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I sometimes don’t know which hard surface to bang my head against first.  There’s the one waiting next to those who, being good at what they do in business adopt an attitude of possessing business acumen in specialist areas – to which they have no experience – or, the hard surface next to those businesses who follow these expansion of service offerings like a blinkered donkey following a carrot.  It can magnetise me with despair.

Whilst some advisors are well placed to give advice it doesn’t follow they have a specific expertise appropriate to a specific business type. And, the less confident a business is, the more likely they’re exposed to a non value-for-money service when there is a gap between what is needed and what is supplied.

So, when the small business owner tells me their “house is in order” because they’ve been told by their “professional” advisor – but they can’t understand what they’ve been told, or why they are doing what they are doing with their business – that’s got to be leaning towards a paradox?

Image credit: Brett Jordan  Article credit: Copyright SUF 2012

 

The storage boxes held the detritus of family shifts and changes, much had gone to charity shops but there were several pieces that had been hanging about the corners of the garage, which ‘collectors’ might appreciate.  “Head off to a car boot”, was the suggestion put forward to me:  a business area that I know nothing about – and how quickly I was made aware of being a novice.

I would be well organised, managing my ‘stock’  – all the prep had been done – an organised site chosen, each toy type had been separated, price label allotted and readied to be brought out for viewing.  I could imagine myself whiling away a couple of hours, relaxing and chatting with my customers in between taking in an opportunity to work outside.

No one warned me about the descent of dealers, ‘Any gold or silver?  Records?  Got any ……?’  The list went on as they pulled at the boxes and opened lids manically.  Those that didn’t want ‘vintage’ toys moved on, leaving a combination of mostly men fighting worse than four year olds.  Metal farm vehicles were put into bags before they’d been purchased,  Schleich dinosaurs were tipped into the box of non-marked dinos and distractions from hagglers meant some managed to walk away without paying.

Deviant dealers cutting into my profits, having to keep track of my (small amount) of stock that was in effect right in front of my eyes!  If my experience is marginally similar to this type of market trader’s regular experience, this is one trader who gets a tip of the hat.

Image credit:  Dominics Pics  Article credit: Copyright SUF

 

This was a character who understood that every aspect of business processes has its complications; he dealt in facts…. not opinions.

‘Earlier this year we had some trouble with seahorses’ – so went a line in a weekend read about the trials and tribulations of a chef who was having difficulty getting kosher certification ‘it’s a tough business – tougher than the pharmaceuticals business’.

This guy was talking about examining Nori, the seaweed around Sushi.  Seahorses aren’t kosher (neither are Shrimps and Eels and Octopus and Squid) and he’d found Seahorse infestation. He went on… ‘Only fish with scales and fins are kosher. But not all fish with fins and scales – sometimes what you think are scales are in fact in fact bony protrusions – bony protrusions do not qualify as scales’.

His business partner asked him ‘What are we left with?’

 Halibut, Salmon, Red Snapper, Mackerel, Mahi-Maho, Tuna….   but….  only certain kinds of Tuna.

(Image credit: Oscar Alexander    Article credit: Copyright SUF 2012)

 

Design on Protecting Your Business:

With their monosyllabic response of computer says ‘no’ extended to now include the likes of ‘outside criteria’ or ‘it doesn’t sit comfortably with us’, smaller enterprise’s expectations of the high street banks continue to consistently fall short because those lender type expectations are nigh on impossible to meet.

Apparently there were some £1.5bn of government backed  NLGS (National Loan Guarantee Scheme) bonds at Barclays and RBS, £1Bn at Lloyds, and Santander had £500m, to be made available to the smaller business. Provisos, such as having ‘a group turnover of up to 50 million’ and making a ‘material contribution to the UK economy’, didn’t include (probably because if you’re able to do it it’s likely there’d be a direct  invite to participate rather than having to put in a request) that your business has an ability to withstand extreme stress testing. But, as the scheme has in effect been sidelined in favour of FLS (Funding for Lending Scheme), those same banks will now be enabled to pass on lending to businesses in need, with the proviso of bolstering lending with no obligation to pass on any discounts (as per NGLS). 

Confused? Don’t be – basically nothing has changed, the banks need guaranteed safe returns, therefore high rates are a function embedded into their loans. The smaller businesses will still have the stress tests and homebuyers will likely still need mainly 40% deposits as they sift through the swamp of deals that come out… and then begin the long wait for processing.

