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Monthly Musings

BOOM! The Only Acid Test

“As I hurtled through space, one thought kept crossing my mind – Every part of this rocket was supplied by the lowest bidder” ~ John Glenn.

There are some small numbers that can make a big difference to a business and there are some metrics that are readily available and ripe for easy improvement: the efficiency in using breeze blocks proportionate to bricks for a refurbishment, the types of stock allowed on the shelves longer than other types, the specific machine able to put out a new product, or even how the length of time taken to make a repair for a part that a customer doesn’t even realises exists.

And, glancing backwards over experience garnered in the daily running of a business, it’s probably the small tweaks and adaptations (how the day is organised, the sales cycle, staff issues… etc.) as being the most noticeable in having made or are still making a bigger difference for that business.

Putting aside the actual business type and market sector to isolate the financial aspect, too often financial decisions are also taken after, when the biggest numbers’ (gross profit, cost of goods, inventory and so on) history on the logs and spreadsheets have been looked over… and an accountant will likely guide through further changes to net better results (tax, VAT, company formation, bookkeeping….). Dollar2

The small numbers that can make a difference get the attention they need. The mechanics are regularly overseen. The metrics are monitored. The financial statements have a regular MOT (Monitor or Terminate).

But what about, as we call it, the mysterious metric?

This is the measurement I use as a starting point for calculating lender’s interest for mortgages, loans and business finance.  It isn’t a secret, obscure or hidden metric. It’s a usually overlooked business buffering opportunity made up of those small numbers – the little ones that make the difference amongst the numbers, spreadsheets and statements.

The financial statements might (maybe a year down the line) show where there is a problem (which six months ago was the future but is now the past).  BOOM!  While these numbers have been building up (or down), lenders have been building their key metrics using their own ratios and, a year ago, when there might have been wriggle-room in a business, so might a lender have had some wiggle room.


A business’s metrics (from its ratios) change, lenders’ metrics (from their ratios) change. The correct business metric directed at the correct lender metric, at the correct time is the acid test of fiscal health. BOOM!

Images and Article credit: Copyright SUF © 2014


As from 1 April 2014 the Competition Commission is being taken over by the Competition and Markets Authority (CMA) and will assume the consumer functions of the Office of Fair Trading OFT concurrently with Financial Conduct Authority (FCA) who will hold the law powers in relation to financial sector activities  for over 50,000 applicable consumer credit regulation firms.


As from 26 April 2014 new lending rules will be applied as a framework for lending when the Mortgage Market Review (MMR)  comes into full effect. For all types of regulated mortgage contracts, lenders will be looking for the ability of all borrowers to afford the loan at both the current rate and, additionally, if there were rate rises. It applies to staying with the same lender; repayment methods, further advances, part or full redemptions and equity transfer, as well as considering a new lender and non-bank mortgage lenders subject to risk-based capital requirements and liquidity risk management controls. Using detailed scrutiny, this advice driven model in essence focuses on responsible lending and affordability assessments.


‘The more organised you are and the quicker you can get to the point of exchanging contracts, the less time there is for movement in the market.’  Although we haven’t seen it recently, apparently gazumping is on the rise.


And …. crazy prices continue….

£1M for a `smaller than a tube carriage’ flat

£150K for a solar powered beach hut.

£115K for a very messy house.

Image and Article credits: Copyright SUF © 2014

What’s Growth Got To Do With It?

Fact: Businesses are the closest to consumers

When there are concerns  about consumers (pretty much a full time occupation for the business owner) those concerns translate to any concerns about the long term outlook – there is a connection between business’ consumers (customers) and forecasts of upward trajectory – it’s the  running a successful business fundamental – there are few who ever take their eye away from concern, or never have a long term outlook aim of upward trajectory. And, it’s a fundamental applied to before the 2008/09 crash and during the recession;  and it will continue to be for as long as there business owners running successful businesses – healthy economy or not.

Do moderate improvements in economic data mean moderate improvement in the intentions of business? Is it upward trajectory time?

