You can’t always rely on your sat-nav

 

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.

 

In addition to sales and marketing services we also have experience in carrying out project feasibility studies, debt collection and dispute resolution in respect of product quality issues.

 

If you are looking to enter the UK market or have a requirement for any of the above services then email me at gordon.blackburn1@btinternet.com to arrange an initial discussion.

Now Chinese banks come under closer scrutiny

We have become accustomed to the growing trend in companies to camouflage poor performance with deliberate misreporting and suspect off-balance sheet shenanigans.

 

The Chinese authorities have taken cognisance of this and China's major banks have been asked to publish data on 12 key indicators, including off balance sheet assets.

Chinese banks - especially the big four state-owned lenders - played a key role in keeping the country's growth momentum going in the years following the global financial crisis.

They lent record sums of money in an attempt to sustain China's high growth rate.

There are now fears that some investments have turned out badly and that banks may not be able to recover those loans.

The concern among many is that a rise in loan defaults would not only hurt the country's banking sector, but also have a big impact on its overall growth.

While the reports of bad loans at China's banks account for less 1% of total lending, some analysts are sceptical and feel that banks were either rolling over such loans or even restructuring them to try and keep the reported figure low. A not unfamiliar banking practice.

 

As evidenced previously some of the most spectacular financial flame outs have 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.

The Chinese authorities have now decided that it is a worthwhile exercise to look under a few stones – just in case.

 

 

Acceptable commercial practice or subliminal warning?

  

The traditional response from recalcitrant debtors was “the cheque is in the post”. This generally bought some time as suppliers met this response with a weary resignation.

 

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

 

Basically the name of the game remains the same, buy some time - achieve a payment extension thereby 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.

 

Irrespective of any other considerations it remains crucial to keep full control of receivables.

 

At the very least delays in payment will impact on the bottom line.

However the worst scenario is that neglecting to strictly monitor a failing company could result in a total write off.

 

 

Turnover vanity, profit sanity, cash-flow reality

 

More than ever, all businesses operating in today’s climate need to have constant and rigorous focus to their commercial exposure.

 

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

 

However as business conditions remain difficult we are witnessing a growing trend for companies to squeeze suppliers in various ways. This can take the form of a decision to arbitrarily extend payment terms, decide not to take up previously agreed deliveries or introduce respective price discounts.

 

From a suppliers perspective this erosion of operating margin means that in some instances the best business decision was to leave it to your competitors.

 

When stricter controls are in place over such elements as payment terms and credit limits the result is likely to be a reduction in turnover.  

The upside of such fiscal discipline carries its own rewards. Avoiding defaults by customers is the surest way to protect the company’s bottom line at a time when profits are hard won and losses easy to establish.

 

Making customer 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.

 

Forging effective partnerships

 

All too often the focus on the current economic background has accentuated the negative. However one of the benefits emerging from the current business climate is the value that can be placed on a mutually beneficial customer/ supplier relationship.

 

As increasing numbers of business operate on a just in time inventory basis it is vital that a good understanding exists between supplier and consumer.

 

In as much as a supplier will be prepared to go the extra mile to ensure that his buyer receives his goods on time and in good order so it behoves a buyer to ensure that he pays as required and is not abusing the goodwill of his supplier by “pinching” some extra period of credit.

 

If both parties work together in a professional and commercial manner then it will strengthen the relationship and both will emerge from the current difficult situation with a renewed confidence in each other and a better based business for the long term.

 

Commercial post mortem – what have we learnt?

All too often in the course of commercial post mortems, the Management and Shareholders of troubled organisations end up asking “how did that go wrong?” 

 

It is an incontrovertible fact that many companies fail to address problem issues early enough to avoid an oncoming crisis. When in reality the causes of the problems were all too readily visible. 

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 variety of exercises ranging from ill judged acquisitions (think RBS/ABN), totally pointless projects such as rebranding or the launch of another product range destined to fail for the above reasons.

 

Inevitably the harsh realities come to the fore but by then for many companies it is to late in the day.