In this Month’s Issue
We are going to stop thinking like a logistics company!
David Hawkins RT Page
2
Recruiting in a “Buyers Market”
Keith Atkinson Marekt Focus
3
Getting it Right - Thinking about Insurance
Stephen Greenfield Greenfield Insurance Services
4
General Election - The Economic Debate Jon Green Lewis Brownlee
5
Are You Planning Ahead
6 Chartered Institute of Management 6
Serious savings on Office Software Open Office Don’t waste a good crisis
Institute for Independent Business
7
Smart Management - The Art of Delegation Nuero Linguistic Programming (NLP)
Institute for Independent Business
8
Graham Constantine Visit www.wholebeing.co.uk
8
Effective Web Marketing
10 Market Focus
Prepare for Take-Off
David Willox Essence of Business
11
We are going to stop thinking like a logistics company! This was the somewhat surprising announcement that Bob, our MD, made at our last management meeting. Actually, after he explained it, it wasn’t so surprising because he frequently comes up with some pretty good ideas and we all grasped it enthusiastically. What I didn’t grasp so enthusiastically was the announcement that I was going to write the introductory article for the newsletter that is going to become a part of this new approach to being a logistics company! Why, you ask, are we going to stop thinking like a logistics company? Believe me, I asked the same question. Bob explained, “Look, if we were the logistics department of one of our customers we would be thinking A Special Introductory Offer for about their business and bringing our logistics Young Companies knowledge to bear on the function. I know we always try to put our customers first but I really As part of our commitment to helping our want us to go further than that”. customers grow their business we have liaised with a number of local companies to create a He explained that it seemed to him that there special package for young or smaller companies. were fundamental differences in the approach. We know these companies represent the future Delivering a good service is not the objective, both for the community and with self interest at delivering the right service is! All our customers heart so we want to help them to establish secure have different approaches and needs in their foundations. We also know how difficult those businesses and only by thinking their way could early years are ! we really deliver what they needed. The offer includes: We have been reflecting that a basic aspect of Ÿ Significant discounts on warehousing our sales strategy should not be how we sell Ÿ Savings on insurance. more to our customers but how we help our Ÿ Highly discounted Web Site Packages customers sell more. Hence the change in Ÿ Help with raising finance thinking. Ÿ A free business review with IIB business It also explains the launch of this newsletter. advisors You will find the rest of it is not about us! We Work is continuing on this. The package is are fortunate in that we see many different available now but full details have yet to be finalised. industries so we are exposed to many different ideas. It seemed to us that, if we could gather genuinely useful news, ideas and approaches into one regular genuinely useful newsletter, we would be able to help our customers and prospective customers develop their business which would in turn help us.
If you start to work with us now you will recieve all the benefits once the details have been finalised. In the meantime if you want to know more then visit our website and register for more information or call us on:
01903 736300
Recruiting in a “Buyers Market”
by Keith Atkinson
During the boom years prior to the recession many organisations found that their job advertisements produced only a small number of replies. With what amounted to full employment (despite the government reported figure of 1.5m unemployed) there was no pool of applicants sitting without work ready to jump at your offer. Today, with a rise in unemployment of 1,000,000 amongst people who actually want to work, your job advertisements will produce a sizable shortlist from which to choose. It seems to be a buyers market! Unfortunately, all is not as it seems and recruiting the right people is harder than ever. While it is true that the pool of active job seekers is much larger than it was this does not mean that you will be attracting more applicants that are right for you. In fact, for a variety of reasons, it may be more difficult to attract applications from the people you really want and more difficult to spot them when they do respond to your advertisements. Some of the applications will come from totally unsuitable people - some people will apply for any and every job. These are a nuisance, take time to sift and when confronted with a hundred CV’s, 50% of which are irrelevant it is possible to miss a real gem.
people looking to progress their careers will be less inclined to follow up new opportunities. They may withdraw their names from the agencies and be less inclined to respond to job advertisements that do come to their notice. The overall result is that your advertisements are likely to attract more responses from a generally lower quality pool of job seekers. To paraphrase the RSPCA Christmas campaign “a new recruit is for life not just the immediate future!” Because effective recruitment is such a key component for building a successful organisation and because it is that much harder when unemployment is rising we will be bringing you a series of articles over the coming editions.