Without getting into the nitty-gritty of different indexes and surveys; or differing business sectors’ economic pressures, aspirations and challenges, it seems with the notion of being in a bad BUT improving place there comes an ability to pull out ideas that had been put away for a lengthy hibernation. Published data  which kick-started the New Year continues to seemingly remain optimistic for the near future; there’s an encouraging, in general positive,  economic outlook as we enter what is (for some) the final part of Q1 territory and for others the exit of Q4.

Business owners want to grow but without adequate support and resources and a healthy strategy….?

Ever the proud wearer of my sceptic’s badge (I’d like to think held firmly in place with balanced thinking), from my perspective and the conversations I’ve had with small business owners (not just in this Q1, or the last Q4, but anytime), any louder platforms’ (media) increased frequency to the noise surrounding economic outlook can skew perception of reality. A recent ‘telling’ strategy is when something gets more headlines than banker’s bonuses during bankers’ bonus season. Compared to past usual headlines at this time is there any wonder I question if something is lying deeper behind the new kid on the headline grabbing block, when, what for some seems a recent conversation is a common conversation for others? Independent businesses’ talk about the long term outlook never stopped because it’s not a recession that’s dangerous – it’s the recovery that’s dangerous.

So, I’m with the guy who said ‘if you’re too open minded your brains will fall out’, as is the business owner (the one I mentioned before filtering concerns, taking  aim at upward trajectory for long term outlook with one eye whilst using the other to watch the customers) , the one who isn’t under an illusion about the reality of reality.

Weigh up all the variables and strategizeCustomer

A common strategy which can support a business in aiming for upward trajectory is to remove (if there are any) some of the profits which, considering the aim of business is to make a profit and that successful businesses are seen as profitable, seems in conflict. However, this isn’t the ‘removal’ of profits in accountancy terms (relating to any drawings or deferrals), this strategy is about responding and managing a business in a balanced manner by not letting it get stagnant.  The long term outlook and potential growth is planned with balanced expansion, is sustainable, allowing margin for ‘error’, uses a combination of internal finance (reserves used reservedly) and raising external (bought in) cash flow products, equity funding or business loan as working capital finance.

Those who have implemented this are likely now enabled to feel encouraged by their strategy. And, those who remained stagnant might want to swap cynic’s badge for sceptics; pin a sign of caution with cautious optimism.

To be able to calculate a trajectory

Investment in a business has to be balanced, resources and facilities for growth have to be factored in at the right time; placed for opportunity and shrinkage buffering. Put some sustainable working capital with a pro-active business owner, whose willing to pop a few of their pounds back into capital expenditure and you have a business that understands interdependency.

With general business conditions continuing to be up and down, investing enough to fill the holes without constraint enables a business to operate and continue its transition. Its takes away being powerless  and can look away from the headlines and far enough ahead to think about growth.


Image credits: Mike KrzeszakDell Inc.Lisa @ Sierra Tierra    Article credit: Copyright SUF 2014 ©




The banking industry has seen a rise in consumer confidence for two years in a row, according to a new survey of 32,000 banking customers in 43 countries. The study around the world showed confidence increasing most in India, followed by Saudi Arabia, with confidence falling the most in Ireland and Spain.The survey showed 60% of respondents aren’t planning to close or move their accounts, which, according to Ernst & Young highlights that this isn’t necessarily because they are confident that they are with the right provider, with some respondents stating they a change would be too difficult or time consuming.

“Bank customers are not being actively retained; they simply remain with their current provider through inertia and are therefore vulnerable to competitors“.

According to another global study the Arts, Entertainment and Hobbies market sector was 60% more competitive January 2014 compared to January 2013 and Financial Services 60% more so, whilst Sports & Recreation was 121% less competitive in January 2014 compared to 2013 in relation to digital advertising

The three months to February saw a highest level since 1998, in the Confederation of British Industry (CBI) quarterly Service Sector Survey.   Optimism indices for consumer services (including hotels, bars, restaurants and leisure) rose to their highest level amongst 139 companies and at the quickest pace since 2005.

The ONS has confirmed the UK economy grew by 0.7% in the Quarter with business investment rising by 2.4% from the previous three-month period and rose 8.5% from a year earlier.

