evidenced during the credit crunch crisis in the summer of 2008 there is a question mark over the manner in which the Banks will respond to the current inputs.

The problem for the Banks is that because of the legacies of their previous mistakes they are effectively stifling their customers businesses as they look to batten down the hatches and strengthen their own balance sheets.

It will become increasingly difficult to gain support from the Banks in the coming months therefore it must be the absolute priority to keep a strict rein on your finances – make sure that your Debtors Book is strictly controlled and ensure that Stock turn and inventory levels are well policed.

With their houses far from in order, the Banks will undoubtedly become increasingly conservative in their approach to lending, so the order of the day is work within your current limits and maximise your profits.

The ostrich school of management

How often do we see that by ignoring obvious problems the Management and Shareholders of troubled organisations subsequently end up asking “why did that go wrong?”

It is simple, a large number of companies fail to address problem issues early enough to avoid an oncoming crisis.

The signs of a troubled business are all too apparent – these include lack of controls, lack of strategic vision, a demotivated workforce and obsolete or valueless stocks etc

Instead of grasping these nettles, often the preferred option is to engage in a totally pointless exercise such as a rebranding exercise or the launch of another product range destined to fail for the above reasons.

The operating style of such companies can be likened to the exercise of rearranging deckchairs on the “Titanic”

Timewasters? – the bane of a Consultant’s life

The life of a Consultant is certainly not without its frustrations but undoubtedly the most irksome is the prevalence of the timewaster.

A typical scenario - contact is made by a company who wishes to engage the services of a Consultant to address the problems within their organisation.

The Consultant spends time studying the brief and formulating a strategy for tackling these problem issues.

At the end of this initial process (often involving a series of meetings) it appears that its all systems go - then the Client goes cold - the timewaster has reared his head again.

It is an all too familiar story - the troubled company appreciates it has problem areas but when faced with the implications of an objective assessment it is all too easy to duck the issue and try to muddle through.

The downside for the troubled company is this fudging of the issue will in most cases signal the slide into administration and or liquidation.

The clock is ticking down

Starting with the US Thanksgiving holiday this week we are entering the holiday season and as businesses start gearing down a general sense of drift will be the norm.

The signs are that the first quarter of 2012 will be a difficult time for business as Consumers further reign in their spending.

 Without doubt now is the time to tackle potential problem areas with some effective reviews.

How much inventory are you carrying? - rather than face a “fire sale” early in the New Year it may well be opportune to lighten up now with some innovative marketing strategies.

How is your cash position?- with the ominous backdrop surrounding financial institutions and Governments alike, don’t expect the Banks to readily provide additional finance- it is an absolute priority to maintain positive cash-flow and this can only be achieved by keeping Debtors under control.

Undoubtedly, the casualty rate will climb as we move into the early months of 2012 – make sure that your Company doesn’t become part of these statistics

Be on your guard

As the economic downturn continues to bite all businesses and organisations must remain alert to the potential for fraud.

Entrepreneurial owners of SME’s are a prime target for fraud as overseeing finances doesn’t always come naturally to them. If a founder is focusing mainly on the product or service being sold, and only minimally on administration, it leaves a business vulnerable to fraud.

It is vital to have systems in place to monitor all the company’s finances in a clear and concise format. After all it is never comfortable experience to find that someone is holding your wallet.

It is not only independent businesses that are vulnerable. UK Councils have been conned out of more than £7m by criminals using information put on their own websites under transparency drives.

The UK Audit Commission reported that Council officials were being tricked into making payments - intended for building firms and other contractors - into false bank accounts. Last year the Commission found that councils across England detected more than £185m worth of fraud - up 37% on 2009/10.

This problem will not go away so vigilance is the order of the day.

Time to boost morale

Whilst carrying out assignments for companies ranging from SME’s to publicly listed corporations, I am struck by the poor attitude of many senior managers towards the Company’s most important asset namely its Staff.

Presently we are being bombarded with negative news- failing economies, the squeeze on domestic budgets, the spectre of unemployment as evidenced by yesterday’s figures from the ONC showing UK unemployment rising to 8.3%..

This constant drip feed of bad news is having a very negative impact. Morale in the workplace at present is generally at a very low point and yet this seems not to have percolated into the mainstream of management thinking.