The next problem is that while there are many potentially good applicants amongst the pool of unemployed it is also true that most companies will bend over backwards to find ways to hang on to their best people when faced with making redundancies.
In the next edition we begin with “Defining the Job and developing the person specifications” and in future articles we will look at advertising, agencies, screening, interviewing and assessment days. We will also cover such things a remuneration and bonus schemes, induction and training as well as looking at key legal issues.
When the economic climate is good people do not give up a job until they have found a new one.
Keith Atkinson is the owner of Market Focus a consultancy specialising in corporate development.
In times of economic difficulty people stop looking for new jobs. The security of an existing employer which is riding the economic storm successfully is such that even exceptionally good
www.marketfocus.biz katkin@marketfocus.biz
Getting Insurance Right by
Stephen Greenfield
Insurance is, all too often, an after thought! Which doesn’t matter, until you need to make a claim. If you’ve got it right you can deal with the issue in a relaxed confident manner secure in the knowledge that all will be well even if you are “somewhat stretched at the moment!” If you’ve got it wrong then all the premiums you have paid over the years will have been wasted and your business may even cease to exist. 1. Make sure that you are aware and understand the full range of Insurance covers available to you and how they are designed to protect your business. Ensure that you know and fully understand the Insurance covers that you currently hold and how they protect specifically your business. Insurance Policies can vary considerably in the cover they provide and the method of claims settlement. Does yours do what you expect it to do? 2. You should make sure that ALL your Business activities are insured under the Policy/Policies that you hold. Does the Policy “Trade description” accurately describe your FULL trading activities? If you undertake work away from your premises is this correctly covered with regard to Liability cover? 3. You should check that your sums insured accurately reflect the actual values at risk, especially if the policy provides for claims to be settled on a “Replacement as New” basis. Under Insurance can mean a proportional reduction in claims settlement. 4. Loss of revenue following an insured loss can easily cripple a Business and it is therefore essential that the Business Interruption Insurance be correctly arranged with regard to the sum insured and also the period of
indemnity required following the loss. Delays can occur with planning permission, installation of specialist machinery or your business may be seasonal. 5. The Liabilities of Businesses and the claims made against them are changing constantly and you should ensure that your Liability Insurances are adequate to protect you. Limits of indemnity that may have been adequate 2-3 years ago may no longer offer sufficient protection. Also bear in mind that claims against individual Directors & Officers of the Company are on the increase and need separate cover to be arranged. 6. Times of economic uncertainty create more problems that end up in litigation either as result of contractual disputes, problems with payments by customers or HR issues. Legal Expenses Insurance can save considerable time and money in dealing with these issues. Policy Covers and Terms and Conditions vary considerably & must ensure that you understand what you are buying. Get the cover right first. Then think about the right premium!
Greenfield Insurance Services www.greenfieldinsurance.co.uk www.
General Election 2010 – The Economic Debate
- By Jon Green
On 6 April, Gordon Brown visited Buckingham Palace to ask for the Queen’s permission to dissolve Parliament, and a General Election date was set for 6 May. The campaigns of the three main parties got underway immediately, and the debate has so far focused almost exclusively on the economy. Most voters see the economy as the biggest challenge facing the UK today, and as such it may well be the issue that decides the election. The main parties predictably disagree on how to guide the UK back to prosperity and reduce the UK’s record budget deficit. Labour Labour pledge to halve the deficit within 4 years, and as part of this, plan to freeze or cut spending in all areas except ‘front line’ NHS services and schools. Labour’s tax policies include the new 50p rate of income tax, a pledge to keep the basic rate of income tax at 20p throughout the next Parliament, increasing stamp duty on properties worth over £1m and giving an exemption for first time buyers of properties up to £250,000, raising National Insurance (see below), and freezing inheritance tax thresholds for four years. The Conservatives The Conservatives pledge to eliminate ‘most’ of the deficit within 5 years, and say they will cut spending in all areas apart from health and foreign aid, suggesting that there are significant savings to be made by reducing the size of the public sector, and increasing efficiency. Tory tax policies include reducing the main rate of Corporation Tax to 25%, scrapping Labour’s proposed NI increase (see below), and raising the Inheritance Tax threshold to £1m. The Liberal Democrats The Liberal Democrats’ economic theme is to make the tax system ‘fairer’, increasing the level at which people start paying tax to £10,000,
