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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

Don’t let fear rule your business behaviour

A researcher in the USA asked small business owners what they most feared or worried about and we would argue that the findings would be the same or similar in the UK.
Top concerns were fear of failure, no customers, poor sales, wasting money on ineffective marketing, financial failure and negative effects on their personal lives.
Some would argue that a certain amount of fear can be a great motivator to keep the adrenaline flowing as human beings thrive on challenge.
However, too much fear can be overwhelming and paralysing, resulting in an inability to make decisions, let alone take risks. Decision making is a fundamental necessity in business, as is facing up to problems if the business is in difficulty. Especially critical are when problems involve cash flow, creditor pressure and litigation that might lead to insolvency.
Regardless of whether we are motivated or paralysed by challenges the worst path to take is to keep our thoughts to ourselves or to ignore a situation.
It is always helpful to share ideas and problems, whether a small business is planning for growth or needs to make changes if survival is in jeopardy.
A business advisor, experienced colleague or friend is likely not only to be on your side but also able to take a dispassionate view and may well produce ideas or solutions you haven’t thought of. Certainly the act of expressing what is on your mind will help you to clarify an issue and may also reduce the stress to manageable proportions where paralysis gives way to effective action.

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Business Development & Marketing Finance General Turnaround

There should be clearly defined roles in businesses

Leadership is crucial to keep a business on track and should be the responsibility of the CEO or MD.
Too often, however, the lines become blurred, so that particularly in small businesses the MD becomes embroiled in issues that should be delegated to others.
Similarly, all too often line managers leave HR to do their job of managing employees, especially when it comes to dealing with performance related issues.
What causes this kind of behaviour? Is it an issue of trust, such that the leadership has insufficient confidence in line managers’ abilities to manage staff? Or do line managers lack confidence that they will be supported by their own managers?
This is often about fear. If line managers have insufficient knowledge of the limits and responsibilities of employment protection, and employee rights, or lack confidence in handling negotiation, or that their decisions will be supported, it is very tempting to leave it all to HR.
We would argue that no business can be successful unless it has a clear line of command, with roles and responsibilities clearly set out and a company handbook to guide everyone, managers and staff.
When a business becomes dysfunctional it is important to look at the management behaviour to establish whether the roles and responsibilities have become mixed up, leaving a beleaguered CEO to fire fight when they should be thinking ahead about strategy.

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Cash Flow & Forecasting Debt Collection & Credit Management Finance Rescue, Restructuring & Recovery Turnaround

Saving a business may mean changing behaviour

It is a common reaction when a small business is in trouble for the owner/MD to hope the problem will resolve itself.
Indeed most owners and MDs live with pressure every day and have seen it all before, the cash has been found to settle creditors, They toughed it out last time so why not this time.
Cash flow pressure and the prospect of insolvency threaten the loss of a business which has involved a lot of passion, energy and money where like any loss can lead to feelings of anxiety or fear, even of grief.
It is hardly an ideal state of mind in which to address the causes of the problem and very often the initial reaction is denial. This can lead to a number of feelings such as anger, blame and despair all of which get in the way when trying to think logically and rationally.
But the longer the delay the more overwhelming, and dangerous, the situation becomes.
Behaviour is normally instinctive and directed by an emotional reaction rather than logical thinking.
Saving a business however requires rational and logical thinking so that decisions can be made and implemented.
This is where trusted colleagues and friends or professional advisers are key to providing the support needed to help make the right decisions which all too often can be personally painful. A form of tough love. Especially when change to a business is needed to both save it and prevent the problem recurring.
Please feel free to let us know about such painful decisions you have made.

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Cash Flow & Forecasting Factoring, Invoice Discounting & Asset Finance Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

Is there a solution for SMEs struggling with lengthy payment terms?

Large companies that impose lengthy periods of ‘end of month plus 90 days’ for invoice payment present a dilemma for small businesses.
On the one hand it may bring in large orders and be good for their reputation as a supplier to a well-known large brand. On the other hand, however, the lengthy wait for payment can cause serious cash flow difficulties.
Large companies are getting away with imposing such terms despite being named and shamed, the latest being beer company AB InBev (payment in 120 days) and Heinz (payment extended to 97 days).
In an attempt to hold companies to account, the Federation of Small Business (FSB) has called for a compulsory code committing large companies to displaying their maximum and average payment terms.
While we can certainly sympathise with the outrage over this behaviour and agree with FSB’s request that firms disclose their longest and average payment terms, there are ways that SMEs can fund themselves while they wait for payment.
Apart from an overdraft or loan secured against assets such as the sales ledger the obvious solutions are factoring invoices (selling debt) or invoice discounting (borrow against invoices). There are other sources that can help fund working capital such as credit to customers. These include the alternative and online funding markets that have a number of sales ledger and single debt offerings including the prospect of selling or borrowing against as single invoice. Another solution is trade finance, although quite specialist it is useful for funding large transactions and especially useful for SMEs when they get a large one-off order.
K2 publishes a Business Finance Guide covering a wide range of options for business finance, available free through the Knowledge Bank on our website

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Cash Flow & Forecasting Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

SMEs need contingency plans to survive a disaster

What would you do if…

  1. Your office equipment failed or you had no power for a week?
  2. Your phone stopped ringing because a cable or VOIP was down?
  3. You couldn’t access your e-mails or cloud based files because you had a problem with your network or IP provider?

