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
Once-Upon-A-Time (in the real past) a Builder Developer was in the middle of developing an industrial estate when he came stuck (Historical note: *even in pre-recession days, High Street Banks changed lending rules as deftly as the Academy of Dark Arts). Having cast comfort blanket salaries aside, he and I both were in the early stages of a long crawl into business (Spoiler Alert: this is more a Grimm traditional tale in that there’s no happily ever after).
Being on a razor’s edge, walking through barbed wire, and treading on eggshells are some of the graphic observations I hear from Business Owners about running their businesses (in the good times, and during bad times). Pressure Points are constantly put to the test and when responsibilities intensify; Being a core business element, the finances that fund those responsibilities inevitably can be as sensitive as would any vulnerable area that is subject to sharp objects.
I was to assist Mr D by searching out alternative avenues…… whilst he was out of the country…. But, as is often the way for the Business Goldmine Goblin Worker, the sledgehammer hit a MAJOR challenge soon after setting about the task in hand. The only way through with a stronger attack needed Mr Developer’s authorisation. This meant, in effect, I had to wake a very grumpy team boss who’d turned the emails off.
I was reminded of this incident through a recently found article in which the writer explains how he’d been unnecessarily harsh in his attitude towards someone who’d approached him. Long story short, it got me thinking about the gamut of attitudes I’ve been on the receiving end of. From the humbling experience of being a Guest of Honour at a couple’s wedding because they’d managed to salvage their business and buy a home… to being on the receiving end of Mr Developer’s vocal boxing. He’d underutilised his assets and thought he’d kick off with a predictably un-creative and without reason **** *FF! Following through with a nasty knee-jerk Rot in the Ninth Circle of Hell!
As my tale is the in the tradition of complicated real life, after I walked away there was no Karma. Mr Developer didn’t fail miserably.
I chose to lose a client and for some time he scrabbled like a drowning rat in sinking mud, but…. eventually found a raft (of sorts). We both meant business; we just dealt with it differently.
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?
01 10 2013
Phase Two of Help-To-Buy (HTB), in which taxpayers guarantee up to 15% of a new mortgage, means that Applications will now be allowed from early October. However, lenders will not be able to buy guarantees for the mortgages they offer until January 1, 2014. Lenders will be able to start writing loans but it’s still unclear when they can advertise their deals, how much it will cost them to take up the mortgage guarantee or if they will be 80% mortgages – crucial factors in cost for the borrower.
The UK economy is currently growing at the fastest pace since the financial crisis and is set to be maintained in Q4; Q3 GDP figures are due out in October.
Despite Interest Rates staying the same, thousands of landlords are facing a rise on their Tracker mortgages with the West Bromwich Building Society’s former specialist arm, West Bromwich Mortgage Company. The rise in December is similar to that of the Bank of Ireland (BOI) whose customers face a further rate rise in October, from 1.35% (o.5% base, plus 0.85% margin) to 3.99%.
Finally, October will see Royal Mail privatised, with orders for far more than the entire number of shares being offered already made well before the 8 October deadline. The float (11 October) is being handled by City firms and banks including UBS, Goldman Sachs, Barclays, Merrill Lynch, Investec, Nomura, RBS Europe.
Image and Article credit: Copyright SUF 2013 ©
Business As Normal…
Small firms are on the whole still feeling austerity chomping at their heels from which many are facing heavy additional burdens. Consequently, doing the bare minimum to get the job done means ‘right’ or ‘wrong’ decisions aren’t always considered, and we’re seeing a distinctive two-camp pattern of those who acknowledge that changes continually happen, therefore they have or are prepared to adapt….. and, those who prefer to put their head in the sand.
Notice any parallels with the endless financial headlines?
For example, LIBOR (London Interbank Offered Rate), the wholesale market interest rate for lending between lenders (banks), once perceived as a reliable benchmark, was recently subject to claims of manipulation. Did it adapt or put its head in the sand? Whichever, it’s now being forced to look at change.