placing more of the tax burden on higher earners, and cutting what they see as ‘lower priority’ public spending, such as the Trident nuclear missile programme. An area of particularly intense debate in the campaign so far has been Labour’s planned 1% rise in National Insurance from April 2011. The Conservatives say they will abolish the rise for everyone earning less than £35,000 if they win the election, arguing that an NI rise will hinder the creation of jobs and thus harm economic recovery. They point to support from prominent business leaders to justify their position. Funding for this, they say, will come from ‘efficiency savings’ in the public sector, although Labour have criticised this as not being properly costed. Formal publication of the election manifestos are due in the next week, which will shed more light on the plans of each party. The Conservatives have seen their healthy lead in the polls whittled down to as little as four points in recent weeks, and a hung Parliament is currently the bookies’ favourite outcome. However, with millions of voters still undecided, this is likely to be the closest and most hardfought election battle in many years, and the task of winning the public support on economic policy is likely to be the key to victory. Jon Green is a partner in Lewis Brownlee Chartered Accountants, based in Chichester, West Sussex. jgreen@lewisbrownlee.co.uk 01243 782 423 Next month: tax considerations for purchasing
Are You Planning Ahead DIRECTORS are putting their ventures at risk by failing to adopt long-term managerial strategies, according to research by the Chartered Management Institute. The study revealed a discrepancy between the areas that were identified as potential weaknesses and the strategies being implemented to overcome these. Nearly two-thirds (60%) said skills and talent management was the key challenge facing employers but only 32% put ‘developing talent’ down as a significant issue. Similarly, with a failure rate of 74% for IT projects, the number of respondents who thought that keeping abreast of technological change was a priority was just 24% and only 10% said effective use of IT and communications was a big challenge. Other business priorities were protecting the company reputation (38%) and managing the impact of regulation, cited by 35%.The findings also revealed a worrying level of overconfidence in UK companies, with only 38% claiming managing risks was important in the current climate. “Questions need to be asked about how UK organisations will be able to manage in the future if they fail to address key operational issues,” said Jo Causon, director, marketing and corporate affairs at the CMI. “Rather than simply focusing on ‘what should be done today’, the inability to plan properly might lead to questions of a more critical nature: ‘what opportunities have I missed’ or worse, ‘how did the organisation not see that coming’.” The research did find, however, that organisations see themselves as up to speed when it comes to monitoring the competition (with 70% answering positively) and 65% said they were effective in identifying changes in society that could impact on the business. “In
the current economic environment the need for high levels of efficiency are all too apparent, so it is encouraging to see some positive signs,” said Causen. “However, it is not an excuse to become too comfortable with the situation as success depends on the ‘principle of preparation’: namely the ability to juggle tasks, manage change and meet market expectations.” Planning ahead is not simply a case of reflecting on what needs to be done but on visualising how the organisation will need to behave in two or three years and then developing and implementing plans to ensure it is capable of doing so.
Serious savings on Office Software Does your company use Microsoft Office? Yes! Why? The answer is probably because you did not realise there was an alternative or just forgot to ask. There is actually a very good alternative - Open Office. This program - or suite of programs offers : Ÿ Word Processor Ÿ Spreadsheet Ÿ Presentation Ÿ Drawing Ÿ Database Completely compatible with MS Office and absolutely free. Yes, you really did read that correctly. It is an “Open Source” project that has been running for over 20 years bring out updates regularly to take advantage of the developments in technology rather than to gain a marketing benefit. We will talk more about it in future editions but you can learn more about it at :
Open Office
Don’t waste a good crisis IN A CRISIS, they say, be aware of the danger — but recognise the opportunity.
may have had the luxury in the past of new clients finding us, THAT TIME HAS GONE.
This downturn, recession, depression or blip is like no other I have known. It is not by any means universal — neither by business sector nor geography.
I believe that we must assume that the basic rules of business now apply to all businesses — we all need to seek out new customers, we need to sell to them, we need to provide unrivalled products and services and we need to treat those customers like our life depends on them — because it does!
