Customer service – a question of balance

 

The old adage the customer is always right has come in for a fair amount of scrutiny recently and there are many times when plainly the customer is in the wrong.

Notwithstanding it is of paramount importance to the sustained growth of any business that the customer is kept onside.

The key requirement that any customer wants is to feel that his/her business is valued and appreciated. In business securing the deal is only the start of the process and the repeat order very often stands or falls with the after sales service (or lack thereof).

Simple but effective measures such as ensuring all contracts are performed efficiently and within due time and that any complaints are handled promptly and with courtesy will go a long way to building and maintaining long lasting relationships.

We have all encountered the difficult customer with whom it would be easier not to deal. However, in these difficult times there are many who would willingly take this “problem” and accompanying revenue off of your hands.

 

Dereliction of duty

The UK Parliamentary Standards Committee on Banking Standards have published their report with the indictment - "too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility.

"Senior executives were aware that they would not be punished for what they could not see and promptly donned the blindfolds.

"Where they could not claim ignorance, they fell back on the claim that everyone was party to a decision, so that no individual could be held squarely to blame - the Murder on the Orient Express defence."

It is fair to say that had the focus been on the needs of customers and shareholders as opposed to the size and division of the bonus pot, we would not have witnessed the calamity which befell the Banking system with all the attendant fall out.

It is not unusual for senior management to be detached from the business they purport to run. From my own personal experience I have worked in trading environments where 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.

The most spectacular financial disasters have always followed a period of ostensibly highly successful trading.

In the 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.

Meantime as a sop to the general wish to see retribution, some of those down the food chain are now being called to account. Former UBS and Citigroup trader Tom Hayes has been charged by the Serious Fraud Office (SFO) in connection with its investigation into the manipulation of Libor.

Mr Hayes, 33, has been charged with eight counts of conspiracy to defraud these are the SFO's first criminal charges related to the Libor rigging scandal.

However the true architects of the Banking crisis remain by and large unscathed.

 

 

Avoid becoming an unsecured Creditor

From a supplier’s perspective the most important part of any transaction is to ensure prompt and satisfactory receipt of funds for goods or services provided.

When a company oversteps the mark by abusing agreed payment terms they are in fact using the Seller’s tolerance as means of providing an unsecured overdraft.

Put simply would you exchange a promise from your Buyer for prompt settlement conditional on your company providing the upfront funds enabling them to do so?

In reality by continuing to supply a persistent late paying account this is exactly what is happening.

It is a question of commercial judgment. In these present trading conditions business is hard won but if the transaction carries a disproportionate risk then it isn’t really worthwhile.

The time and effort spent chasing a recalcitrant account could be better spent elsewhere.

 

Effective management in troubled times

 

Working with companies over the past months there is a noticeable sense of demoralisation amongst many sectors of the work force.

 

The causes for this are readily identifiable, many people are struggling with their own domestic finances whilst at the same time the need for increased levels of performance and efficiencies at work have rarely been as intense.

 

It is the responsibility of the Management to ensure that during these times staff members are encouraged to give of their best.

 

Too many Managers are remote from the day to day activities of their staff and appear to have the attitude that the people who report to them are lucky to have a job.

 

This mentality is counterproductive. Staff need motivating and incentives do not necessarily have to come solely in the form of financial rewards.

 

Some of the best run and therefore by definition most successful commercial entities are those where the workforce is engaged and feels part and parcel of the organisation rather than merely there to make up the numbers.

 

Nerves are jangling again

Following the recent dramatic falls in Global markets, fear is the overriding factor with an increasing sense of nervousness for many operators.

 

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. Five of Britain's top lenders need to plug a combined 27 billion pound ($42.3 billion) capital hole as part of an assessment by the country's new financial watchdog, which is trying to restore confidence in the sector.

It will remain 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 remain conservative in their approach to lending, so the order of the day is work within your current limits and maximise your profits.

 

 

Consumer confidence – the litmus test

  

One of the tests of the English legal system is “what would the man on the Clapham omnibus think?”

Basically this is the reaction to any problem or situation that could be expected from a reasonably educated and intelligent but non-specialist person.

In the current economic climate many companies would do well to ask “what does the man standing in the queue at the Clapham Supermarket checkout think?”

The problem is that many people running businesses (or for that matter senior politicians) are too removed from the realities of life to effectively understand the economic difficulties currently facing the ordinary consumer.These include rising utility and food costs, declining wages through to employment uncertainties.

It is a very easy exercise but a few minutes spent in the supermarket or on a garage forecourt will give a true insight into the problems and frustrations felt by the ordinary consumer.