Base Rate has current ‘forward guidance’ giving that, providing unemployment remains above 7%, interest rates will not go above the four year static 0.5%. When the MPC (Monetary Policy Committee) make their decisions for setting the Base Rate (BoEBR) to meet inflation rate targets, the objective, based on variables, is to maintain price stability whilst supporting the Chancellor’s objective – In essence to strike a balance between keeping inflation down, yet not pushing up interest rates higher than would be healthy for inflationary pressure. Theoretically, interest rates could stay at the norm 0.5% for the next few years. Dependent on how they are interpreted, dependant on which numbers are used, the shift around could be viewed as ignoring the facts or being ‘forced’ into change.
This Interest rate, for short term money lending by the Bank of England to commercial financial institutions, (who in turn set their own interest rates for their borrowers and savers), was changed between 1997 and 2005 on 30 occasions - 26 came in the form of quarter-point changes in either direction, and the rest were half-point changes - from 1971 to 2013, the average rate of interest was 8.19%…. and, with a potential forced change for mortgage lenders, (consequence of EU rulings); which could have mortgage lenders having to tell borrowers ‘the maximum interest rate they have charged during the past two decades’, this APR could arguably contribute to already confusing information, with both lenders and borrowers wanting to bury their heads as preferable option to advertised loans and their Klingonesque small print : ‘Interest rate of a maximum of a charged during past two decades’.
What could curb all this confusion? What could possibly give those in business an opening to consider the ramifications of not considering? ….got me to thinking about the derogatory term: Normal for Norfolk.
For any not familiar with this reference to a county, it’s used when describing an action (or less sensitively an individual) which is seen as so ridiculous it could only have been born as a result of inbreeding; the implication being it’s a stupid action. Scratch away at the letters (distraction technique for mounting paperwork) and it takes only the removal of a few consonants before a couple of useful phrases alight.
The new normal (following 2007-2008) for business could utilise these phrases as clarity from many a powerful body: this is ‘Normal for No Folk’ or this is ‘Normal for Folk’. ‘They’ (those who issue the statements) should be able to see clearly each time, by the response they get, that we (those the statements apply to) understand what it is we’re being told. The phrases could help us to understand whether something is a long or short term expectation, or acceptable or unacceptable situation - We’d be able to clarify whether they do or don’t know what they’re doing. They could go about their business realising what they perceive as ‘Normal for Folk’ is anything but normal…. and we could go about ours, understanding ‘Normal for No Folk’ is anything but normal.
Searching for the Right Note
Did you know school recorder lessons are solely responsible for some of the great drummers of the world?
The skill sets of Buddy Rich, Ginger Baker and Keith Moon all began when some crazy, thinking that an enthusiastic child (with an eagerness to explore the world’s sounds and rhythms) should be handed Satan in a stick …and offered a recorder lesson. Kermit, seeing the potential in the young Animal, Dave Grohl’s mum, wondering how to fill the long summer holidays or the Krupa famiy, pondering a hobby for the young Gene – had all being advised to promote the easily accessible recorder…. Long story short, these guys turn the tune and start hitting out a beat with their newly found drumsticks – they were more long-term project not short term ‘what’s available’.
But all that practicing needs feeding. Drum machines, eating less and being easier to transport than a drummer, almost managed, at one point, amongst the drivers of rhythms’ market forces, to make the drummer’s skill set a redundant, unviable proposition and the genesis of favouring investing in music that interfaced with electronics and tech happened.
Using technology to portray a future in which technology could enhance our lives, We Are the Robots, one of Kraftwerk’s avant-garde pieces (in advance of Step-Up Finance’s genesis), gives a 70’s perspective of the future. The human element disappearing, compounded by machines replacing the drummer, connotations of an uprising HAL are removed … and `I ♥ my machine’ is reinforced during the 70’s when the UK economy was weak – you know the story – high inflation rates, recession, wrecked businesses…. a time when everyone began to focus on looked forward… to the 80’s…. remember those volatile 80’s? High inflation and high interest rates and a period of economic and technological growth, when programmable machines; vocorders, cassette tapes, Walkmans, compact discs, almost killing off the LP and video ‘killing the radio star’, leading up to Black Monday …. and recession. Alternative genres were created as Rap/Rock/Metal and a fusion moved through the 90’s, with digital recording being standard, musicians frequently shared stages with those they’d been influenced by; returnees came back from the 60’s, 70’s, 80’s and 90’s , technology kept ever advancing, music merged: with itself, computers and the internet.