The BBA  (British Bankers Association) has said that mortgage lending was 38% higher in January than a year ago and ‘continues to rise compared to a year earlier’. It is widely expected that the Bank of England  will raise interest rates by the end of next year, with an inevitable knock-on effect on mortgage rates.

Finally, not certain if this is a record or not but Royal Bank of Scotland has lost all the money  invested in it by the taxpayer six years ago with total losses since its bailout now drawn level with the £46bn put in with 81% stake, in 2008 and The Co-op Group’s losses  for 2013 are expected to be greater than £2bn, by far the worst in its history.

Image and Article credits: Copyright SUF 2014 ©



The Gatekeepers of Your Business (Part One)

Any sized business can make a big promise happen by delivering the value proposition, specific to that business, when its committed to and supported by the right gatekeepers – from an answerphone holding the fort, to a line of line managers sitting in waiting.

With stiff competition for products (and services) big promises consequently bring big asks from customers. More than ever before, consumers have control over what they’re willing to spend. Additionally, loss aversion has them buying accordingly which means that providing a value proposition needs to be about more than price.Lego

Giant corporations are big on value proposition rhetoric: L’Oreal changed ‘Because I’m worth it’  to  ‘you’re worth it’, and currently its ‘we’re worth it’;  their team of marketers (probably sat at Lego-laden tables dotted with bowls of jelly beans) worked until inspiration struck, they recognised the brand’s value was as important to the customer as valuing their customers. Providing they’ve followed through with appropriate gatekeepers – they’ve cracked it.

On more familiar territory:  Lloyds Banking Group’s ‘You First’ changed to ‘For the Journey’. Presumably etiquette illustrated the customer being placed first, although with no clear objectives, identifying ‘first’, ‘for’ and ‘the journey’ made it hazy so, serving the people and businesses of Britain they’ve re-branded and re-focused their value proposition to ‘For the Moments that Matter’ – (a big claim considering their recent IT system failure).

As I understand it, ‘marketers’ general advice about value propositions is to stay away from money propositions (biggest savings, cut prices etc.), however, although RBS make no mention of money with their customer value proposition:  ‘Here for You’, imagining it next to the Restructuring and Recovery Division doors this is a value proposition with sufficient menacing tone it doesn’t need a gatekeeper, just re-name the department: Mission Impossible?  And with Barclays’ ‘Fluent in Finance – It’s our Business to Know Your Business’ – Scary… in a KGB way?  Santander: ‘Bank for Your Ideas’ – hazy or just vague?  Maybe re-thinking the money thing and firming up some ideas isn’t such a bad idea?

A value proposition is usually only put to the test when something goes wrong and when it goes wrong, if the gatekeepers’ aren’t managed…. who’s really bothered?

Re-arranging doesn’t change the formula – eleven plus two: when you rearrange the numbers is twelve plus one.

Next time: Part Two – The Gamekeepers of Your Business : When things went wrong…..

Image credit: Joshin Yamada, Phil Whitehouse  Article credit: Copyright SUF 2014 ©

New Rules
Home Mortgages
April sees the MMR  (Mortgage Market Review) come into force including waves of change around affordability rules. Those lenders who haven’t already implemented increased affordability checks will do so, as part of applicant stress testing and scrutiny.
Commercial Transactions
Claims made for tax relief on plant and fixtures within property using capital gains, will alter after 1 April 2014 where allowances have been included in a Fixed Value Requirement or Disposal Value Statement.
Finance Bill 2014
From draft legislation there will be changes to the taxation of partnerships and pension tax relief additionally, (not yet published) capital gains tax on the disposal of certain properties by non-residents.
Building Standards
NHBC Standards are changing rules relating to ventilation and heat recovery, fireplaces and chimneys, with design life of timber retaining walls being part of clarifying technical requirements.
LFB (London Fire Brigade) is to charge businesses £290 for call-outs if they attend more than 10 false alarms in a 12 month period in response to a vast amount of wasted time spent attending triggered automatic fire alarm systems.
(No connection to business or finance whatsoever) Simply Interesting for some
F1  will see V6 Turbo engines instead of the 2.4 litre V8s – engine recovery is going to the rear wheels where there will be harder compound tyres of lower nosed, heavier, single exhaust cars .

