Why should SMEs have a staff handbook?

taff handbookIt is important for employees, and management, to know exactly what is expected of them by way of appropriate behaviour, legally-imposed regulations and any specific company policies.

Businesses are required to oversee compliance by staff of all manner of regulations such as Health and Safety, manual handling, smoking, noise, abuse and discrimination to name just a few.

However, new laws and regulations are constantly being imposed on businesses and others are subject to change. While in the past such policies might have been incorporated into each employee’s contract of employment, the constant changes make updating them almost impossible. Instead contracts of employment can be quite short by referring to a staff handbook that can be kept up to date.

Businesses vary greatly in what they include in the employee handbook, but some can run to some 60 pages.

The essentials that should be in a staff handbook

Essentially, the handbook is combination of quality, management and reference manual. They are particularly useful when inducting new employees or as a reference manual when dealing with grievances and disciplinary matters, or sickness and absence.

Therefore, it makes sense for every business to have a well-structured staff manual, no matter whether it is an SME or a larger company.

Ideally, a staff handbook should be clear with an easy to search index so that it can be used for training purposes and referred to when dealing with problems that may arise.

It should contain company policies on dress codes and behaviour, information about claiming expenses, health & safety, security, personal safety, use of vehicles and driving while on company time, and lots of statutory policies.  It might include instructions for using technology and telephones, while most companies now forbid staff from using phones while driving and some forbid their staff from taking calls on business phones outside working hours.

Others have instructions for operating specific equipment or machinery as might relate to departments, while these can be incorporated into the staff handbook they might instead be appended in working instructions that apply to the relevant department. Either way such instructions should be referred to in contracts of employment and the staff handbook as observing them will be a condition of employment.

Staff handbooks should include reference to policies on equal opportunities, Disciplinary Rules and Procedures, Grievance Procedure and Health and Safety Policy.

While there is no need to include the details of the legislation they should point to where both staff and management can find more information.

There are many other policies, these days, that businesses may also have, such as on drug and alcohol consumption, especially where they expect employees to drive motor vehicles. Email security is also a major area where employee compliance is key including internet security, protecting company systems from unauthorised access and viruses, accessing inappropriate or non-work-related websites, personal use of company computers and telephones or social media. Sickness and absence, parental leave, data protection and whistleblowing are also normally covered.

Again, staff and management need to be familiar with the policies and procedures and know that they exist, and where to go for detailed information.

An up to date staff handbook should be available on staff noticeboards with notice of any changes that might be relevant. These should also be covered during a periodic staff review and every now and then an updated staff handbook should be issued to all staff.

It might need to be longer than 60 pages but, however long, every company that employs staff needs a staff handbook.

Could there be a retail “bricks and mortar” fightback?

Happy "bricks and mortar" shopperThe inexorable growth in shopping online continues to put pressure on “bricks and mortar” retailers as is illustrated by the clothing and homeware retailer Next, which last week reported its third quarter full price sales up by 1.3% on the same time last year.

But Its High Street sales for the quarter were down by 7.7% compared with the same time last year while Next Directory sales rose by 13.2% compared with 2016 and 9.4% in the year to date.

Multi-channel competition from the likes of Amazon is forcing retailers to revisit their business models and the cost of retaining a High Street presence is causing them to struggle to keep prices competitive. Another problem is the time and cost of delivery, again under pressure from Amazon and its Prime next day delivery service.

Nevertheless, many people still like to go to physical shops for the social interaction and the opportunity to touch and see the products.

One solution retailers have chosen is to reduce the size of their estates but retain a presence on the High Street with smaller stores, marrying the display of a smaller selection of products with the Argos Style online ordering and delivery system, or moving into concessions in department stores.

Marrying “bricks and mortar” space with innovative technology

As the BBC programme The Disrupters, suggests, there may be more innovative shopping models to come.

One it describes is the Moby Mart, tested in Shanghai, where a marriage of self-drive technology and a mobile “store” can be summoned to the customer’s neighbourhood.  They then enter the “shop” by swiping their mobile phone at the door, select products then swipe their way out again.  The idea is still at beta stage so there is some way to go before it becomes a reality.

That the physical retail space still has its attractions is illustrated by the fact that the likes of Amazon have ventured into real-world bookstores as well as buying a US grocery chain, Wholefoods, with more than 400 High Street outlets.

Alibaba, too, has been experimenting with ways to keep a physical presence while keeping costs to a minimum.

One idea is their pop-up café, under the Taobao brand, using facial recognition software to identify customers who are than able to enter to pick the food they eat and pay using their mobile phone rather than to cashiers.