Until such times as the man in the street starts to regain some confidence there is little chance of economic recovery gaining serious momentum.

 

Time Wasters – certainly a growth sector

 The life of a Consultant is certainly not without its frustrations but undoubtedly the most irksome is the prevalence of the “time waster”.

Picture the 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 it’s all systems go - then the Client goes cold - the time waster has reared his head again.

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

The reality facing this troubled company is that this head in the sand mentality will in most cases signal the slide into administration and or liquidation.

 

What if your sat nav malfunctions?

 One of the most valuable assets 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.

 

To see how we can assist you in gaining a UK presence please take a look at our website www.glbconsulting.co.uk

 

Or check out our video link http://youtu.be/ruUtQnlJwVM

 

Time to bite the bullet

 

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 was in many institutions from large corporations to smaller SME’s.

In the never ending quest for larger profits many of the disciplined measures of business were abandoned.

Analyses of recent business failures all have one common denominator – the architects of these calamities went hurtling over the cliff like lemmings.

There has never been a more pressing need to examine all areas of exposure; price risk, credit risk and liquidity risk.

It is imperative that appropriate credit checks are made on potential customers before sales are made. Another element of risk is non-performance by Suppliers so again it is vital that key Suppliers are credit scored and suppliers risk is spread.

A thorough analysis of the current Debtors Book might make for uncomfortable reading but like most unpleasant tasks it should not be ducked.

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

 

Opportunity versus risk - the yin and yang of commerce.

 
Every business transaction contains an element of risk, yet at the same time how adequate are the mechanics and systems that are in place to manage these risks?

In recent years we have witnessed just how costly the laissez faire attitude to risk was in 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 jettisoned.

An analysis of the most spectacular flame outs all have one common denominator – the architects of these calamities went hurtling over the cliff like lemmings.

There has never been a more pressing need to examine all areas of exposure.

A forensic analysis of the current Debtors Book might make for uncomfortable reading but like most unpleasant tasks it should not be ducked.

It is always preferable 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 .

 

A distinct lack of commercial realism

 

I was approached by a “start up” company operating in the field of renewable energy.

 

The initial telephone conversation sounded promising so I arranged to have a preliminary meeting. I met the “management” at their offices in a prestigious block in The City – so far so good.

 

We then got down to discussions and it all went rapidly downhill – these people had a vision of being the London HQ of a large energy trading company. The only problem was they hadn’t thought through exactly what they were trying to do, far from seeking an assessment /appraisal of their business they were in fact looking for someone to turn up and present them with a business plan for a niche role in an industry in which they had no previous experience, product or usp.  

As a Consultant I am quite used to explaining the harsh realities of the business world to companies that are already operating and finding it tough. However this was quite a different case – these people though that by putting a name board on an office building in The City this would fast track them to a listing on the FTSE 100. 

Needless to say apart from providing me with an insight into a commercial Never Never Land this particular assignment was not one to fly.

 

However I am still on board for serious projects!

 

Morale is the linchpin of efficiency

 

Presently we are being bombarded with negative news- failing economies, the squeeze on domestic budgets, the spectre of unemployment etc

 

This constant drip feed of bad news has 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”.

 

There is no better motivation than a clearly though through strategy which is well communicated and executed.

 

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.

 

Up close and personal

 

Business practises have changed markedly in recent years.  

Although many operations are completed electronically in this virtual world we should never forget that essentially commerce is about people trading together.


The reality of the real world is that goods need to be moved from point of production to point of consumption and obviously the diverse elements which make up this chain cannot be achieved solely via a computer terminal.

It makes sound economic sense to foster and maintain good customer relationships as it has been determined that it costs up to five times as much to win a new customer as it does to retain one.

There is an old adage “know your customer,” this dictate has never been more important than in these uncertain and challenging times.

 

Seeking the philosopher’s stone.

 

When trying to boost the bottom line, there are 2 obvious courses of action; reduce operating costs and increase revenue. If you’re the FD you’ll probably aim for both.

 

The decision by the new CEO of Anglo American (one of the world's largest diversified mining and natural resource groups), to sell the company’s $30 million corporate jet is not merely showboating but an example of the new sense of realism in the corporate sector.

 

There is a new wave of executives hired in recent months to slash spending and sell assets after years of profligacy at the world’s top companies.

 

As to generating revenue, 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”.

 

Sometimes it’s best to walk away

 

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.

Similarly a business transaction with a slim margin of profit carries a disproportionate risk/reward ratio.

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

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

 

 

Back with us again – the usual suspects fear and greed

 

After a substantial rally in the Global stock markets we have recently seen some turbulent trading and wild price swings.

