Running out of cash – crisis management, the first step in dealing with a cash crisis

crisis management when running out of cashCrisis management when a company is in financial difficulties is about quelling the understandable panic and taking a long, hard look at managing the business’ cash flow and the potential for action that makes the business viable.

Running out of cash is the cause of most business failures where the cash flow test of insolvency applies such that a company is insolvent if it is unable to meet its liabilities as and when they fall due. This doesn’t mean the business should be closed down but it does mean the directors should take clear steps to deal with the financial situation.

The first thing directors need to appreciate is that their primary consideration is to protect the interests of creditors rather than that of shareholders. This is where an insolvency or turnaround professional as an outsider can help by bringing an objective assessment of the personal risk when making decisions and the prospects that turnaround initiatives can be taken to restore the business to solvency.

Initial action by experienced turnaround professionals will focus on the short term cash flow while at the same time they will consider the medium and long term prospects for the business and whether the business model works or needs to be changed. This may be contrary to insolvency professionals who may be interested in justifying their appointment under a formal insolvency procedure.

Any review by professionals will consider how financial situation developed where it often the case that over time creditors have been stretched. Indeed, there are many reasons for the shortage of cash that often leads to a delay in paying suppliers whether this is due to a decline in sales, poor debt collection, bad debts, inadequate credit control, over trading, over stocking, funding investments and growth that doesn’t translate into sales or indeed myriad other reasons.

Guidance from the ICAEW (The Institute of Chartered Accountants in England and Wales) is that at this stage:

Getting cost controls properly in place, insisting all purchases (however small) are signed off centrally by the managing director or finance director, chasing harder to collect outstanding debts, or agreeing new payment terms with creditors can have a quick impact and help ease an immediate crisis.

The most likely immediate priority in managing a liquidity crisis is reducing costs while maximising income.

So, the first step in managing cash is to construct a 13-week cash flow forecast to help identify risks and actions that can be taken to reduce them. It should include income from sales and other receipts and outgoings, both to ongoing obligations such as rent wages and finance and to creditors.

The business also needs to control cash on a daily basis, with payments made on a priority basis with purchases approved by an authorised person who is aware of their impact on cash flow.

This will avoid the risk of returned cheques. It is also advisable to talk to the bank and keep it aware of what is being done to keep things under control.

This is the first step in crisis management when a company is having financial difficulties, but thereafter a restructuring adviser can be invaluable in taking a long, hard look at the business operations, its processes and its business plan to identify areas where performance is weak or unprofitable and whether and how the company can be returned to profitability if these elements are removed.

Getting external and objective help is likely to be necessary and my guide to running a business in financial difficulties is a useful reference.

Will SMEs get more help from the Government?

help from the Government?Business pages are always full of articles claiming that SMEs need more help from the Government.

But equally, there have been a number of upbeat and positive reports that suggest the opposite is the case, so what is the truth?

According to the business lender Iwoca, lending to SMEs in deprived areas has dropped dramatically, by 8% between 2014 and 2018. Iwoca CEO Christoph Rieche has said: “It’s concerning that, in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive. SMEs are vital for the health of the economy.”

The figures are borne out by UK Finance, which has revealed that small business loans and overdraft balances from big banks fell by almost 16% in the North West between the end of 2014 and September last year, from £9.8bn to £8.2bn, while loans and overdraft balances in London fell by only 2.3%. Wales saw a 14.2% drop, while Yorkshire and the Humber posted a 10.9% decline.

The CEO of the British Business Bank has also argued that the Government should invest “billions” more in SMEs if it wants to deliver on its promise of levelling up all parts of the UK.

Earlier this month reports in the Financial Times and the Times criticised the Prime Minister for ignoring business groups such as the CBI (Confederation of British Industry), BCC (British Chambers of Commerce) and the IoD (Institute of Directors) in a speech he gave on EU trade negotiations.

An aide (unnamed) later reportedly criticised these business bodies for failing to prepare their members for “a Canada-style free trade deal” and said they were unlikely to get Government attention unless they fulfilled their responsibility to their members.

Another issue high on the SME agenda is the Apprenticeship Levy, which is failing SMEs, according to the FSB (Federation of Small Businesses) leading to a 24% drop in apprenticeship starts since the new scheme was introduced in 2017.