Finally, the rise of discounters, like Aldi and Lidl, has been inexorable.  They continue to flourish and grow in physical retail spaces by offering own-brand, cheap but quality basic foods to undercut their rivals.

While ‘bricks and mortar’ retailers need to have a distinct proposition and provide a great service, convenience is a factor, but the battleground remains price vs perceived value. Getting it right will be a challenge and is one that Mary ‘Queen of Shops’ Portas still advocates despite recent claims that her “Save the High Street” campaign has failed following new figures showing that a thousand shops have closed over the past five years.

Short term thinking in business amid Brexit uncertainty

in the midst of uncertainty don't panicIt seems that hardly a day goes by without a new and negative headline about the UK’s decision to leave the EU and the prospect of an adverse outcome from the negotiations.

Here’s a selection from the Independent at the time of writing: “David Davis has conceded that Britain’s Brexit withdrawal agreement will probably favour the EU”, “UK financial watchdog warns bank moves likely to be irreversible”, and “20% of UK restaurants at risk of going bust due to Brexit”.

It is hardly scientific, but gives some flavour of the atmosphere currently dominating the headlines on the issue.

Whether business owners follow the news or not, it is hardly possible to be completely immune to the climate of uncertainty that is surrounding the process, not least because reportedly some 58 studies have been carried out on the likely impact of leaving the EU on various sectors of the UK economy, details of which the Government has so far declined to publish, allegedly for fear of jeopardising negotiations, but may now be forced to after a vote in the House of Commons.

What further pressure last week’s interest rate rise to 0.5% will put on businesses remains to be seen, but the prospect of further rate rises is unlikely to help any business struggling with debt repayments.

No wonder, then, that many businesses are putting growth and investment plans on hold and concentrating on short term survival.

But ultimately this is not a sustainable position to be in since the business that fails to innovate is unlikely to thrive or grow and stasis is generally seen as a forerunner to failure.

What can a business do in the face of continuing uncertainty?

The obvious is to say, “keep calm and carry on”.

But also, acknowledge that fear of the future can become a self-fulfilling prophecy that encourages short term thinking, caution and at worst frozen panic.  It is often the case that where some see only looming disaster others see opportunities.

So, we would urge businesses to do their best to look on the bright side, think and plan for at least medium term and do everything they can to keep their businesses in the best possible shape, from carefully managing cash flow and monitoring cost but at the same time actively looking for opportunities.

This may mean getting help from a restructuring advisor to thoroughly review all its operations and identify the strengths and weaknesses and suggest ways to transform, pivot, slim down or otherwise revise the business model and update processes in preparation for embracing the opportunities as they emerge.

How not to do email marketing

avoid email marketing being seen as spamTrying to catch people’s attention is not easy when their email inbox is flooded with emails they feel they have not asked for and have no time to read.

So, any business planning an email marketing campaign that wants to attract readers’ attention, whether it is passive to stay ‘top of mind’, or active and get them to sign up to offers, make further inquiries or buy an item, needs its communications to be engaging, relevant to the recipient and succinct.

Of course, an accurate profile of the ideal recipient, whether influencer or customer should have been researched and the goal of the piece of marketing clearly defined. So, writing the e-mail’s content should be relatively straightforward, shouldn’t it?

Indeed, irrespective of how great the content is, getting recipients to open emails to read great content is a challenge.

There are plenty of pitfalls to avoid if you don’t want your communication to be marked as spam or be listed as ‘unsubscribe’.

What to avoid when writing content for an email marketing campaign

A business’ credibility can be easily wrecked by an email containing spelling errors, typographical errors or broken links. The advice is to proof read thoroughly and preferably using someone who has not been involved in the writing.

Do not use deceptive subject lines that imply the sender and recipient have been in an ongoing conversation when they clearly have not been. Equally, do not send emails with no-reply to sender addresses. It is a disincentive to those who might be willing to engage further.

Whatever the purpose of the email, make sure it offers something of value in a way that interests the reader – hence the importance of a detailed customer profile.

This should be the first message before explaining how the sender business can satisfy that requirement, and even then, keep any information about the company as short as possible.

The subject header is key to getting the recipient to open the email. Once opened the recipient shouldn’t feel they have been duped into opening it, instead they should feel pleased they did.

Too many calls to action can feel like bullying or badgering and can be off-putting.

If the email is to contain images they should not take too long to load onscreen.  At the same time, do not rely solely on an image for the email.  Image-only emails are often seen as spam.

And finally, you have just eight seconds at most to get the reader engaged and interested so KISS (Keep it Simple and Short) is the way to go.

