Business Development & Marketing General Turnaround

Email marketing – getting it right

email marketingEmail marketing, that is communicating to potential clients/customers using regular e-newsletters, is one of the oldest-established methods of online marketing.
While recipients often complain about receiving too many of them, they remain one of the most effective components of the marketing mix, with an open rate of 20-30% according to Campaign monitor, a UK and US-based email marketing company.
So why would any business not consider using this method of marketing communication when the Direct Marketing Association has calculated that it has a ROI of up to 4,300%?

It’s not about the numbers and there are rules

This is where the law comes in – and yes there are rules about marketing that are online here. Basically, you MUST check if customers want to be contacted and equally you MUST make it easy for them to opt out, either by sending a STOP text to a short number or by including an “unsubscribe” link clearly shown in the newsletter.

What are the advantages if it’s so easy for people to stop receiving them?

Effective email marketing is about quality, not quantity. It is a mistake to think in terms of large numbers and we advise clients to not buy contact lists. It may be more work but it is far more effective to build your own contact list of people with whom the business has had some dealings and who may be willing to find out more.
A well-crafted communication targeting the right audience prompting interaction and responses from just a few people is worth more than one that is sent out to thousands who don’t open or read it and who then unsubscribe.
In many cases, this will not be about sales but about building an awareness of your business’ brand and personality and establishing a relationship.
Done well, you can talk to recipients as individuals, give them something interesting and new to read and build a loyal “fan” base.  Not only that but you can easily measure what has worked and what has not by how many recipients open the email, make comments and respond to any “call to action”.
But obviously it is important to define the purpose of your communication.
In the new and uncertain post-Brexit economic climate, it makes sense to revitalise your business marketing and to add e-newsletters to the mix, if you don’t already use them. It also makes sense to get professional help with the writing and design to ensure messages are both relevant and capture the readers’ imagination.

Accounting & Bookkeeping Cash Flow & Forecasting Finance General HM Revenue & Customs, VAT & PAYE

Quarterly digital tax returns – watch this space!

tax and calculationsQuarterly digital tax returns – watch this space!
The then Chancellor, George Osborne, announced in the March 2015 budget a proposal to radically change the tax system away from annual paper-based returns.
This would apply to everyone, both businesses and sole-traders, and require them to submit quarterly tax returns entirely online.
That was the plan and lengthy and comprehensive consultation was promised before the system would be finalised.
Indeed, this comment appears on the HMRC Roadmap website page, last updated on August 15 2016 : “We do not underestimate the scale of these reforms and are introducing them gradually between 2018 and 2020, because we know how important it will be to get them right and to give individuals and businesses time to adapt.” Quite so!
However, since then there have been a number of delays and changes which have made it hard for SMEs in particular to work out just exactly what will be expected of them and when.
In July, following the changes in Government personnel after the EU Referendum, Accountancy Age reported that HMRC had cancelled a Stakeholder Conference planned for July, as well delaying the issuing of consultation documents, of which there are six relevant to different groups of taxpayers.
HMRC also plans to hold regional and online consultations, but as yet there appears to be no detail.
All of this with a consultation period supposed to be completed by 7th November this year.

So what is going on?

Already as a result of feedback, changes have been made to the proposed plan including possibly introducing a threshold of £10,000 annual turnover, below which all unincorporated businesses and landlords will be exempt from keeping digital returns and submitting quarterly updates, deferring the start of Making Tax Digital for some other small businesses, giving them extra time to get used to digital record keeping and quarterly updating, exempting digitally excluded businesses from digital record keeping and quarterly updating and introducing simplifications, for example extending cash basis accounting to more businesses.
Consultation questions have now been published by HMRC, and appear to be comprehensive, asking among other things for comments and information about the likely additional costs they will face in buying software, in training, and in business and advisors’ time.
We would advise SMEs to make themselves aware of the proposals and ideally respond to the consultation if they wish to have some influence over what will be a radical change for many of them bearing in mind that the 7th November deadline has not been extended – as far as we can ascertain!
In due course we will post notes for SMEs to make sure they are prepared but for the moment we don’t yet know what impact the proposals will have. However, SMEs should be aware that if the quarterly filing of accounts as originally proposed is implemented, compliance will involve a significant investment in both time and money.