However, there has been some positive news for SMEs, the Ministry of Housing, Communities and Local Government has confirmed that a £1bn of new loans is to be made available to small construction companies, under a loan guarantee scheme.

Let us hope it is not like the Enterprise Guarantee (EFG) scheme that was introduced in January 2009 to replace the Small Firms Loan Guarantee (SFLG) scheme that was introduced in 1981.

While both provided for a government guarantee to underwrite bank lending to SMEs, the SFLG scheme was a key contributor to the grown of the UK economy under Mrs Thatcher’s government through encouraging entrepreneurs. The SFLG repaid the banks as lenders to companies upon insolvency of the but was very different to the EFG that required personal guarantees from directors and only repaid the bank lenders after bankruptcy of directors as guarantors. It is no wonder that the EFG failed. We can only hope that the new breed of young advisers to Rishi Sunak, as the new chancellor read history but I am not holding my breath.

In the meantime, there are other initiatives, many aimed at the regions such as the Midlands where FSE Group has been appointed by the Midlands Engine Investment Fund to manager an estimated £40 million fund for its region’s businesses.

An example of stimulus for SMEs was that reported by Civil Service World who found that the proportion of government spending going to SMEs exceeded 25% for the first time in four years last year, as smaller firms won an extra £2bn in Whitehall contracts.

There are without doubt burning issues for SMEs that need to be addressed, such as tougher action on late payments, reform of business rates and reliable, efficient broadband in rural areas and market towns, on which there has been little Government comment so far. We might however have found a champion in Philip King, the recently appointed Interim Small Business Commissioner, who is promoting the Prompt Payment Code (promptpaymentcode.org) to focus a spotlight on the payment record of large firms.

We shouldn’t ignore the positive signs from Government following its election with a clear mandate and a sense of purpose to make things happen which in turn will rely on a strong economy.

The budget on March 11, may yet contain some real help for SMEs and at least will let us know whether the Government is aware of SMEs and their concerns.

 

Sector focus on the UK newspaper industry, regional, national and online

UK newspaper industryThe UK newspaper industry has faced multiple challenges for many years but somehow it manages to survive.

In many ways it is a good example of how agile a business needs to be in the 21st century if it wants to continue, to prosper and to grow.

But arguably the UK newspaper industry is more than simply a business albeit, like all businesses it needs to cover its costs and make a profit.

Relevance is critical to having and retaining readers as consumers of content in what might be assumed to be a traditional supply and demand business. At its most basic, news is about informing readers about what is happening in the world, and in the country and region in which they live and aspiring journalists in training were often told that their purpose was “to entertain, to educate and to inform”.

Nevertheless, to the accountants, newsroom journalists have increasingly been seen as a cost, a drain rather than a contributor to the business’ profits.

Indeed, relevance is often more than simply news or indeed information.

So, costs started to escalate in the early 1990s largely due to the increasing price of the paper, much of which is imported from Canada and to falling circulation.

The development of web offset printing had already eliminated the need for type setters and proof readers and increasingly the focus turned to how to get more from fewer journalists and a near-epidemic of redundancies began, with a shift in the news-gathering model from in-house employed journalists to a mix of less expensive, young trainee journalists in house and freelance columnists.

At the same time, in attempts to retain readership, many papers, particularly the regional and local ones, started to include a great deal more content that could be described as lifestyle, celebrity and entertainment-related, reflecting a perceived change in readership interests.

But it is a tough and competitive business and by March 2018 the UK Press Gazette was reporting a net loss of at least 30 local newspapers in the previous year, while many of the nationals were struggling to make a profit. It said that Trinity Mirror closed more titles than any other publisher, with 12 shut down in total over the year and the collapse of family-owned Observer newspapers had led to the closure of all of its 11 titles.

In the local market, it reported, “Trinity Mirror remains the biggest regional publisher, with a total circulation of 1,598,285 across its 129 local publications.

“Newsquest was the second largest publisher with a total circulation of 1,344,379 across its 118 publications.”

Arguably, the digital revolution has had the biggest impact on the UK newspaper industry.

The majority of a newspaper’s profits come from advertising, and as more and more advertisers shift to online promotion the print and distribution costs of newspapers are significantly impacting profits. Like retailers, the switch to online distribution is taking a long time and the rate of online growth in profits is not sufficient to offset the rate of print related decline.