 Lenders are tied to the qualifying elements of the scheme – and high rates are how the banks view risks-of-return rather than the cost of funding – they’re looking to protecting themselves and their profits…. something, all too often, some smaller businesses don’t prioritise: the protection of themselves, leaving the business vulnerable and profits exposed.

Just as it’s going to be difficult to prove a bank’s Libor actions specific damage to someone, it’s often not easy to convince the long-term damage of some finance vehicles – you know it’s there, you know it’s not going to have a good outcome…. but for those looking for the short-term bottom line, like puppies chasing a stick, they won’t ever look beyond the immediate gain…. and won’t let go of an idea.

Access to funding has always been a struggle for some business dealings and will continue to be so; add to that, knowing that even before you apply you’re going to get turned down it, becomes even more impeding –  there is no sentiment between a bank and a business; when a business is deserving of finance, there are options for lending and cash flow from alternative and non-high street names before, during or after any government schemes.

Overlooking the best solution with a positive approach for a business environment’s long-term benefit is ineffective financial management and a lost opportunity for the redress of power – something the banks wouldn’t do to themselves. The rigging of Libor rates and the threat of financial meltdown might seem ivory towers away from a small business’s operations, indeed before the problems hit the headlines, Libor, for many businesses, didn’t relate; uncorrelated to their financial structure it was relevant to the ‘too big to fail’  British bank: their businesses wouldn’t feel the effects of the behaviour and attitudes amongst the bankers beyond the bank manager’s desk.  The notion of recognising the need for appropriate finance and how it is put to use has yet to be learnt by some of our banks but financial management in the smaller business doesn’t have to wait for them to catch up. Placing the appropriate types of financial management for the size of the business, the business sector, with gaps identified, is the financial core – the underpinning and foundation to a business, to make it strong enough in the future to withstand any mismanagement decisions being made now. 

Owner managers, co-ordinating the running of a smaller enterprise are capable of managing money when the blueprint or infrastructure of the business is in place – by working from the inside out, from the bottom to the top, the business becomes complete and is in the right order – (exactly what lenders look for when measuring a business’s ability) – Unnecessarily reforming the structure is as destabilising as decorating before the plaster is dry…. ask any bank.  

Image credits:  USFWS/Southeastalpha du centaureSOCIALisBETTER

Article credit: Copyright SUF 2012

 

 

Last August had the London riots, this year August has the London Olympics. Last year had Project Merlin and Greece in the headlines, this year it’s all about mortgage price wars, because of the FLS (Funding for Lending Scheme) overstepping the NLGS (National Loan Guarantee Scheme) to which the Bank of England will be monitoring.

Interest rates have been held  and B.of E. is to make no changes to its quantitative easing programme, but a review of inflation and growth programmes will be made in November.

With a 0.7% decline in the economy  further debating is likely from the  economists and advice being proffered to Mr Osborne, but perhaps he should listen to the advice from Australia’s Treasurer Wayne Swan, who cited The Boss (Bruce Springsteen) as his economic hero, with lyrics that give insight into an economy.

G –Day (21st December 2012)  means changes to the E.U. Gender Directive  and changes to insurance premiums  of all types to equalise between men and women.  Mortality, morbidity and claims rates data for gender specific assessment will no longer be used for rates: as an indication, Life Cover for men could be -10% with +20% for women, Income Protection +25% for men and -30% for women.

Ofcom  have capped charges for sending second class large letters and small parcels and price increases on stamps for large letters and small parcels up to 2kg will be capped in line with CPI inflation to `protect small businesses and vulnerable customers’.  Royal Mail have created a record and produced a stamp within 24 hours for the historic win of the first British women to take Olympic rowing gold.

The high street banks have been active of late; have they hit their watershed? HSBC has put aside £1.3bn for likely payments towards money-laundering allegations,  Barclays have set aside £450m towards compensation to small businesses for the mis-selling of financial products, NatWest has disgruntled some of its customers due to IT problems  and RBS will take a hit of about £300m  from its role in the mis-selling scandal and IT meldown, and are likely to set aside just under £50m, compared to Barclays £450m. Santander  have put aside £548m for  PPI, they’ve also been in the news for charging a monthly fee to those business customers whose `free’ accounts were transferred when they took over the likes of Alliance and Leicester.

(Image and Article credit: Copyright SUF 2012)

 


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