Starved of Cash

According to latest Bank of England reports lending to “small businesses remains constrained with little change in banks risk attitude”.

Having suffered the consequences of their previous reckless attitude to lending the Banks remain nervous about the prospects for the UK economy.

After the spectacular failure of their previous policies there was always likely to be an excessive over reaction on the part of lenders.

The tragedy for many small businesses is that they are being strung along whilst Banks prevaricate about increasing facilities and in the meantime much damage ensues.

Now more than ever any application for funding must be accompanied with a stand-up strategy together with evidence of strict control over all elements such as cash-flow, debtors and stock turn/ inventories.

In this current climate, the Banks will look to any shortcomings and or operating deficiencies as justification to turn down increased funding and or to reduce or even call in previous agreed facilities.  

The Workshop of the World

For a few decades in the 19th century British manufactured goods dominated world trade.

Most mass manufactured items were produced more efficiently and competitively in Britain than elsewhere.

At the height of its imperial prowess Britain also had the commercial, financial and political power to edge out rivals at home and abroad.

In some industries, most notably textiles, massive changes took place in technology and in the organisation of production causing dramatic productivity growth. This in turn brought a steep decline in prices

For other sectors more modest organisational improvements coupled with greater specialisation and the employment of cheap labour brought similar, though less dramatic, results.

An unprecedented range and variety of products thus came within the grasp of a new mass market both within Britain and overseas.

Fast forward just over 100 years and all of the above factors can be applied to the Chinese economy.

But just as with Britain after an unparalleled boom there is a period of pausing, analysts have now concluded that the Chinese government's target of achieving 7.5% growth this year may be missed.

New export orders are contracting, suggesting external demand for China's exporters remains weak.

 

The true picture is that not only is China's export sector slowing down, but its manufacturing sector is also slowing down. That means the trade surplus is almost gone.

 

After a decade of spectacular growth the Dragon is now pausing to catch its breath.

 

Keep ‘em happy – keep ‘em loyal

 

External factors over which little control can be exerted continue to buffet all business sectors. However, every organisation does have a potentially winning weapon in their armoury namely the opportunity to offer excellent customer service.

 

In these difficult times everyone expects ultimate value for their cash be it the corporate customer or the man in the street.

 

It is a paradox that as trading conditions 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 with the intensely irritating muzak accompaniment, 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 focus on Customer service will emerge from this current difficult period all the stronger.

 

Shark infested waters – don’t fall overboard

 

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.

 

However all businesses be they independent or large corporations are vulnerable Corporate fraud can take many forms such as invoice kickbacks, sales schemes, bid rigging and the like.

 

It is an undeniable fact that there will always be people trying a variety of ways to “scam” your organisation; it is a problem that will not go away so vigilance is the order of the day.

 

Effective Management in challenging 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.

 

 

Juggling Jelly

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. 

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?

 

You can only win it by staying in it

 

Some years ago whilst working for an international corporation I attended one of the bi-annual strategic reviews for senior Group executives. Each executive was required to give a presentation in respect of his/her business unit.

 

One colleague addressed the audience with his one word objective namely “survival”.

 

At the time this was met with a fairly frosty response but current events show that this could be a suitable watchword for the present time. As the machinations continue in the Euro zone and the commentaries become even more emotional with phrases such as “disintegration” and “meltdown” then to survive these times would seem to be a very laudable objective.

 

So many factors are coming into play over which individual companies can do little to protect their interests other than ensure that they react appropriately.

 

However the one certainty is that the global economies will survive and business will continue. In the coming months there will undoubtedly be casualties but by adopting a controlled and rational response to these challenges businesses can ride out these difficult times.