Nowadays, we take it for granted that our daily, or weekly, paper whether it is local, regional or national, publishes an online edition, which can be updated frequently throughout the day given the intense competition to be first with news developments in an increasingly fast-paced world.

Many national UK newspapers, with the notable exception of The Guardian which relies on appeals for contributions from readers, have introduced a paywall, forcing readers to pay a subscription to read many of their online articles.

The Independent, launched in 1986, and sold to the Russian businessman Alexander Lebedev in 2010 went online-only in March 2016.

According to an article in PR week last year “the Financial Times hit its target of a million paying subscribers a year ahead of schedule … and The Times and Sunday Times have around half a million paying customers, with the majority now digital-only. After years of making substantial losses, the Guardian announced a small operating profit for 2018-19.”

By contrast, over the last 13 years, it said, there had been a net closure of 245 local and regional titles.

There is no doubt that the explosion of social media, has led to arguably shorter attention spans and more impatience generally, not to mention a greater dislocation between where people live and their attachment to the locality and changed attitudes to local and regional papers.

However, the rise in concern about “fake news” on social media and subsequent fact checking services offered by some papers, may well improve readers’ trust in what they read in reputable publications rather than on social media.

In my view it is too early to predict the total demise of the UK newspaper industry, certainly at national level, but I hope also at regional and local level, not least as an antidote to the early-morning commute or as a pause in the daily office pressure for a mid-morning coffee and a quick flick through the paper.

Directors’ duties and liabilities survive insolvency – a new court ruling

directors' dutiesA recent High Court ruling on directors’ duties after insolvency has said that they cannot buy assets from their liquidated companies at below market value.

The ruling was made after solicitors for the company’s second liquidator who took over the case, Stephen Hunt, argued that Brian Michie as former owner and director of the construction company, System Building Services Group Ltd, had “unfairly bought a two-bedroom house from the original insolvency practitioner involved for £75,000 less than it was worth, 18 months after his company went out of business”.

The company went into administration in July 2012, and then into a creditors’ voluntary liquidation in July 2013 following which Mr Michie bought the property in Billericay, that was owned by his company, for £120,000 in 2014 from the previous liquidator Gagen Sharma.

The case revolved around whether director’s duties survived the insolvency of a company and specifically those relating to the purchase of assets post insolvency.

Directors have specific obligations where a company becomes insolvent. Under the Insolvency Act 1986 (IA 86), they must act to minimise further potential loss to creditors. Under the Insolvency Act 1986, the directors must recognise their duty to the company’s creditors, including current, future and contingent creditors.

While the case did not involve a pre-pack, where the business and assets of an insolvent company are sold by its Administrator to a new company, in this case the assets were sold by an insolvency practitioners back to the director and it has implications for such a sale since it was argued that the director knew the real value of the assets and knowingly bought them for less than what they were worth known as a ‘sale at undervalue’ which is a breach of the IA86.

Mr Hunt has been quoted as saying that: “This wasn’t a pre-pack case in the normal sense, but it was a predetermined sale of assets back to the director through a company that the insolvency practitioner assisted in forming.

“The moral case for pre-pack sales to directors has often been questioned, but this decision opens up the possibility of a clear legal difference between a third-party sale and one to the existing owners.”

I would strongly advise company directors to familiarise themselves thoroughly with their duties and liabilities.

You can download a copy of my Guide to Directors Duties here.

Key Indicator – the state of UK business activity

UK business activityUK business activity is either in a woeful state, or slowly picking up speed following December’s general election, depending on who you are listening to.

Given the dire insolvency figures for 2019, which I covered in Tuesday’s blog, there is clearly plenty wrong in specific sectors of the economy.

The construction industry, High Street retail and the accommodation and food services were the worst-affected last year but it would be foolish to pretend that any business, from SME to large corporations had an easy time given the global economic slowdown and, more recently, figures revealing that the EU economy is near-stagnant.

Nevertheless, now that the withdrawal of the UK from the EU has passed its first hurdle and that the government has a clear mandate with a huge majority to implement its decisions for the next five years, there are signs of optimism.

The first Lloyds Bank Commercial Banking Business Barometer in 2020 showed a 13-point increase in business confidence, taking it up to 23% in January, the highest it has been for 14 months. The Lloyds barometer calculates overall business confidence by averaging the views of 1,200 companies on their business prospects and optimism about the UK economy.