Today, at a time of continued weak economic growth, Step-Up Finance isn’t alone in loving our machines, the human element has and is being removed for efficiencies (well observed Kraftwerk) but surely we can’t be alone, here at Step-Up Towers, in thinking there’s currently a lot of looking backward as we move forward. Or that, when devoid of context, too much thinking done backwards might not be the way forwards (not that economic influence is causality of music development). Musicians keep the beat going, songwriters are able to convey a perspective, experimental musicians create new sounds and create new instruments (as per Kraftwerk who built their own drum machine) … it’s the ones who bring something new, often at a time of stagnation, that are the influencers in any field.
Interest rates have given the financial charts a flatline since 2009, with 0.5% almost becoming a BoE tagline. Now, we’re hearing of a potential planned strategy by the BoE to include some form of ‘Forward Guidance’ i.e. giving out some certainty by reacting to the situation and saying what it’s going to do before it does it, rather than responding when the numbers show things aren’t working. ‘We’re functioning automatic’ (Kraftwerk lyrics: We Are the Robots) remains true today and when applied to frameworks which perpetually use the same measurements or what might happen as indicator: take this, and that, add some of those and this will likely happen. Add something new to an automatic process and the potential to influence a crisp quality is opened. Measurement can become more specific as differing perspectives add depth, music can become sharper at the edges, drummers have an opportunity to open their Pandora’s box of paradiddles, the BoE might be enabled in giving certainty to the route of interest rates and, from our perspective (how Step-Up Finance gets involved) business owners are offered insight for a wider focus in planning long term strategy in their enterprises…. not just taking the short view ‘what’s easily available’.
Image and Article credits: Copyright SUF 2013 ©
Think Like A Rat To Catch A Rat
Us humans and Mr Ratty et al have a lot in common: both are partial to a swim and a bit of chocolate (rarely done at the same time ), both are deemed smart thinkers with, apparently, Mr Ratty having a similar brain to the human one (although, as yet, with no vermin version of reality TV, humans could be Top-Trumped). And….. both use the internet, although with RATS (Remote Access Trojans) managing to infiltrate businesses, it would take more than MC P.Piper to repeat his carefree rocking down the streets of Hamlin, with a killer soundtrack hence the viral version of Ratatouille can have the winning hand.
Attacks happen to all size businesses, either as a target or by inadvertent corruption, attacks which have an immediate impact on an unprotected or unprepared business. Last year saw 87% of small companies experiencing a security breach; that’s a lot of wasted time and resources. A malicious insider who manages to infiltrate the security departments of an empire or avoid teams of people devoted to security insight and take down a corporate giant holds more interest than hearing about Dave’s distraction from a Trojan Horse that took him out of biz for for a week, or that SME Sue’s cyber attack meant her customers couldn’t place their orders..
It’s easy to bid one rack one’s brain, I’m sure my poor head aches again, I’ve scratched it so, and all in vain, Oh for a trap, a trap, a trap!
(Mayor – Pied Piper of Hamlin)
I’m fortunate - In my business I don’t have to accommodate credit card terminals because, according to a data breach investigation report, the indication is that almost a quarter of confirmed breaches, with a financial motivation for the attack, are amongst the retail and restaurant sector: Terminals must be a prime area of concern for some businesses.