Business Development & Marketing Finance General Turnaround

How do you inspire employee loyalty to your business?

respect employeesFar too many businesses rely on money to incentivise and reward employees, assuming they are motivated primarily by money.
However, there has been plenty of scientific evidence for at least 20 years that has shown that this is not the case, according to Daniel H. Pink the author of five books about business, work, and behaviour. (Washington).
The prolific contributor of articles on business and technology to publications, including the New York Times, Harvard Business Review, Fast Company, Wired, and The Sunday Telegraph, explains his argument in a popular TED talk.
Numerous tests over the years have shown that actually offering a money “prize” to groups who solve a defined problem more quickly than others is counter-productive and actually slows them down.
However, problem solving actually speeds up if there are no constraints and people are left free to think laterally.
Pink illustrates how this has been used to productive effect by a US software company that allowed employees to spend almost 50% of their time on anything they wanted, but they had to then present the outcomes to the rest of the company. Another example he cites is Google, which operates a system where engineers are free to spend 20% of their time working on anything they want. The results have accounted for up to 50% of Google’s new products.

Employee loyalty is about respect and recognition

While financial incentives might work for a clear set of simple, routine tasks with clearly defined objectives, the majority of business growth in the 21stCentury relies on innovation and conceptual ability. While obviously paying people adequately and fairly is important, what matters in the latter context is to give employees self-determination and control over their work.
It plays into their desire to do better, to use their imagination and to feel trusted.  The “reward” in this context may be the respect and recognition from management and from their peers.
Rewards or recognition do not need to be explicitly stated at the outset, but loyalty depends on being listened to, consulted, respected and recognised. The mechanisms can range from suggestion boxes to a post on a noticeboard for a particular achievement but the essential ingredient is acknowledging that people are responsible, able and adult and can be trusted to do their best without over-controlling management. Suggestions that are not acknowledged discredit management, and suggestions that are ignored or rejected without consideration make people feel undermined.
Get it right and a business will be able to rely on its employees’ loyalty, get it wrong and your staff will know you don’t really care about them.

Banks, Lenders & Investors Cash Flow & Forecasting Finance Insolvency Rescue, Restructuring & Recovery Turnaround

Insolvencies continued to fall in the three months up to the EU referendum

insolvency graphPerhaps because of the feverish media coverage before and after the UK EU referendum vote, there has been little if any comment on the continued reduction in company insolvencies.
The most recent figures, published at the end of July for April to June 2016 (Q2) showed a continuation of the downward trend that has been in evidence since their peak in 2009 in the aftermath of the 2008 Great Recession.
An estimated total of 3,617 companies entered insolvency in the last quarter, down 4.2% on the first three months of 2016 and down 2.7% on Q2 in 2015.
By far the biggest driving force remained Creditors’ Voluntary Liquidations, showing a slight rise, by 0.7% on the same period in 2015, and suggesting that creditors are unwilling, or unable, to wait for their money or to enter into arrangements for repayments over a longer period since the use of Company Voluntary Arrangements (CVAs) remains at rock bottom.

Construction Industry struggles

The Insolvency Service has as yet produced no figures for insolvencies by industry sector, but Construction was by far the worst hit from January to March (Q1) 2016.
However, the monthly Markit/PMI statistics are a good indication of the ongoing state of the Construction industry, showing a consistent contraction in both confidence and activity throughout the last six months.
Indeed, after two quarters of contraction the industry is in recession and the post-Brexit July figures gave no relief to the gloom, producing the worst set of monthly figures for seven years.
Given the uncertainty since the referendum, plus the erosion of profit margins due to increased materials costs and a skills shortage in the sector optimism about the health of Construction is not likely to return any time soon.
Certainly there is little prospect of much in the way of commercial construction while the future of the UK economy is in limbo.
It remains to be seen what the Government proposes to do about the acknowledged acute shortage of affordable homes that has been causing such problems (while at the same time pushing up property values). If there is some relaxation of the current restrictions on Housing Associations for new building of social housing there might be at least some relief for Construction.