Image and Article credit: Copyright SUF 2014 ©

Pollex’s Up! Time Thief

Where is the human Pollex situated?

First day away from the office and, blessed crackers, I was exposed as a lazy thinker… I’d have to Google that one… I had no idea

Thinking takes practice  -  When it comes to cramming certain facts, I’ve never managed to hold the map of routes that circumnavigate burning midnight oil. Although even if I’d realised that higher intelligence (and by that I’m not referring to myself) isn’t insurance against the necessity of putting in practice, I’d still have skipped school in favour of seeing Bowie live. By the time I was a parent I hadn’t even given a thought to parenting needing practice so, as a naive parent, ‘kinaesthetic learner’  was welcomed as enthusiastically as child given a puppy for Christmas  and now, thanks to the Great God that is Google  we’re  all one click away from information overload …. and exposure to more lazy thinking.

Why bother problem solving by exploring ideas when there’s so much ‘knowledge’ readily available?  -  In business I’m sometimes as guilty as the next in giving out (accompanied by involuntarily inside mouth biting) ‘well… it depends’. The reason is (usually) simple: something is beyond my control; I have to surrender to an, in effect, legion of androgynous troopers, who waiting on the doorstep – ‘outside forces’.  For as frustrating as it can be (for all parties), I can’t always give a definitive black and white determination. But, just as I’ve experienced sufficient to realise that time is of the essence in business, I’ve also come to recognise, you’re going to have a hard time if a job isn’t done properly. Hence, I have a more frustrating time when a person emits (often with side of the mouth chew to infer they’re giving thought), ‘well… it depends’ as their camouflage for sitting on the fence – time wasting.

Ground control to Major Tom…   Can you hear me Major Tom?

Sometimes it does depend.

Without balanced thinking, pros and cons are useless  -  Take marketing  for example.  As each trend, strategy, plan, and measurement, expands, increases, decreases, the general shift  becomes, as with each element of a business’s evolution, more complex; especially when (like you and me) the customer factored in to the ROI is increasingly savvier in using online search for information, solutions and comparison. Then take what is now an elemental marketing platform, the website. Every business owner will have their own opinion about the notion that a business without a website is said to be non-existent. A website for some is easy entry into marketing, for others it can be too difficult to even consider, different perspectives, both derived from a ‘thinking’ process relevant to itself. However, the value judgement of ‘thinking’ resides in the overview, which is measured by considering the positive points of having a website and the negative points, or lesser positive. When something hasn’t been tried before, or experience tells of mistakes, messy experience, or similar, the ‘thinking’ balanced viewpoint might go along the lines of ‘it might be worthy of more information for further consideration’.Thumb

When thinking isn’t practiced surely it goes the way of any unpractised skill, meaning it can’t be put into operation from experience. Using the analogy of the well-practiced acrobat with an ability to rotate many hula hoops, all at once, quickly enough to make the hoops look as one – that’s what a Venn diagram of the scope of my service business’s crossovers would look like (elements overlapping one another, plus elements overlapping with other service businesses) -  just as other business owners’ Venns will have overlaps for how and what they operate. I don’t know about you, but for me it’s difficult to want to only direct my attention to the interesting bits of my business. The way I try to manage this tendency (and maintain direction) is to think about the decisions I have to make …. and make those decisions. And, as I don’t like to limit my thinking, the information I need mustn’t be limited or biased….

Thumb2 The point is, it’s not only the information that’s important. We all want a derivative black and white determination AND at the same time choice, alternatives to consider. The route of least resistance means that we don’t get distracted, decisions can be made quickly, time won’t run away further than it already has. Searching amongst constraints to find hidden, unobvious, possibility and informed decision making takes thinking about (time) which (as the inside of my cheek will attest), on the occasions of forces being beyond my control, can be frustrating - But as, in my experience, confident responses aren’t guarantee of certainty. Saying ‘well…. it depends’ can, depending on where you sit, be fence-sitting or thinking beyond the most likely.

 “You ask yourself not if this or that is expedient, but if it is right”  – Alan Paton


Image credits: Celestine ChuaKevin KMarc DalmulderJin.

Article credit: Copyright SUF  2014©

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 ©

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