 

Whilst some commentators remain bullish the recent spate of economic news from China, the Eurozone have clearly unsettled some operators.

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

 

Eurozone concerns persist

The Organisation for Economic Cooperation and Development (OECD) has painted a troubled picture of the Eurozone economy. The forecast of a 0.6% contraction in GDP is down markedly from the 0.1% contraction forecast just six months ago.

It said Eurozone unemployment would continue to rise from its current rate of 12%, stabilising in 2014.

It blamed continuing austerity measures, weak confidence and tight credit conditions. It hinted that the European Central Bank (ECB) might want to expand quantitative easing (QE) as a measure to encourage stronger growth.

It warned the continuing weakness in Europe "could evolve into stagnation, with negative implications for the global economy".

The US and Japan have seen a greater focus on stimulus measures compared with Europe, where austerity measures have taken precedence.

 

It is evident that while the threat of a Eurozone break-up may have subsided, a long term solution to the debt crisis is yet to be found.

 

The problems in Eurozone have not gone away. Essentially people are either choosing to ignore them or are seeing what they want to see.

 

Currently unemployment continues to rise in countries such as Greece and Spain, a delayed solution may see the crisis escalate, a move which is likely to hurt investor morale.

 

Countries such as Greece and the Republic of Ireland that have been bailed out by international lenders continue to see their economies shrink.

Meanwhile larger economies such as Spain have imposed spending cuts in an attempt to avoid having to ask for a bailout. The recent problems in Cyprus served to highlight the problem.

 

The austerity measures in many countries - mostly in southern Europe - have combined tax rises with cuts in salaries, pensions, benefits and social services.

 

Apart from the social cost the spectre of unemployment represents a major threat to economic recovery within the EU together with all the global implications it brings.

 

Auditing the Auditors

 

In recent times the flak following the recent failures in the global financial system has been largely directed at one sector i.e. the Banking industry. One group of participants have remained largely unscathed for their part in the train wreck, the Auditors.

There are now signs that the activities of this sector is coming under closer scrutiny .Auditors are in a very privileged position and their integrity is paramount.

In the US authorities brought criminal and civil charges against a former senior partner at accountancy giant KPMG over alleged insider trading.

Scott London a former senior partner at accountancy giant KPMG has agreed to plead guilty to insider trading. Mr London, 50, faces a maximum term of 20 years in prison and a maximum fine of $5m (£3.3m), according to the plea agreement.

The scandal has hit the accountancy firm's reputation. It resigned as auditor from a number of US companies including Herbalife and Sketchers soon after the claims emerged.

However it is not just about illegal activity, there are many instances of conflict of interest such as taking on consultancy work for Clients and becoming too cosy with management teams.

Back in April, John Griffith-Jones, the former boss of KPMG (and now head of the Financial Control Authority) was under pressure after it emerged that he was involved in setting the terms of an investigation into the collapse of HBOS despite the fact that KPMG were auditors to HBOS from 2001 to 2009. Recently days it was announced that the former head of HMRC Dave Hartnett was joining Deloitte who have helped large corporations avoid large tax bills.

At the lower end of the scale it is all too easy for companies to bully the young staffers sent in to do the grunt work. What chance has a newly appointed auditor walking around a factory warehouse to adequate value stock?

In reality they have to rely on the company for “valuations” and this can result in a totally inaccurate picture being presented. Very often the senior management of the company being audited and the auditors can end up signing off on a “nod and a wink”.

The validity of a company's accounts reflects both the integrity of the company which is being audited and that of its auditors.

 

 

Chill winds blowing down UK High Streets

 

The acceleration in store closures this year followed a grim 2012, when a net 1,779 closed. That represents a 10-fold increase from the 174 in 2011.

 

So far this year 16 major retailers have entered administration operating 1985 shops and employing over 14,000 staff.

 

With the rise of online shopping the chains did not need as many stores as they did in the past, a trend that looks set to accelerate this year.

 

People have got less money in their pockets, employment is tighter and also we've seen a massive growth in the supermarkets in terms of non-food retail.

 

The dominant factor has been the growth of online shopping. The internet now accounts for 12% of retail sales - and is forecasted to be at least 30% by 2020.

 

Reflecting this trend the Centre for Retail Research estimate that over the next 5 years the total number of UK retail stores will fall by 22 % from the current 281,000 to 220,000.

 

Particularly vulnerable will be those retailers specialising in books, cards and stationery as well as DIY outlets.

 

Those retailers who fail to exploit all areas of multi channel marketing whilst finding themselves saddled with the burgeoning costs of maintaining retail outlets will continue to suffer and add to the casualties in the coming months.