The most recent IHS Markit/Cips manufacturing purchasing managers index (PMI), for January, showed that the sector has enjoyed its best performance for nine months. Another survey by the CBI (Confederation of British Industry) was also positive in suggesting “the biggest wave of optimism among smaller manufacturers for six years” with 45% of these SMEs reporting that they were more optimistic following the election.

In addition, the Bank of England has kept interest rates at the same level, despite expectations that they would be cut. The outgoing BoE Governor Mark Carney said: “the most recent signs are that global growth has stabilised”.

But much of this is about sentiment where the proof of the pudding will be in increased orders on business’ books and improved cash flow.

On the positive side, productivity (output per hour) increased in January, by 0.1% in the services sector and by 5.7% in construction, according to official figures from the ONS (Office for National Statistics). The results of another survey by the finance firm Together concluded that British SMEs plan to invest £1.7bn over the next two years.

It has to be said that much of this “improvement” is from a pretty low base given that the economy ended 2019 at near-stagnation point, so this is not yet really any indication of a growing economy, although it is a positive shift.

There have also been some encouraging government noises about increasing spending to address the economic inequalities between the North and Midlands and the South which could be good news for Northern businesses. Other government initiatives in the pipeline are likely to benefit the house building and construction industries.

Despite the optimism there is a long way to go before most businesses and especially those involved in farming, fishing and food export, will know the shape of any proposed trade deals, with the EU and with the USA so the short-term for them is not especially encouraging.

The Chancellor, the Foreign Secretary and the Prime Minister have all in the last few days signalled a very hard line negotiating position with the EU over the shape of any agreements which the Government hopes to achieve by the end of 2020. Whether this is a negotiation tactic or a ‘die in the ditch’ strategy we shall find out quite soon.

Concerning input to the outcome there have been some reports that the Government has been ignoring requests from business bodies, such as the CBI (Confederation of British Industry) and the FSB (Federation of Small Businesses) to include their representatives in the forthcoming trade negotiations with the EU.

There are also still the unresolved issues of how the current skills shortage and migrant labour issues will be addressed.

No doubt a level of certainty for some businesses will emerge during the budget, which is due to be announced on March 11. Well at least we shall learn more about the Government’s priorities.

In summary, while it is encouraging that there has been a return to more positive sentiments from UK business leaders, there is a long way to go before we can be confident that they are matched by revitalised UK business activity at home and abroad.

Dire insolvency figures for 2019 – and little respite in sight?

insolvency figures and lifebeltsThe final quarter insolvency figures for 2019 make grim reading, as does the regular Red Flag update from insolvency and recovery firm Begbies Traynor.

The main messages from the latest insolvency figures, published for Q4 2019 by the Insolvency Service at the end of January, were that in 2019 underlying company insolvencies increased to their highest annual level since 2013 driven by a by 8.2% increase in CVLs (Creditors’ Voluntary Liquidations) which were at their highest level since 2009 and by a 24.0% increase in administrations, their highest level since 2013.

Construction, the wholesale and retail trade and accommodation and food services suffered the most, as they had been doing all year.

Begbies Traynor’s Red Flag update published last week also piled on the misery, with findings that a record 494,000 UK businesses are now in ‘significant financial distress’ with property, support services, construction and retail businesses suffering the most. These figures were the highest-ever since the company began reporting its Red Flag research 16 years ago.

Julie Palmer, partner at Begbies Traynor, said: “Currently, we do not know if the failing performance within some sectors is due to short term confidence issues, or more fundamental economic and structural issues.”

But, arguably, the worst insolvency figures could yet be to come.

Bellicose politicians and European stagnation

On Friday night the UK formally left the EU. While this has established a level of political certainty, for business the economic uncertainty continues for at least ten months before our trading relationship with EU has been negotiated.

The negotiation timetable helps us know when we might have certainty about our trading relationship. The first being the end of June as the last day by which any extension to the 11 month transition period can be sought although as things stand the PM has ruled that out. Without an extension the deadline for a Brexit trade deal is the 26th November as the last date for it to be presented to the European Parliament if it is to be ratified by the end of the year.

Notwithstanding the uncertainty of its trading relationship with the EU, the UK can now begin negotiating its own trade deals with other countries.

But whoever heard of a trade deal being formalised so quickly?

