Up close and personal

The rapid advances in technology in recent years have transformed the way we do business. Not so long ago our everyday business tools would have been regarded as flights of fancy.

With the unstoppable rise of e-commerce come challenges. Perhaps the biggest danger is the lack of personal contact between a company and its customers. Obviously this is not an issue for an online retailers selling products over the net and being paid via a Debit Card or Pay Pal etc.

However, there is an increasing tendency for B2B sales to be concluded by email or even SMS.

The personal element has been lost and so has the identity and customer relationship.

The surest way to avoid problems is by knowing your customer and understanding their business.

It is not possible to develop and maintain an ongoing business relationship and mutual understanding based upon a key pad and email ordering system.

 

The crowds are baying for blood

US Prosecutors have recently issued criminal charges resulting from the alleged cover up of the losses at JPMorgan of $6.2 billion on derivative trading.

Currently three of the front line “players” are in the frame but as anyone who has worked in a trading environment will know these figures represent an easy target.

As the various banking disasters unfold we hear how “mega profits” were being generated and that nobody thought that this seemed too good to be true.

When an individual or group of individuals are labelled “star traders” the culture of these financial institutions is such that it is virtually impossible for anyone to check or challenge them.

There are few prizes for killing the golden goose.

Even more ludicrous is the lack of independent controls which left many of the traders to self-police their own portfolio.

Whether by design or delusion what trader facing enormous losses is willingly going to face up to the reality of the situation?

The preferred course of action is to continue betting more heavily in a forlorn hope to recoup the losses. It is an all too familiar tale.

The regulatory authorities may pursue some of these irresponsible traders in an effort to appease those who think that the bankers “got away with it”.

In due course a few of them may end up going to prison but the vast majority with have nothing to fear.

In reality the really guilty parties are those who were operating at the very highest levels in the banking communities.

Whilst not directly responsible for the specific transactions they oversaw the deeply flawed system. Whether driven by greed for increased profits or fear of not keeping pace with their competitors they presided over the ultimate train craash.

 

 

 

Mixed signals from the East

  

Li Keqiang the Chinese Prime Minister is now targeting growth this year of 7.5%.

 

This marks a more conservative view than that taken by the World Bank, as well as private sector banks, who had predicted growth to slow to 8% this year.

The government has said it will take steps to try to support the economy but faces a difficult task in putting more money into consumers’ pockets and to effect the shift from state directed investment to consumption and services.

Another problem facing the government is the amount of money held in China’s shadow banking system (thought to be around £200 billion) currently invested in Trust Loans and High Yield Bonds.

As witnessed by the fall out in the Western banking system these financial “instruments” carry an unquantifiable degree of risk.

The spectacular growth in the Chinese economy was fuelled by an export boom as China established itself as the workshop of the world.

China’s exports have picked up in recent weeks but with European economies still in a fragile state the implication for export growth is obvious and the potential for the Euro debt crisis to spread would inhibit export growth in the months ahead.

The other side of the equation is domestic demand. As was witnessed in Britain during the Industrial Revolution more and more people are leaving the countryside to seek work in the cities. By 2035 it is estimated that 300 million will have re-located bringing with them increased demand for housing and consumer goods.

 

 

The spectator always get the best view

 

Based upon my experience across a variety of sectors and businesses one observation holds true – whilst some companies are doomed to fail there are many whose survival and future profitability could be secured from a fresh input.

 

When you are personally involved, for a variety of reasons, 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.

Where's the family silver?

 

It is incomprehensible that so many companies be they large or small fail to keep an adequate control of their inventories. Similarly companies neglect to rigorously police their receivables.

 

Whilst Management consistently push for increased sales performance, the question of housekeeping is often put on the back burner or it would appear totally neglected.

It is a truism that no business deal is complete until the invoiced funds are in the seller’s bank account.

This begs the question: how comfortable are you with your stock and debtors controls?

A worthwhile exercise would be to review operating systems now rather than adopt the let’s hope for the best style of management.

 

Symbiotic relationships offer a route to survival

  

All too often the focus on the current economic background accentuates 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.

 

 

Adding value

 

There are only two courses of action when attempting to boost the bottom line, cut operating costs and generate additional revenue.

Many organisations opt to reduce staffing numbers as a quick fix but there is a danger that in line with reduced personnel there is an accompanying decline in operating standards. In such circumstances customers often choose to vote with their feet.

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.

In many instances companies would be advised to make customer service their USP but this requires the commitment of a dedicated work force not one that is pre-occupied with the spectre of further redundancies.