I now have a list of over 30 business sectors that are doing well — in some cases exceptionally well — and over a dozen countries with significant GDP growth forecasts. I simply can’t emphasise strongly enough that, unless we are in automotive, construction or real estate, then almost certainly we remain in control of our own future — no-one else. Indeed, even in the automotive sector it is not universal gloom — I see that not only did Volkswagen have a record sales month in February but that the German car industry overall still expects to sell 200,000 more units this year than last and further that Toyota has actually increased sales in the US this year. There are many growing markets like these with money to spend — target them! I recently spoke to a group of business leaders in London and was emphasising the need, especially in these times, for businesses — all businesses — to be proactive in seeking out and converting new customers — in other words, “prospecting”. A man came up to me afterwards and asked for clarification of what I was saying. He was, he said, the Managing Partner of a legal practice with 15 partners and asked what I meant by “prospecting”. “Seeking out new clients who have not previously used you”, I said. “Oh”, he said “how?”. “For example”, I said “do you ask for referrals? — do you ask each of your satisfied clients to recommend others to whom you could sell your services?”. “That goes against the grain“, he said, “I’m not sure about that”, and walked away. That Managing Partner is running a business — just like any other business — and whereas we
None of this is rocket science or new, none of it is things we should have been doing anyway, but I do believe it’s going to be those businesses that really get their act together that come through these times really humming. There is a risk — a big risk — that the rest will fall by the wayside and I see no reason to mourn them. In addition to the business sectors that are growing, there are national markets also to consider. For example, the OECD says that Brazil will likely avoid recession completely in 2009. Petrobras — its state oil company has a four-year $174bn expansion plan, whilst Embraer remains one of the largest passenger jet makers in the world. Brazil is seen to have outperformed India and China and has a wellregulated banking system that is not exposed to subprime. Go and sell to them. There are other nations who are continuing to grow and invest — maybe not as fast as heretofore — but, nevertheless, at rates of growth that are the envy of most other nations. Go and sell to them. If we are running a business or are involved in running a business, I believe it is our responsibility to develop and implement a growth strategy to ensure that our business and our employees thrive through these times. That’s our job — now more than ever!
Smart Management - The Art of Delegation YOU’RE WALKING TO YOUR OFFICE and an employee stops you to give you a rundown of what’s happening: “I made a phone call to Bill. He says that we can’t get the project done until July 7, so I’m going to work on the Smith account, and after lunch turn MY attention to the Lion account. “The newsletter project will be finished on June 17 and, by the way, the copy machine is broken. Should 1 call a repairman?
and specific. Once this is done, employees will feel more comfortable acting on their own. Think of this plan as a road map — and your employees will, too. Develop reporting systems. Get your feedback from reporting systems: monthly reports, statistical data or samplings. Or consider weekly meetings with employees. Give strict and realistic deadlines.
” As you get to your office, another employee stops you to give a rundown of his situation. This lasts another three minutes.
If you don’t give clear deadlines, employees won’t feel accountable for the completion of their tasks.
Frustrating? You bet. And you wonder, why can’t these employees take more responsibility and not drop every detail of every project in your lap?
Keep a delegation log.
Maybe it’s not them, but you. Maybe you are not delegating effectively. Here are some key points to remember
Recognise the talents and personalities of your employees.
Stress results, not detail. Make it clear to your employees that you’re more concerned about the final outcome of all projects, rather than the day-to-day details that accompany them. Don’t be sucked in by giving solutions to employees’ problems. When employees come to you with problems, they’re probably looking for you to solve them. Don’t. Teach them how to solve problems themselves. This, too, can be frustrating because it takes time. But in the long run, you’ll save yourself time and money. Turn the questions around. If an employee comes to you with a problem, ask him or her for possible solutions. If an employee comes to you with a question, ask for possible answers. Establish measurable and concrete objectives. With all employees, make your objectives clear
When you delegate an assignment, jot it down. You’ll be able to monitor the progress and discipline employees when necessary.
Being a good delegator is like being a good coach of a sports team. You have to know what projects each employee can handle and what projects they can’t.