Furthermore, this will all take place in the context of stalling economic growth in the EU, particularly in France and Germany as revealed last week:

“Gross domestic product (GDP) in the currency bloc rose by just 0.1% in the fourth quarter of 2019 from the previous quarter, according to the EU statistics agency Eurostat.”

Stock markets were also dropping dramatically, which has been attributed largely to the spread of Coronavirus that has led to a lockdown of much of China.

All this, without taking into account changing consumer behaviour and confidence, partly due to increasing debt levels and to environmental concerns. Perhaps, given the 6% annual increase in personal insolvency figures over 2018, now at its highest level since 2010, there is also a degree of job uncertainty. In retail, for example, almost 10,000 jobs have been lost since the start of the year and 57,000 went in 2019, according to the Retail Gazette.

The Prime Minister and foreign secretary, Dominic Raab, seem set on taking a very hard line ahead of negotiations with the EU. While there are some that take the view that in negotiations it is best to start off taking as hard a line as possible then softening as they progress, given that the remaining countries in the EU clearly have their own problems that they will be seeking to solve the words “rock and hard place” spring to mind.

So, there is a distinct possibility of a hard Brexit, one without a deal although message spin is likely. If this is the case then the uncertainty for business will continue beyond the end of the year until a new normal is established.

We therefore endorse the advice of Eleanor Temple, chair of R3 (the insolvency and recue industry body) in Yorkshire:

“These insolvency figures should be a wake-up call to any director of a company which is finding it hard going at the moment. Anyone in this position should look to take objective advice from a qualified, professional source, to decide the best path forward – and the earlier this is done, the better.”

Emotional Honesty at work – mutual respect turns a negative into a positive

emotional honesty and conflict resolution There are many situations in our working life that have the potential to damage relationships with colleagues and managers and it takes emotional honesty to confront them.

Disagreements are inevitable especially where individuals are ambitious and want the best for the business and its goals. There are often many solutions to problems and teams need to learn how to share differing ideas without disagreements being seen as confrontation and in particular avoiding individuals being afraid of others in such a way that they don’t contribute.

Team decision making doesn’t necessarily mean agreement but is should be positive, especially when the team is needed to implement the decision. Sophisticated teams may explore decision making as a form of idea meritocracy by considering the knowledge and expertise of each contributor rather than team democracy where everyone is equal, or worse, where overconfident individuals, bullies or HiPPOs (Highest Paid Person’s Opinion) make the decisions.

Conflicts at work are often rooted in a lack of respect among colleagues. Conflicts are different to disagreements and can make the atmosphere toxic leading ultimately to bullying and other serious issues that damage a team’s ability to work together.

Another area of discomfort is giving feedback on someone’s behaviour or during an appraisal when the appraisee is under-performing. The intention is normally to invite a change in behaviour that leads to a positive outcome. But receiving such messages can promote rejection of the message or even anger hence the need to deliver such messages with both honesty and with emotional understanding.

Dealing with disagreements, a loss of respect and giving feedback all require a level of emotional honesty to confront the issue in a sympathetic way. In addition to individuals learning how to deal with difficult messages the culture of the company is also important. Culture can help avoid individuals being defensive and feeling victimised by removing blame and promoting honest engagement such that everyone moves on after the decision has been made or after a matter has been dealt with.

In an ideal world everyone at work respects each other and values the contributions of others. However, we all have quirks of character and mannerisms that can grate, which is why we need a level of emotional honesty to both acknowledge this to ourselves and to others. This acknowledgement allows us to be constructive when confronting issues. The key is to actively listen and seek to understand others and avoid letting our own emotion get in the way.

If it is necessary to resolve a problem with a colleague or manager, the first step is to remind ourselves and them of their good points and qualities and to start with these at the opening of any discussion.

Emotion should be firmly kept out of the discussion. Expressing anger or frustration makes it hard to really hear the feedback being given. So, an essential element when dealing with disagreement or a loss of respect is to maintain courtesy.

Equally, aggression, both active and passive, during a confrontation gets in the way by becoming a form of bullying; even disengaging from a difficult situation can be done in a way that is construed as emotional bullying when one party gives in or walks away without resolving the underlying issue. This is often how family members deal with conflict and is seen at work when people don’t know how to deal with issues.

It can be effective to establish a connection by sharing a situation where you may have made a similar mistake and not talking down to the person on the receiving end.

