Blog Archive

Page 5

The month of predictions is here… so while we get down to business…. here’s a roundup of what’s being said…

Image and Article credit: Copyright SUF 2014 ©

The Banking Reform Act, ring fencing retail and investment banking, and implementing recommendations of the Parliamentary Commission on Banking standard (including criminal offences for senior bankers misconduct), has become law.

As is said, this is just the beginning.

Although, ring-fenced banks will not be able to hold or own the capital of other non ring-fenced banks etc., it won’t be fully in force for another four years during which a new authorisation process for staff will be introduced and effectiveness reviewed.

And, a banking union plan has been agreed for managing Eurozone banks (UK plus 10 other countries are not part of the plan). The ECB (European Central Bank) has been put in charge of European Union regulation rules for banks in the Eurozone

Image credit: WetWebWork  Article credit: Copyright SUF © 2013

Businesses Break Up All The Time – Not Always for The Right Reasons

There are some get-togethers of which I’m partial to.

But, unless the invitation is from nearest and dearest, sometimes there can be a palaver of what bottle to take (are these folks wine buffs…?). For those I know better I’m usually safe in the knowledge that providing the label looks interesting, never mind the contents (don’t judge me) and, therefore the opportunity to reconnect at a family gathering is usually safer ground….. Auntie Sue can always be relied on to admonish Uncle Joe for one-too-many beers (in her unique one-too-many wines way)…. and there’s always a younger family member providing general distracting entertainment in demonstrating the latest `how to wriggle away’ from Auntie Sue’s lipstick enhanced hugs.

Over time there’s been a noticeable change synonymous with some gatherings.

There seems to have been less proud moments of proffering re-introduction to offspring last seen in a pushchair and now sporting full exhibit for Movember, and more (when enquiring about other halves) looking to the floor, feet shuffling and announcing ‘…. we’re separated/separating’. Any awkward moments of bringing the wrong bottle or giving flowers to an allergy sufferer are insignificant by comparison to these cues.

A breakdown isn’t always obvious.

Much the same process as a business’s breakdown, when connections no longer work, visible signs aren’t automatically noticeable. Broken connections in long-term life relationships have a commonality with businesses breaking down, easily going unnoticed amongst other pressures, communication is the first to be let go of. Only last week I spoke with a business manager who hasn’t seen the businesses owner on the premises for over two years!  With no obvious reason, the manager concluded (and I agree) the ‘relationship’ between owner and business was over (also manifesting as ‘relationship’ with owner and staff straining at the seams).

It’s a shock.

Any business owner drifting away from a ‘relationship’ with their business is like leaving a baby unattended – in short, risk is left unmanaged.  A symptom of realisation is anger. And, just as someone might be prepared to spend time looking at the situation, the ball has started rolling. They might be ready to take action but quicker than expected, third parties have entered. Realisation’s anger is fuelled by a compounding realisation of the reduction in informed decision making prospects. Adding frustration fuel to anger, the unwanted third party intervention is necessary as damage limitation, both parties want to take decisions but the anger often gives out confusing and conflicting information. With increased animosity…. a vicious circle starts, to which the only benefactor is ironically all too often the cause: Wasted time.

Is the end is inevitable?

With compromises, adjustments have in their core unsettling processes; some people come through their experience tired,  others stronger. Much as looking to the floor, feet shuffling and announcing  ‘…. we’re separated/separating’ can be followed by pointing to a baby covered in lipstick kisses ‘and that’s our new offspring!’  The business owner might be re-affirmed that being an employee isn’t an option.

Mitigating the blow.

We’ve all had shocks of one form or another which in hindsight can sound easier to have come through than it actually was. But, by acting upon the realisation of something not working, the blow can be lessened, leaving time for revival.  A conclusion usually starts with re-evaluation (and wound licking) – No matter how awful the realisation is that either a relationship within a business is breaking down, or that the relationship with a business is breaking down, the sooner it is acted upon the sooner the effects can be mitigated.

Carry on or act upon the realisation.

Connections in the breakdown of long-term life relationships have a commonality with businesses breaking down.

Image credit: NinaZed   Article credit: Copyright SUF © 2013

To sustain or grow business, owners need to continually invest; However, 2013 has maintained a vein of general turbulence for business… with a finale to the year (unless something else turns up before Big Ben’s midnight striking in the New Year….) on the heels of the Co-Op’s disgraced former Chairman’s scandal,  culminating in RBS being accused of deliberately wrecking viable small businesses to make profit.

My concern has always been for those businesses that were indulged by their banks, like spoilt children at a party; overeating and over-excited to the point of bursting. Then, needing support, (often feeling sick) they’d return to the bank for assistance – Only to find themselves overlooked and thrown out of the ‘house’. Good viable businesses and so-called zombie business equally hit – Any who have spoken with me over the last decade will know that the RBS story is very old news.  And now, earlier than the 2018 target, the Bank of England has been asked to review its powers over the banks’ balance sheets – the Leverage Ratio – to rein in risk-taking banks.

With access to finance via traditional bank funding still having barriers, businesses have done well to keep their heads above water. So will the 2014 opening of The British Business Bank  offer some innovation as an institution? Or will dependence on its infrastructure Velcro it to the various other Government initiatives which have had little impact in their contribution to accessing working capital or asset purchase?