Banks, Lenders & Investors Cash Flow & Forecasting Finance General

Have you ever considered a payment card based on gold?

Continuing our series of blogs about new business ideas for business people to ponder during the summer holiday break we have a guest contribution from Alasdair Macleod, Head of Research at GoldMoney, a leading provider of precious metals for investors. They recently launched a pre-loaded payment card using gold as a digital currency based on the unit value of gold bullion as an alternative payment method.

How GoldMoney’s preloaded card works

By Alasdair Macleod
Gold card and coinsAt GoldMoney, we have noticed that account-holders sell gold to preload their cards when gold rises. This makes sense. People are using their accounts as money, which is exactly what they should be doing.
A Gold backed card compliments a conventional debit or credit card based on fiat currency as it gives users the option of using it for day-to-day payments, as well as taking advantage of currency fluctuations.
Let’s assume you plan to take someone out to dinner. Beforehand, you look at the price of gold. If it is up, measured in your normal currency, preloading your card in order to pay for your dinner will make it less costly than using your normal bank card, compared with yesterday. If the gold price is down, you just use your bank card. In other words, you use the money that gives you the best deal.
This is the point about money. It is not an investment, so computing what you initially paid for gold and your profit or loss on it is not the point. You have to look at it as a competing form of money, which can give you an economic benefit.
As a user myself, I am certainly benefiting from this dual-money approach to spending.
My experience of gold versus sterling is a good illustration of why it works so well.
About four months ago, I planned a trip to Canada, which, it so happened, was to be at the same time as the British referendum on leaving the EU. I paid for the flights, hotels and car hire several months ahead. That left the issue of spending money, about which I did nothing, other than to ensure I had adequate funds in both my GoldMoney and regular bank accounts.
Before the vote, sterling was strong, which impacted negatively on the purchasing power of gold measured in sterling, so I drew down on my regular bank debit card to pay for local expenses in Canada. Then came the surprise vote for Brexit, and the gold price, measured in sterling, took off like a scalded cat.
The sterling rate for Canadian dollars was also trashed, but I still had my gold, which actually bought significantly more than before, even measured in Canadian dollars. From that time, I used my GoldMoney card for local expenses. So instead of worrying about the collapse in sterling, I continued to enjoy my stay in Canada by using gold.
I could, of course, have taken out a travel company’s pre-loaded card, and bought my Canadian dollars well in advance. By locking in the rate, I would have had the advantage of certainty, but lost the flexibility gained by using gold as a rival form of money. In the event, I was far better off retaining that flexibility.
I share this experience with my readers as a lesson for us all.

Business Development & Marketing Finance General

Why do so many SMEs fall short when taking on new employees?

man contemplatingIn the next in our series of August business ideas to ponder at leisure we’re looking at recruitment, induction and staff loyalty.
Generally, employers hope to recruit employees who are already trained, qualified or competent for a position on the grounds that they will become productive more quickly once they start.
However, for some time there has also been complaint from employers that they find new recruits, including graduates, to be weak in basic literacy and numeracy, or people skills, and over time that they are not as loyal or committed as expected.
While recruiting experienced staff is viewed as ideal, most companies want to pay as little as possible and end up employing inexperienced staff.