Humour and displacement topics can be useful tools for lightening the mood or changing the topic when dealing with awkward situations but it is often necessary to get back to resolving serious issues as burying them tends to fuel resentment.

It is important to remember, too, that people have personal lives outside of work and their circumstances may be a contributing factor where they may be concealing a personal or family situation that is affecting their behaviour or performance at work.

It is not unusual for people to keep outside problems to themselves, believing they have to conform, to be “professional” or to fit in with a so-called “macho” culture.

Whatever the situation or problem, time should be allowed for the person on the receiving end to digest and think about what has been said.

When on the receiving end we need to listen, take notes if necessary and may need time to consider the points made before responding.

Emotional honesty rather than confrontation is the best way to resolve workplace problems. Feedback should be constructive and dealing with disagreements and conflicts should be done in a way that looks for a positive outcomes.

Respect for others is key and if maintained then everyone can benefit from the experience.

 

Retrain to do what? The jobs of the future

the jobs of the futureA national government retraining scheme was proposed in July last year to help those workers whose jobs will become obsolete because of Artificial Intelligence (AI) and automation.

Whether it will materialise following the Brexit mayhem and subsequent election remains to be seen.

Research by Oxford Economics has found that 1.7 million manufacturing jobs have been lost to robots worldwide since 2000, including 400,000 in Europe, 260,000 in the US, and 550,000 in China and that a further 20 million manufacturing jobs will be obsolete by 2030 although most of these will be abroad.

There is no doubt that the future world of work, especially, but not only, in the manufacturing sector will look very different.

The drive towards aver more automation may conflict with concerns for the future of the planet and the environment but both will doubtless mean a radical rethink of economies, especially those that are dependent on consumer activity.

Demographics too will play their part as many of the populations of the developed world age and live longer and birth rates decline.

All this has led to an apocalyptic vision of the future by some, such as Aaron Benanav, a researcher in the social sciences at the University of Chicago, who argues that economies have, since the 1970s, been based largely on industrial production, expansion and exporting as their major economic growth engine and that such opportunities for growth are dwindling as more economies mature.

He argues that no other sector than manufacturing has been identified that can replace this out of date growth engine and that “restoring previously prevailing rates of economic growth will prove difficult if not impossible. Unless we find some way to share the work that remains, beggar-thy-neighbour politics really will tear our societies apart”.

Others, however, are more optimistic arguing that we have not even begun to imagine the jobs of the future.

Business Insider is one publication that has had a stab at imagining the jobs that will be needed in the future. Their list includes GPs, Dentists, Plumbers pipefitters & steamfitters, vocational nurses, construction managers, physician assistants, sales reps, secondary school teachers, tractor-trailer truck drivers, computer systems analysts, construction trades supervisors, service sales reps, software developers, and physical therapists to name just a few.

But these are all existing jobs in the world as it currently is. A global digital company, Cognizant, has gone even further and imagined jobs of the future that may be needed. A small sample from their suggestions includes:

Ethical Sourcing Officers for when corporations want to root their decisions on what is ethical and not what is profitable. The ESO will be in charge of production to ensure that every step of the process is in accordance with the ethical values of the shareholders.

Personal Data Brokers, who will make sure their customers are paid by those companies who use their data. This assumes that consumers will have full control over their personal data

Virtual Store Sherpas, will be the online equivalent of the in-store personal shopper, who will guide consumers through the process of selecting the most appropriate and affordable items and organise delivery.

Man-Machine Teaming Managers, whose job will be to “figure out and combine the strengths of man (cognition, judgment, empathy, versatility, etc.) and machine (accuracy, endurance, computation, speed, etc.) to create the most productive worker team possible”.

A brave new world or an apocalypse? Who knows? But there is no doubt that the future is out there!

 

Running a small business is a juggling act

businessj juggling actA YouGov study has found that small business owners identified most strongly with the analogy of a juggling act when asked about running their businesses.

The analogy was strongest in the North West, in Yorkshire and Humberside, where 63 percent in each region compared themselves to jugglers.

Bookkeeping was rated the biggest chore by 27% of the 1000 respondents, while 42 percent of respondents believed central government added to the hassle for small businesses.

As an analogy it makes sense where dropping one ball can cause a knock on effect such as the consequences of not having contingency plans or missed payments or failure to file Tax Returns.