Losing the ability to operate a business in the event of a minor, let alone major disaster can have serious consequences that in turn can impact on sales, reputation and cash flow.
Despite this, few businesses have contingency plans for possible disaster scenarios or have a back-up in place for such situations.
If you rely heavily on office-based equipment such as computers and printers it makes sense to also have laptop and access to a printer. Separate access to wifi is also useful. If the telephones are down then knowing how to switch calls to VOIP, another phone or a mobile is essential. If you rely on access to desktop or server based files then cloud based systems will give you instant access which may be far quicker than relying on back-up tapes and hard drives. It may be strange but all too often the access codes are stored in a computer that is down.
Laptops, tablets, mobile devices and virtual offices all make it much easier to work remotely but some planning means there can be a seamless transition in the event of a disaster.
Please share your own backup plans and any tips for others to adopt.

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Business Development & Marketing General Uncategorized

The marketing value of "thank you" in business

We recently heard of a SME owner who sent out a New Year’s greeting card to their customers and suppliers with a hand-written thank you message for their support during the year.
It was a small thing, but thoughtful, personal and hugely appreciated judging by all the positive comments it generated on social media, which turned the courtesy into a great piece of marketing.
We also know of a very successful cosmetic surgeon who wrote a hand-written note as a follow-up to the contacts he made and as a result built a successful business which he attributed to his personal attention in writing letters.
As the economic recovery continues increasing numbers of small traders and SME start-ups are appearing and not all of them are offering something unique, so the competition is heating up.
Despite the pace of change and the digital revolution they will need a way to differentiate themselves from the rest.
Hand written and personal thank you messages could be an effective way of doing this and therefore still have a place in the marketing mix.
Have you tried it and with what results?

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery

The power of networking via Social Media

Cash strapped businesses cannot ignore the need to maintain their visibility and risk losing existing customers who may assume they have disappeared, nor can they risk not having a way of finding new ones.
Despite any lack of cash, entrepreneurs should be innovative and find ways to best use their time to promote and grow their business.
Many people use networking as a great way of doing business by going to functions or attending a regular local networking club such as BNI. With effort and discipline networking can grow a business by generating leads and making introductions. It works best where a close-knit team work together to promote each other’s business.
Networking via social media online can be similarly effective and have the benefit of offering you scope for establishing some highly valuable relationships with people anywhere you want to do business. Unlike face to face networking, location is not a barrier.
Like face to face networking, social media networking is not a short-term fix; both require time and effort to build relationships which in turn produce results.
It takes a while to find your feet but a start is to participate in online discussions to find other like minded networkers. Like networking clubs, finding the right online groups takes time but there are plenty to check out on LinkedIn, Twitter, Facebook or Google+.
In addition to finding the right group you need to find the right social media for you and your business. It is no good being on Facebook if the people you most need to connect with tend to be on LinkedIn.
Building the right group is also important. It is no good having lots of followers or members if you aren’t working together to establish a mutually beneficial relationship. Having 10 Followers on Twitter who
Follow each other and work together by promoting each other and actively referring leads to each other is far more valuable than having 1,000s of Followers or even worse, Following 1,000s of others.
If you are lucky sometimes your message ‘goes viral’ but it takes practice to find a message that others are genuinely interested in. Like all forms of networking, the hard sell on social medial puts people off, but a Tweet, post or comment that is genuinely interesting or valuable turns its readers on. If inspirational or engaging they may share it, and then you might get lucky.
The challenge is to make it work for you. Perhaps you can respond by sharing an inspirational comment for others!

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Business Development & Marketing Cash Flow & Forecasting Finance General Turnaround

Retail start-ups – opportunity or lack of opportunity?

An estimated record 10,000 new retail businesses were launched in 2014 compared to 2013 according to Creditsafe, a company providing information on the health of businesses.
The new retail start-ups included shops, online retailers, cafes and restaurants and the development was being interpreted as a sign that entrepreneurs are leading the economic recovery partly because retail is seen as a major indicator of consumer confidence.
However, it remains to be seen how many of these fledgling businesses are still trading in 12 months’ time and whether this is indeed a case of entrepreneurs seizing opportunities or whether it is in fact a response to the lack of alternative opportunities.
It has been clear for some years following 2008 that retail is a volatile sector and has been in the throes of huge changes. While there are positives in the rise of the “shop local” initiatives aimed at supporting independent small traders, there has also been evidence that people have become very cost conscious and cautious in spending with smaller but more frequent trips to the shops.
Online shopping and a disenchantment with major High Street chains and edge of town superstores may indeed be a positive sign for the 10,000 fledgling retailers, but they will need to be very canny about pricing, marketing and controlling cash flow to survive.
We await the January post mortem on retail trade during Christmas and New Year, but already it looks like 2015 is going to be an interesting year.

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Planning for the year ahead

SMEs often use new year as an opportunity to plan for the year ahead and might benefit from knowing about Rudyard Kipling’s six wise friends: Who, What, Where, Why, When and How.
But while it may be straightforward to answer What (the goals and targets), When (by what deadlines) and Where (what sector and what clients might be most productive) the Who, Why and How are more difficult.
Who: the allocation of tasks is critical for success, including leaving you time to spend on the non-daily activities. Do you have the right people in your organisation, do they have the skills, such as devising and carrying out the marketing strategy that will be needed to meet your goals?
How: are there alternative ways such as outsourcing activities?
Why: this essentially invites you to consider your business model that encompasses all the elements of your business. Is it viable? Do you have sufficient funds or the cash flow to support your plans? Does it generate sufficient profits to justify your effort?
Finally, are you as the owner spending enough time on strategy, finance, marketing planning and leadership as all too often these are neglected when you are busy with the daily operation?
When planning for the future, it is worth considering whether an outside expert might be able to help you, you might be surprised how valuable this can be and it doesn’t need to be expensive in terms of cash and time.
I wish you a very happy new year.