Training, induction and loyalty

In our view the inexperience of staff is linked to whether or not they are valued. There are however solutions.
Firstly, why not consider taking on people who are younger and less set in their attitudes and investing in training them, not only in skills but also in the business’ ethos and work culture?
Secondly, leaving aside the skills problem for a moment, how much of the loyalty problem is due to an inadequate and often far too short induction process?  Often SMEs pay little attention to these essential underpinnings.
Perhaps they do not really value their employees, nor do they value the time and investment needed to make employees feel truly valued.
This is often characterised by a failure to induct new recruits or even to provide proper support to existing employees. All too often staff feel they are competing with colleagues rather than collaborating with them for their collective benefit.
Arguably paying attention to welcoming, training and helping newcomers to the workforce to settle in will help to make them feel valued and encourage a level of loyalty to the company that has shown an interest in their development and given them a chance.
Lastly, on the subject of loyalty, employers often complain that after they have invested money in training staff who then leave for a better opportunity.  In our view seeing this as money wasted is a too narrow viewpoint, particularly post Brexit. The goodwill generally endures.
If, as seems likely, recruitment from overseas post Brexit becomes severely limited and bureaucratic it has already been said that for the UK to be competitive it needs to upskill its workforce. The lack of home grown skills has been an issue in the UK for some time and the situation will only become more urgent, so investing in the workforce is something every business and employer should consider contributing to for everyone’s eventual benefit sooner rather than later.

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

Blockchain – innovative technology that could cut business costs dramatically

man contemplatingThe holiday month is a time to ease back, refresh and perhaps explore new ways of doing business and this includes innovations in technology.
Many people will be aware of the virtual currency Bitcoin, but how many have heard about the underlying technology that made Bitcoin possible?
This is Blockchain, a secure digital and publicly accessible registry or ledger system, also known as Distributed Ledger Technology (DLT), that will allow sharing of everything from confidential documents to financial transactions to all those who are authorised by being given the access codes.
Its secret is in its decentralised nature, which means it operates without a central authority, such as a bank or a legal notary. A copy of the entire registry, updated in real time, can be saved to the computer of every authorised member of the Blockchain. Transactions are checked against previous activity and verified before being added.
How will Blockchain help businesses?
Most importantly it will provide the basic infrastructure on which businesses can build secure, trackable and verifiable records of everything from contracts and agreements to payments.
It is expected to reduce transaction costs as well as the time needed to verify details of interactions where multiple parties are involved.
Professional intermediaries, such as banks, lawyers or brokers, would not be needed to verify contracts, agreements or payments and this would reduce fees and transaction costs for businesses.
The Blockchain infrastructure can be used to create secure storage for public records and binding promises, something the UK Government has been exploring for use in the public sector potentially by the NHS and for recording such things as welfare payments.
Many banks have already started to experiment with using Blockchain technology and Santander analysts have estimated that the new technology could save banks more than $20 billion per year in transaction and other costs.
In the coming years it may well prove to be as great a revolution as the internet has been in the way businesses operate.

Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting Finance General Turnaround

Brexit musings

keep calm and stay positiveThe first Markit/PMI (Purchase Managers Index) post-referendum composite results have now been published, showing a downturn in both business confidence and activity to below the 50 benchmark in Services, Construction and Manufacturing to 47.3 from 51.0 before the vote.
Despite the doom-laden reactions from commentators it is important to prevent sentiment falling off a cliff and making recession a self-fulfilling prophecy.
So it cannot be said too often that it is early days yet and growth is still being predicted for the UK economy, albeit at slightly lower levels, as this example illustrates.
Building supplies company Travis Perkins is due to publish its half year results this week and has issued a profit warning. Nevertheless, its pre-publication statement said: “In our view it is too early to precisely predict end-market demand and we will continue to monitor the lead indicators we track and will react accordingly.”
The holiday season ebb in business activity is a good time to pause and clarify where we are now, as individual businesses and more widely.

What was really at stake in the referendum?