Among the issues identified in an article in The Economist on the same subject is knowing the right time to take certain steps in a business.   In that sense, it argues, the juggling act is a permanent exercise in balancing a variety of trade-offs. Such as holding high stock levels can help avoid the consequences of being let down by suppliers but it ties up working capital.

Knowing the right time to expand is a major issue: “by expanding too fast, companies risk losing control of product quality and messing up their management structure”.

Another is the tension between centralisation and delegation. A hierarchical structure can lead to a rigid and inflexible business structure and a loss of agility, while delegation of roles can only work if staff are well trained and the business has a clearly-defined set of goals with which everyone is familiar and on which they act in harmony.

Another juggling act is created by the tension between sticking with the core products or services and how much you can diversify away from the core.

“Choosing the right time to expand and diversify, and the right organisational structure to do it, is a matter of judgment. That judgment, and the flexibility to change plans, is what makes a good manager.” is the Economist writer’s view.

So how can an effective CEO handle the juggling act?

Firstly, they should learn to delegate effectively. They should not be trying to do everything themselves. However, this means that those to whom tasks are delegated must be well-trained and know the company’s goals and be suitably motivated and trustworthy when left to carry them out.

The effective CEO will always be juggling priorities but there are ways of managing them although this involves being well organised.

It helps to see a business as a system of systems by breaking it down into discrete and manageable sub-systems or processes with delegation and clear lines of communication to keep track of all the various activities.

Planning and managing time have been covered in previous blogs and are essential to ensure balls are not dropped. It is easy to put off tasks which can turn out to bite you on the backside if ignored. Examples of activities that are often put off are: the collection in book debts, paying suppliers, VAT and PAYE, boring things like compliance, insurance, allocating time for staff reviews, and even speaking with customers; indeed there is much to oversee the trick is not to do it all but have systems and processes in place to ensure each necessary activity is done.

Check lists and using management systems can make juggling easier. This might mean having KPIs (Key Performance Indicators), check lists such as one listing all the month-end accounting tasks, a monthly management report that consolidates information from departments including management accounts, an order management system to track the fulfilment and invoicing orders, a way of monitoring sales & marketing activities and their results. There are myriad sub-systems and processes that can make the juggling easier but they all need to be optimised and integrated as part of the overall business.

It is possible to make the juggling act manageable and efficient in a way that frees up the time of the CEO so they can focus on the future of the business giving them time to develop strategy. To work on the business, rather than be bogged down in the business.

Keep it simple – and polite – if you want a response to your email

response to your emailIt can be frustrating trying to get a response to your email but employing some behavioural psychology can help.

Catching and holding the attention of busy people with perpetually flooded in-boxes can be tricky, so the secret if you want someone to both read and respond to your email is to make it easy for them to read and engage.

Firstly, the email should have an appealing, short and clear subject line that captures the imagination and makes the recipient want to find out more b reading it. Indeed, most of us harvest or scan our email inbox and often only check who the sender is and read the subject header.

Once opened the email itself should be short and above all concise in clear simple language. Beware of information overload, the recipient can always come back for more. While you may have several things you want to communicate, the objective is to get a response so you can expand in a follow-up call or email.

Giving something of value to the recipient can also trigger a response. Perhaps by offering an idea, or suggestion relevant to them or their company. Relevance is also key by demonstrating you’ve done some research as we can all spot the ‘bollocks’ of most marketing messages.

Courtesy is also crucial. Research has shown that polite emails with correct spelling generate a better response rate. The sign-off is also important, for example “Thanks in advance” has been found to generate a much higher response rate then “Best wishes”.

Keeping your message short and simple also signals courtesy, that you understand the recipient is a busy person.

Your last paragraph should make it clear what you are asking for and it may be that you can set up further communication even if your recipient doesn’t respond by using phrasing such as “If I don’t hear anything, I’ll assume you’re happy to ….”.

Finally, the time when you send an email may be crucial. If you schedule your email to land in their inbox at the start of the working day, for example, there is a greater likelihood of its being read and of your getting a response.

Using automated scheduling software can also help, so that if you don’t get a response to your email a reminder email a couple of days later can nudge the recipient’s memory.

To summarise, remember the acronym EAST (Easy, Attractive, Social and Timely) no matter if your recipient has the brain of an Einstein. In this context, another acronym also applies, KISS (Keep it Simple, Stupid).