2014 will be interesting to watch as a juncture to continued ‘extreme’ risk aversion.   The Banking Reform Bill  (in the House of Lords) with its measurements to ‘improve’ bank governance is to come into effect.  One element proposed to enter the Bill is the criminal offence of ‘reckless misconduct in the management of a bank’ (should a senior banker’s behaviour fall below that which could be ‘reasonably expected’).  That could be an interesting one – We all run our businesses in the belief that we’re doing the right thing at the time (to run our businesses) and, banks being businesses will probably counter the same argument. Which, considering the few spot-the-differences in the 5+ years since the financial carnage, there’s probably plenty of time  for those at high levels to haul this one around before  any movement is seen in the management culture of those lofty level bankers.

Analysis Paralysis 2014?

Image and Article credit: Copyright SUF © 2013


With the reality of business economics being under increased pressures, the debate on the sustainability of small businesses will continue.

There is no silver bullet for businesses with models at tipping points; competition and alternative channels, profit margins and budgetscash-flow  and supply chains, each have an impact on the demand. Customers want convenience and efficiency all wrapped up in value with an added smiley face.

But there is no doubt, not adapting to all those demands will only place a business in jeopardy to altered trading conditions.

Small companies that have become reliant on systems (including their banks) believing that their business is safe are, in general, unrealistic. By optimising opportunity and developing strategy  businesses assist themselves in being complicit in managing business.

Implementing change for improvement creates transformation and can build the necessary confidence for business decision making when there is any uncertainty.

Image credit: Jan   Article credit: Copyright © SUF 2013

I wonder how many will choke on their coffee when they hear of  the brilliant idea that Banksy recently set up?

A market stall  in New York, part of his contribution illustrating Art without a price tag, filled with original work at $60 a pop….. and few takers. Marvellous.

Collectors for profit, missing-out to those genuinely willing to give it a go, and value the offer on the market stall by enjoying the aesthetics for their true value over perceived value, is a rare thing indeed.

Image credit: pasukaru76  Article credit: Copyright SUF 2013 ©

The pound has risen, there’s optimism amongst the financial industry and sterling is looking strong as record low interest rates are still in place  – Business surveys have recently been consistently positive; retail sales are up, car sales are good, mortgage approvals have increased.


Most of these figures are set against previously declined figures, therefore it’s not unrealistic for Step-Up Finance to keep hearing the ‘concerned about cash flow’ chorusing from small businesses amongst the commercial finance and funding concerns.

Needing a jumpstart, some of these business have tried finding a solution by turning to bridging finance or loans, while others have used their own reserves or drawn-down from their business.

Some have managed to reduce the stresses and stabilise their situation.  Some have made it worse by not being realistic about the amounts needed, gateways to those amounts, or exits routes from those amounts.  Some measured the amount of finance that can be taken from a business without leaving it worse off. Some missed the main measurement for cash flow and business value.

The sum total is some have cash and will survive, and some haven’t been strategic, and likely won’t.

Image and Article credit: Copyright SUF 2013 ©

Should A Business Borrow Money Because It’s Cheap?

There’s no straight answer….and depends fundamentally on how a business funds its current operations.

Wanting to increase their reward is how the business owner accounts for their decisions, therefore, when it’s running consistent and there’s opportunity to benefit from that consistency by increasing turnover and further growing retentions for the business, when there is an appetite to take opportunity and ‘cheap’ borrowing is available, the ‘cheap’ part of a facility might aid some of the final decision making. And, when business isn’t currently running consistent because one, or several factors, inhibit opportunity, the decision to borrow might also be inspired by ‘cheap’ lending on offer.

The key borrower decision is the same as the lender’s key decision; risk, counter balanced by debt.  And, good quality financial investment from third parties can be thin on the ground at the best of times… even more so at the worst of times.


Initial risks that businesses take aren’t always quantifiable in monetary terms and, at such a crucial time for financial support, business owners are  usually found ‘investing’ in their investment because they ‘believe’ in themselves. This crucial time, without a firm foundation of funding, often means businesses owners are taking time with their ‘investment’ but further disabling themselves from taking the time to evaluate and accommodate financial structures, or being restricted in exploring alternative forms of funding without  upsetting  the equilibrium of running the business. In such an example, capitalising on ‘cheap’, capitalising on an investment opportunity, capitalising on maintaining that investment has currently never been as low before.

Without wishing to sound like a stuck record, Lenders re-think their strategy and attitude – Businesses owners need to re-think theirs.

When the banks remove an overdraft and replace it with ‘different terms’, the willingness to lend hasn’t been removed (indeed, its arguably promoted as support) and an ability for the customer to borrow is still there (for those offset as worthwhile ‘risk’ for the new terms) but as the amount of  overdraft facility  might be reduced, the length of ‘tie in’ term increased and the alternative facility and its costs being  more expensive risk for the lender has been counteracted, but what of risk for the borrower?  Should they utilise what’s available from themselves, or use what’s available, it’s ‘cheap’? Borrow from yourself, your business or a third party? Increase or decrease the risk? Take a breathing space with cash flow or keep the cash flow on reduced oxygen?

Should a business borrow money because it’s cheap or should a business be willing to get informed; understand what they have, what they could have, what they’re working with, how it should work, why it isn’t working better, what could work better.  Should a business be an easy target in the business jungle or get some body armour? 



Image credits: Nathan O’Nions   FabCafe  and SUF.   Article credit: Copyright SUF 2013 ©


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