Arguably this should have been properly highlighted and debated before the vote.
The three variables a nation can have are Sovereignty, Democracy and Globalisation and essentially, whether people realised it or not, the referendum involved a decision between the benefits of Sovereignty versus Globalisation given that we have ballot box Democracy in UK.
The most difficult to assess is Globalisation and its benefits. Essentially it involves the free movement of goods, services and people, which reduce costs, improve wealth and promote security through interdependency. These are difficult elements to quantify but most obviously benefit commercial enterprise and the metropolitan ‘elites’. After years of war and protectionism, this was the underlying philosophy behind the EU.
However, while Globalisation may have broadly improved people’s living standards in the EU, protected their employment and improved their citizenship rights, a majority of voters did not feel they had been beneficiaries. They would also seem to resent the uneven distribution of its benefits.
In the UK this has affected not only the low paid and low skilled but also the middle classes, many of whom believe they are paying for the excesses of the decision makers through the various austerity measures that have been implemented by government.
So when it came to the vote, Sovereignty became the priority and clearly the Brexit majority wanted to see not only a different form of “Globalisation” within the EU but also greater security and prosperity for those who felt left behind.
Where does all this leave the UK and particularly businesses?
We have said it before but it bears repeating in the light of the Travis Perkins statement above that Brexit presents plenty of opportunities to negotiate and create different ways of operating in a global market such that the benefits are more widely distributed. Indeed, the EU has been becoming more protectionist so that UK will be able to do its own trade deals with non-EU countries.
But it will not happen if the UK and other countries go down the road of pessimism, isolationism and protectionism. The opportunity now is to truly embrace Globalisation, to embrace its benefits and trade with the whole world, not just the EU.

Banks, Lenders & Investors Cash Flow & Forecasting Finance General Turnaround

Uncertainty after the Referendum is producing some wild predictions

keep calm and stay positiveIt is true that businesses dislike uncertainty when planning for medium and long term investment and that it will probably be at least two years before there is any clarity on the UK’s position over leaving the EU.
But how likely are the speculations of some economic commentators that the UK may be facing a period of stagflation, defined as a period of rapid interest rate rises coupled with a depression?
The last time the UK experienced stagflation was during the 1970s, when huge oil price rises precipitated an economic downturn in much of the Western world.  In the UK a combination of climbing interest rates and government borrowing, high unemployment and a miners’ strike culminated in Edward Heath’s government declaring a state of emergency in January 1974 and imposing a three-day week on industry amid fears of power shortages.

So what likelihood of a repeat of such a perfect storm?

Plainly much has changed since then including tighter regulations on strike action and diminishing trades union powers, less reliance on coal-fired energy supply, control of interest rates being moved to the Bank of England, and, at the moment, relatively high levels of employment.
While it is true that the IMF (International Monetary Fund) has downgraded global growth since the referendum, its predictions for the UK are still sturdier than they are for Germany and France.
Interest rates have been at unprecedentedly low levels since the 2008 financial crash and it would seem that the Bank of England may yet provide further stimulus by reducing them below the current 0.5% figure as well as introducing more quantitative easing. This is uncharted territory and lending markets may reassert their authority by demanding higher interest rates given the greater perception of risk caused by Brexit.
Another factor is the devaluation in £Sterling which followed the referendum results. At the moment this translates into cheaper exports from the UK and very soon will lead to price inflation for consumers due to the increase in cost of commodities bought by UK companies in $US or in Euros. 
In fact, commodity prices have been falling for some time thanks to lower demand from China and in the last week oil prices came down again by 20% after rising slightly for a short time. But when commodity prices rise, the impact will be felt by everyone.
Although uncertainty will lead to lower growth as some businesses hold off on investment there will need to be massive rises in commodity prices and interest rates, perhaps combined with a significant rise in Chinese consumption for the preconditions for stagflation to exist.
If, in addition future governments turn more protectionist by erecting barriers to trade and migration, while introducing measures to combat inequality by redistributing income (through taxation and regulation) then the situation could become more precarious.
While the referendum result has crystallised issues and opportunities in the UK and there will business winners and losers, in our view the more extreme predictions of imminent stagflation are decidedly premature, if not straying into the realms of fantasy.