All too often the attitude of the management seems to be that the current backdrop will of itself be the motivating factor.

Obviously as companies struggle with their profitability, it is not a question of throwing money at the workforce but what is required is more of an attitudinal change.

Bringing the staff on board may well be as simple as communicating the company’s situation in a clear and concise manner rather than the heavy handed “if you don’t like it there are plenty of others ready to take the job”.

It is no coincidence that the companies who emerge stronger from challenging times have been able to do so largely as a result of the efforts of a committed and diligent workforce.

People are the main asset and as such should be valued accordingly. 

The Dragon pauses to catch its breath

Since 1978, China's economy has doubled every eight years. Today, the average Chinese person has some ten times the purchasing power they had just a quarter century ago.

China was the engine room powering the Global boom of the early 21^st century, however there are signs now that the Dragon is catching its breath.

October shipments from China rose 15.9% from a year earlier, down from a 17.9% growth in September and 24.5% in August.

Meanwhile, imports grew 28.7%, resulting in a trade surplus of $17bn (£10.7bn)

The data underscores growing concerns about the impact of a global slowdown on China's export-led growth.

European markets are crucially important to China but with European economies in a fragile state the implication for Export growth is obvious and the potential for the euro debt crisis to spread would result in a further decline in export growth in the months ahead.

Make service your USP

We are operating in times when everyone expects ultimate value for their cash be it the corporate customer or the man in the street.

It is a paradox that as times become tougher and business harder to win the level of service offered by many Suppliers is falling very short of acceptable standards.

From the frustrations of automated answering (devised surely to test anyone’s patience to the ultimate degree) to the failure to meet agreed delivery schedules Customers are left feeling that their business is not valued.

Little wonder that they choose to vote with their feet. Customer service is not a difficult act to pull off – in reality all that is required is to give the Customer the feeling that their business is important and they are valued not just “one of a number” or even worse a nuisance.

Those businesses that master the art of Customer service will emerge from this current difficult period all the stronger.

Survival of the fittest

The retail sector is particularly challenged at the present with the survival of many outlets dependent upon the results of the next few weeks pre Christmas trading.

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.

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.

The inability to adapt to the requirements of the changing market place will inevitably see many companies joining the long list of corporate failures in the months ahead.   

Time to cut the Cruise control

During my various assignments one observation holds true – whilst there are very few bad businesses, there are many that benefit from a fresh input.

One of the biggest handicaps facing any business is inertia but when you are personally involved it is not always easy to change direction or take appropriate remedial action.

This is where an “outsider” can be of assistance – an objective appraisal can very often mean the difference between merely drifting as opposed to decisively moving forward

Can you trust your controls?

Shares in the camera giant Olympus fell as much as 30% on Tuesday after the company admitted to hiding losses on securities investments for decades.

This is not an isolated event, think of the recent problems with losses incurred by various Banks. However it highlights how vital it is that Senior Management set clear defined operational and reporting procedures.

In many companies the Directors simply do not have the understanding of the mechanics or the day to day activities of the business which they purport to run.

In trading environments it is not uncommon that totally unrealistic profit targets have been passed from Board level to trading departments. No cognisance having been given to the disproportionate risks which need to be taken to achieve these targets.

Some of the most spectacular financial flame outs have followed a period of ostensibly highly successful trading. In their desire to recognise these “profits” no thought were given as to how they were being made. In such times it would be well to take note of the old adage that is something looks to be too good it usually is!

If your company is bucking the trend in these difficult times it may well be that you are implementing a winning formula.

However history tells us that it is often a prudent course of action to look under a few stones – just in case.

Tapping the barometer

Very often the best indicators are the least sophisticated. The UK economy remains in a very fragile state – the clearest evidence of this can be seen as you walk down any High Street.

The rising number and popularity of charity shops tell underscore that many families are struggling whilst at the same time the latest results from Marks and Spencer the favourite chain for the over 40’s reporting a decline in pre-tax profits of 8% for the 6 months to October 1^st compared to the same period last year. The company cited the “current challenging conditions”.

In previous years, many retailers factored in Christmas buying spree as part of their overall strategy but this year as consumers struggle with debt and job insecurity it is hard to imagine this consumer excess.

As the knock on effect percolate back down the chain many businesses will suffer. External factors by definition are difficult to handle but at the same time in-house disciplines can at least provide some insulation.