Nuero Linguistic Programming (NLP) Many of you will have never heard of NLP. Many of those who have heard mention of it will probably think it is some “New Age” fad that has no place in a business publication. They couldn’t be further from the truth! Many of the worlds top performing companies have recognised the contribution the techniques can bring to their performance while top athletes use them to reach the pinnacle of their sport. NLP offers a range of techniques that provide the ability to: Ÿ do whatever you already do reasonably well, even better
Neuro Linquistic Programming - continued Ÿ acquire skills and attitudes to do what you cannot do right now, but would like to be able to do Ÿ think more clearly Ÿ communicate more effectively with others Ÿ manage your thoughts, moods and behaviours more effectively. So what is NLP? Ÿ NLP is a method of personal development a tool for improving your own and others' performance Ÿ It is also a model of effective communication - a practical and pragmatic
I’m to blame - again!
collection of insights and methods that can enable you to improve how you communicate with yourself and others Ÿ And it is a means of modelling - or creating models of human behaviour in order to replicate them. Seem like mumbo-jumbo? Well, I have seen it work in the most spectacular ways – and very quickly. I believe everyone in the business of managing people should at least have a look at it which is why I have asked Graham and Claire from Whole Being to contribute a series of articles, the first of which you can read below.
By Graham Constantine
I saw an email this week from Steve, a friend who has just moved to live in an idyllic cottage with an open fire overlooking a mountain in Wales - "and it's all your fault !!!!" said the email.
I realised that it makes such a huge difference when I have an idea in advance of what response I want, so that I know what I'm looking and listening out for.
So I sat at my PC and I said to myself "What response do you want when you communicate with somebody else?"
Yet knowing what response you want and what response the person that you are communicating with wants is key to negotiating a win-win outcome.
I had simply asked Steve "where do you want to be in five years time?" He replied "I had never really thought about it until you asked me to imagine myself in that place, imagine the sounds the smell etc." so I got the response that I wanted as Steve described his dream home to me and now he's living there So I decided that I will pick three opportunities where you can use this pattern and start to ask well-targetted questions. First sit in a room with a potential client, and start to ask them "What will your sales team be like when they are performing at their best?" and secondly sit down to coach a colleague ask "How do you want to be six months from now?" and in relating closely to a partner ask "Where do you want to go for Christmas?".
Seems too obvious doesn't it.
The starting point that I have found useful is to ask yourself the question "what response do I want?" Make a movie in your mind of what this will look like, sound like and feel like and compare this with the response you are getting and keep in mind the question "what can I do next?". This will lead you in a direction of becoming more flexible in your communicating as you realise that you are getting the response that you want more of the time.
Find out more about NLP! Visit www.wholebeing.co.uk
Effective Web Marketing The Web offers unprecedented opportunities for you to reach a wider potential customer base than ever before. This does not however mean that you can build a web site and expect the world to beat a path to your door. Far too many companies find somebody to build a web site for them, put it on-line and then forget about it. A year later they review the results and some bright spark says “told you so, it won’t work for us”. It’s a bit like building a shop in the middle of a wood where nobody goes and wondering why it hasn’t helped your sales. And believe me when I tell you – being found amongst the 200 million or so sites is about as unlikely as finding a needle in a haystack Web Marketing is part of your overall marketing strategy and your web site is only one part of the web strategy. For some reason many organisations, sometimes otherwise quite sophisticated ones, seem to forget the traditional approaches to marketing when they come to develop their web sites. Over the coming editions we will be looking at how to produce a web site that really is an asset. There really is quite a lot to understand and get right. We will assume that you do have a clear marketing strategy and you know how your web strategy will be a part of this. If you haven’t produced such a strategy do not embark on web development! There are many components to effective web marketing including: Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ
Search Engine Optimisation(SEO) Blogging Discussion boards Pay per Click advertising(PPC) Banner advertising Affiliate marketing Social networking sites Database Marketing Extranets Webcasts
We will look at all of these over the coming editions. However, before we begin to consider them you have one fundamental decision to make.