Inevitably, as the online business ‘market-square’ encroaches evermore there is caution from some about venturing onto the internet for exposure, or using digital. On the one hand, here is a platform that enables them to grow their business exposure and customer access, on the other hand, the gateway appears to be a swinging saloon door exiting into a feral unregulated world which could immediately expose them and their business. However, my gasp was still flabbered when, the day after hearing and speaking with various people who had, in all literal senses, global experience of data risk, I spoke with not one, but three smaller business owners, each alleging not having email. I didn’t need to ruminate the question; How can denying a business another link for customers, employees, suppliers or peers to communicate be effective without the modern day equivalent of a biro being accessible?, for long. There was a common denominator, if a flexible business mindset had ever existed, it had become ‘infected’ by a self ‘malicious’ short-sighted attitude about effective business.
With shrinkage concerns central for businesses at any time, these owners, are similar to wild rabbits with Myxomatosis, they don’t realise their symptoms are compressing their doom as they snuffle and munch their way along the delusional safety of familiar grass, blind to predators and oblivious to the ready-to-strike vermin that put a hole in the wallet. They might avoid the cyber attacks and RATS that can damage unprotected, unprepared business but they’ll unlikely avoid the verminous affect that has them belly-up for an eventual Sale.
In days of yore, before SME access to email, my future FIL was the victim of a Rat attack at his business premises. He knew it was a Rat because it was found smouldering next to a power cable having left perfectly gnawed indentations for the insurance company. Thanks to a Bank Holiday (banks were blamed even then), refrigerated fresh food stocks had an extra day to bathe in warmer temperatures - long story short – stock wasn’t available and his customers were let down. Unlike the raft of information available for businesses today, he’d never been advised on any ‘but for the’ loss of turnover cover; these rats cost him business and then some.
“By gnawing through a dike, even a rat may drown a nation” - Edmund Burke
True, Mr B. and I could be drawn at this point into telling of my business trip to some building developments, beginning in Schipol which had a mid morning offer I’d heard as being ‘De Kuypers?’…. but was in fact a friendly offer for ‘de kippers?’, and finished with what I’d heard of as,`to the good barn?’ but was in fact a friendly ‘to de Goud-a barn?’
Roll-mop herrings followed by, a little too quickly for my stomach, cheese tasting session isn’t an inevitable by-product of a business trip to the Netherlands. It’s all in the planning. A data breach doesn’t have to be an inevitable reason not to integrate a business online.
01 07 2013
On July 1, former Bank of Canada Governor Mark Carney will replace Sir Mervyn King as Governor of the Bank of England with a first Monetary Policy Committee (MPC) meeting on July 3 and 4. Mr Carney sees that an important role for Central Banks is to offer “forward guidance” when the economy and monetary policy face exceptional challenges. He’s also said the Bank has has no intention of dropping women from Britain’s bank notes after a decision in April was made to replace Elizabeth Fry with Winston Churchill on the £5 note in 2015 – leaving (not including the Queen) no British women on our banknotes.
Flood Re has seen a deal being reached between Insurers and the Government. Flood insurance premiums will be capped and linked to Council Tax bands. All UK household insurers will pay into a fund that can be used to pay claims for people in high-risk homes. As part of the Water Bill, the SoP (Statement of Principles) was extended from ending 30 June to 1 August which will now continue until the new system comes into force. The cap on the amount households will pay for flood insurance premiums will start at no more than £210 per annum in Bands A and B, rising to £540 per year in Band G. The minister responsible for negotiations between the ABI (Association of British Insurers) and the government will deliver a keynote speech July.
New employment tribunal rules of procedure are to be introduced at the end of the month: 29 July which sees claimants who issue a claim against their employer in an employment tribunal being required to pay a fee to issue a claim and a further fee to proceed to a hearing. The rules have been revised to simplify and streamline the employment tribunal claims process.
The world’s only conference dedicated to passwords is taking place in Las Vegas in July at which ‘password fatigue’ is being debated and informed solutions in the pipeline are discussed along with the ‘password pill’.
Will July 20 be the day Trafalger Square sees a controversial blue cock installed among the pigeons? The national symbol of France, a cockerel, has been made as a 14ft high representation of ‘regeneration, awakening and strength’ however, for some, placed on the fourth plinth under Admiral Lord Nelson (he of Battle of Trafalger fame) it’s not viewed in the same light.
Image and Article credit: Copyright SUF