Cash-flow will be very difficult to manage over the next 2 months so as always strict governance of Debtor and inventory control will provide some measure of comfort.   

Good time to be holding folding

There is no shortage of ammunition for the gloom merchants at present. However, these current market conditions underscore the old adage that “cash is king”.

During times of global financial upheaval, e.g. during the Great Depression of the 1930’s there are opportunities for those individuals and companies who find themselves in the enviable position of being positioned to operate in a cash-starved market.

There will be opportunities to acquire shares at very attractive levels whilst failing companies will be up for grabs at drastically reduced prices with the prospects for consolidation or spinning their assets for more cash.

 It sounds like a pretty simple model, but then, so are many of the best ideas.  

Are you looking to gain a presence in the UK market?

One of the most valuable commodities available to any organisation is local knowledge.

How many times has a venture ended badly owing to a basic failure to understand and deal with local market conditions?

The UK is a mature and sophisticated market and though offering different challenges to operating in a 3rd World destination there are still obstacles in trying to establish a presence.

Operating overheads present a crucial challenge and this is where we can assist you to achieve a cost-effective solution to marketing your products in the UK.

Take a look at our website www.glbconsulting.co.uk

 Alternatively check out our video link http://youtu.be/ruUtQnlJ

Could your company benefit from fresh input?

I have an extensive business background in sales and business development. In addition to working at senior/ main board level in the UK I also have worked in both North/South America and the Far East.

Currently I am working as an independent business consultant and have handled a variety of assignments on both a short and long term basis.

At the same time I would be interested in discussing a “hands” on managerial role where I could more fully utilise my business background and contacts. I would be particularly interested in hearing from companies wishing to diversify or looking to turnaround failing business units.

If you are looking to strengthen your management team then I would invite you to look at my profile at http://uk.linkedin.com/in/gordonblackburn or alternatively email me at gordon.blackburn1@btinternet.com and I will send you a copy of my current CV.

Taking accepted commercial advantage - or Red Flag warning?

Not so long ago the standard response from recalcitrant Debtors was “the cheque is in the post”. It traditionally bought some time as generally Suppliers met this response with a weary resignation.

Times have moved on and the latest mantra is “its set up for next week’s computer payment run”.

Basically the name of the game is the same, namely to achieve a payment extension effectively squeezing the Supplier’s margin.

Obviously it is a difficult balancing act between keeping the customer happy and managing your own company’s cash-flow.

Now more than ever it is vital to keep full control of Debtors.

Whilst delays in payment can damage bottom line, the worst scenario is that neglecting to monitor a failing company could result in a total write off.

Fasten your seatbelts - further turbulence ahead

Yesterday’s GDP figures for the UK showed that the economy grew by 0.5% in the third quarter of 2011. In itself a modest figure but acknowledged by some as showing some growth which is better than no growth.

However as we have seen many times in the recent past the real market driver was outside influences. Reports of a referendum to be held in Greece over the terms of the recently agreed bail-out was enough to spook markets again and across Europe shares nosedived as the spectre of a Greek default re-emerged together with the subsequent knock-on effects throughout the Euro zone.

In times like these it is impossible to insulate your company from these buffetings. The Banks stand in the forefront of this onslaught and their problems are well documented. As they look to shore up their own balance sheets their attitude towards funding and risk in general will be increasingly strict.

Expect a closer scrutiny of your monthly management reports and anticipate those “hard to field” questions which are bound to follow.

It may well be that difficult decisions need to be taken but it will be far better that the management of the company implement remedial action before somebody from the outside is appointed to do it.

Tacking a steady course

The BOE with its usual reliance on metaphors of a nautical nature advise that the UK recovery is being impeded by heavier than expected headwinds. Apart from the overall Global backdrop the UK is facing some very serious challenges as we come to the end of 2011.

Confidence is low and events of last week have added significantly to the sense of gloom. In the UK Inflation is above 5% and the increased cost of utility bills as we are in the peak demand season for fuel will impact heavily on domestic and industrial consumers alike.

To pick up on the nautical theme, we are sailing into very stormy seas, so it is time to batten down the hatches and think about jettisoning any unnecessary cargo.

 A tightly run ship i.e. contained overheads and strict control of both inventories and receivables are undoubtedly the Captain’s Order of the day