Static or Dynamic Site? This is not a reference to the aesthetics of the site but to the way it is rendered into a browser such as Internet Explorer. Static sites are hard coded and if you want to add a page or article you have to produce the code (HTML) and upload it to the site. Dynamic (sites with a Content Management System, CMS) sites are driven from a database which holds the text and pictures. Initially, a template (or several templates) are produced. To make changes to the site no coding is required - you simply upload the new article via a simple submission process. These differences may seem unimportant until you appreciate the importance of regular updating. Unless your site is new, up to date and offering something new your customers and potential customers will not return regularly to it. Probably more important is the fact that search engines will not rate it highly. In addition if you are not changing it regularly you will not be availing yourself of one of the web’s major advantages - the ability to test new approaches in an inexpensive and quick way. The advantages of a Dynamic site are that: Ÿ You and your staff can update it yourselves without waiting for your web company. Ÿ You can test new ideas quickly and easily Ÿ You can add offers and remove them at will Ÿ You will not have to pay a web company to make the changes. The decision is to us a “no brainer”. If you are starting from scratch then go to a web company that uses Dynamic CMS approaches. If your web company charges you for each change to your site discus CMS systems with them. Next month we will look in more detail at CMS
Prepare for take-off - David Willox In this fairly lengthy article we examine the implications of the economy moving out of recession sometime in December and consider how you should respond to the challenges it will pose. If you are happy to accept that: 타 The retail sector will probably see a decline in the rate of growth and possibly an actual decline in total demand growth 타 There will be growth in most business to business sectors 타 There will be significant growth in the automotive and construction sectors and those that supply them
So we had the absurd situation of demand and supply of goods to consumers increasing while much of industry ceased to invest because they knew the economy was in decline. Crazy?
타 There will be severe pressure on cash flow support from the banks but there will be money available for investment
In addition many companies did not invest because they would have to borrow to do so and the banks simply had no money.
then you can skip the next section - Responding to the Challenge Unfortunately the business world today is not quite as it seems. We have just had a recession, but throughout that recession retail sales continued to grow. This is not supposed to happen! If we are to understand the recovery we have to understand what happened to the economy in the recession. Total GDP fell but the amount people were buying actually increased. In other words the economy was producing less in total but people were buying more. So where were the goods coming from? Importing? Unlikely since the pound declined sharply in value making imports more expensive while companies were reducing prices in a discounting frenzy. Actually, the total value of imports declined by 17.5% from its high in 2008. In fact, some sectors of the economy were continuing to grow strongly while others were suffering very substantial declines. Three sectors in particular were hit; automotive, construction and banking. These had a knock on effect in other supporting industries and many companies reduced capital expenditure.
So what is going to happen now? The first and obvious effect is growth in the three sectors that have been hit the hardest. Companies start to replace the vehicles, building projects will increase in pace and the banks will show a return to profitability. This latter will not be difficult when you realise that many of their assets are in shares and share prices have bounced back. Other suppliers of capital goods and those supplying them will see an increase in sales. The retail sector and those supplying it are not so fortunate. It may seem strange but retail sales have now started to decline. They began to decline in November, almost at the point that the economy as a whole started to grow. In fact it is not so strange since much of the growth in retail spending over the last few years has been supported by the easy availability of credit. But what about the credit crunch during the last 18 months or so. Well it is true that the banks had less money to offer but business as a whole significantly decreased its borrowings for capital expenditure and the banks were not enthusiastic to lend purely to resolve cash flow problems, which was seen as risky. Which
means that they did actually have money to lend to individuals which grew by 0.9%. Unfortunately, the effect of fewer people being in work and the shorter working hours many companies have used to avoid redundancies is now kicking in (we know the number of unemployed has decreased but that is not the same as an increase in the number of people actually working). To summarise, retail demand is slackening if not declining, businesses see the headline GDP figure rising so they will regain the enthusiasm for investment in new plant. They will need to borrow for this from the banks reduced pool of available funds. This means that there will be less money available to support general cash flow demands at a time when sales in many sectors will start to increase. Unfortunately, of course, any sales growth invariably puts pressure on cash flow. In summary therefore: 타 If you supply capital goods to other businesses or are in the automotive or construction sectors - you are likely to see significant growth opportunities 타 If you supply any goods or services to any of these sectors you will see growth 타 If you supply to the retail sector you may see a decline in sales volumes 타 Which ever sector you are in you will see pressure on your cash flow Responding to the Challenge The usual advice given by accountants and bank managers, when consulted on cash flow issues, is simply to chase creditors more zealously and seek extended credit terms. While I am all for good credit control and seeking the best purchase terms you reasonably can, can you spot the fundamental flaw in the logic! Industry, generally, is going to suffer from cash flow problems! Overall funds available to borrow have declined but we are trying to fund more economic activity which means that neither your suppliers nor your customers have the money to extend credit or pay you more quickly.
So, if you are in one of the growth sectors, how do you take advantage of the opportunity without running out of cash? And is there a way of capitalising on other companies cash shortages? The simple answer is yes, but you will have to examine some sacred cows. You appear to need more working capital. Any business that is expanding sees an increase in debtors, needs more stock, more raw materials, has more work in progress (WIP) and therefore needs more cash to fund it all. Or so the conventional wisdom goes! But think of your business as a very large pipe through which your working capital travels . At the moment this pipe has a certain diameter and length and therefore holds a certain amount of liquid (or working capital). Suppose you could speed up the flow. You could then use a smaller diameter pipe but get the same amount out at the other end. And if you did that you would have considerably less liquid (working capital) tied up in the pipe. This is not some pipe dream (forgive me) but is based on something called the Theory of Constraints which has been used by some of the worlds most successful companies. They focus on accelerating the speed at which work passes through the entire process from raw material to money back in the bank. This has many implications but results in lower WIP, less stock and, incidentally, smaller more frequent deliveries to their customers which benefits the customers as well. The consequence is less demand for working capital and lower borrowings. If you are in manufacturing it almost invariably means smaller batch quantities for example. Intuitively, this implies higher costs. However, surprisingly this is, in reality, not the case and we will explore this in depth in future articles. Your focus should be on seeking ways to ensure that individual pieces of work flow through the entire process as fast as possible. Avoid the temptation to focus on reducing stocks, WIP and debtors. We want to focus on the cause of these being high. If you do focus
order. So that is what we do. We order the wine before it is made, so that our winemakers can get their heads down and do what we both want them to do...make their wines delicious!
Naked Wines was set up, Rowan Gormley, and 17 deranged and passionate friends (Rowan’s words - not the editors), who left sensible safe jobs, slap bang in the middle of the biggest recession since the Great Crash. What's the big idea? We set up Naked Wines because we could see one thing about the wine business that needed to change. And that was this...most of the expensive famous wines we were tasting were mediocre. And some of the unknown winemakers were producing stunning wines...but nobody had ever heard of them. The wine business is a bit like celebrity chefs. When you eat at a Gordon Ramsay restaurant, you don't get the great man cooking for you....but you do pay for the name. So our idea was to hire the people who actually do the cooking. Give them the finest ingredients - and sell them on to you without the huge celeb chef price tag. The exact OPPOSITE of everyone else.
We can only do this because 20,000 normal wine drinkers, people just like you, have become Naked Wine Angels. Wine Angels, like theatre angels and business angels, sponsor winemakers and in return get preferential prices, an open invitation to visit, free tastings and the lovely warm feeling of having done something good. It works. Ask our 20,000 Angels In the words of Stephen Rapoport - "You guys are utterly effing brilliant. Fact." But wait! There's more.... We only want you to pay for wines you love. So we will refund in full for the ones you don't. And if you tell us which wines you did like we will recommend new wines to you that we guarantee will blow your socks off. We deliver next (business) day for ÂŁ4.99. Most of our competitors take about a week and charge ÂŁ6.99. If you want to taste the wines before you buy, no problem. Sign up for one of our tastings.
We don't just buy wines. We make them happen.
And finally, we are called Naked because we have nothing to hide. You can see exactly what our customers think of the wines for yourself.
Every talented winemaker wants to make wines their way...without compromise. But to do that someone needs to give them a break. Their first
Do try their wines - they really are pretty good - and they are a nice bunch of prople The Editor
Prepare for take-off - continued from previous page on them you may achieve a short term improvement but invariably they rise again as you run out of a critical item, slowing the process down causing the other stores working capital to increase as well as increasing delivery times . Whether you are a manufacturer, project oriented, service or retail organisation there are some very simple ways to examine how to
accelerate the business process - without investing money - and we will explore these in future articles. In the meantime remember: Speed of the entire business process Find out more from
Market Focus