Insolvencies – the signs are not good for struggling SMEs

insolvencies signpostMore businesses have been declared insolvent during July to September, according to the latest statistics released by the Insolvency Service on Friday, October 27, 2017.

An estimated 4,152 companies entered insolvency in the third quarter of the year, an increase of 15% on the previous three months and of 14.5% compared with the third quarter of 2016.

Construction companies, Manufacturing and Accommodation and Food Service Activities topped the list of insolvencies, as they have in the previous two quarters, and, although final figures have not yet been released for the latest period, the trend is clearly upward.

The news comes as R3, the insolvency and restructuring trade body, released the latest findings of its long-running research into business health.

It revealed that more businesses were showing signs of financial distress increasing from one in five in April to one in four in September. Among the causes cited were decreased sales and increasing use of overdrafts with many reporting that they were at their overdraft maximum limit.

R3 President Adrian Hyde said: “Businesses have faced a number of fresh challenges over the last year. Increasing input costs caused by post-referendum inflation increases and a weaker pound, a rising national living wage, the added costs of pensions auto-enrolment, and, for some businesses, rising business rates will have hurt bottom lines.”

He said investment in new equipment had dropped between April and September from 33% to 22%, which suggested that concern over the economic prospects for the UK was prompting company directors envisaging trouble ahead and building up cash reserves to get them through tougher times ahead.

“The question of balancing competing needs – whether to prioritise solidifying their cash position or investing in their businesses, a key concern in the digital age – is more urgent than ever for many companies, especially with the economic landscape becoming more unsettled,” he said.

Time to revisit the business model?

It is, in our view, more imperative than ever that businesses retain tight control over their cash flow, revisit their business plans and have a close look at their operations to identify where savings could be made. Uncertain times only offer opportunities for those with deep pockets, for most businesses surviving them requires a focus on margins and hoarding cash until a more stable future can be predicted.

It may be a time, sooner rather than later to take a thorough look at the whole operation to identify whether it is time to restructure or pivot the business model to one which is more sustainable. This can involve some level of restructuring in order to be prepared for the possibility of worse to come.

Can SMEs afford to use invoice discounting and factoring?

invoices in filing cabinetBoth invoice discounting and factoring are a means by which a business can borrow against the value of its invoices before they have been paid.

They can be a useful way of funding working capital and managing cash flow, especially for a rapidly growing business, but they also come at a cost.

Not surprisingly the finance comes at a cost which will depend on the services being provided, interest charged and risk of loss to the lender, some being less scrupulous than others.

The amount charged will cover interest on funds drawn and a service related fees. The service fees will change depending on the volume of invoices, value of invoices, concentration of invoices, percentage drawn down, maximum amount borrowed, the level of monitoring necessary and any credit insurance. They can also include set up, audit and introduction fees.

The funding agreement, often hidden in the small print, will include event fees such as termination fees, default fees, collection fees, notice penalties. Many also require the support of personal guarantees. On the face of it they can’t lose money, but you would be surprised at how many do.

What is the difference between invoice discounting and factoring?

With factoring, the service provider takes on managing the sales, ledger, credit control and chasing of invoice payments. With Invoice discounting the business remains responsible for its sales ledger and invoice chasing.

When considering whether to use either service businesses should weigh up the costs against the benefits of freeing time to manage the business (particularly in the case of factoring) and the enhanced control over cash flow, especially if it is intending to grow.

However, again, particularly with factoring, other borrowing avenues will be restricted because book debts will not be available as security.  While this choice provides some protection against bad debts, factors will also restrict your borrowing against poor quality debtors by either disallowing them for borrowing purposes or recording them if they aren’t paid within terms.

In terms of customer service, a business will need to consider the effect on its customer relations of having no direct contact with the business, and especially, how the factoring service treats its customers.

With invoice discounting a significant consideration is how robust the business’ in-house credit and invoice processes are and how the service compares with the rates that may be charged on an overdraft or bank loan. It should be pointed out that banks no longer want to provide overdrafts as a way of funding book debts.

In both cases, the event fees can be sufficiently large to justify some lenders looking for reasons to trigger them. Even with scrupulous lenders, regular defaults become a problem for both parties.

While both services may be an option to consider for a healthy business, it is questionable whether they are helpful to a business that is already in financial difficulty. Turnaround advisers often find themselves having to negotiate on behalf of companies with factors and invoice discounters to persuade them not to pull the plug when, although the money loaned is covered the lender wants to end the relationship and recover their money.

The pros and cons of bitcoins for SMEs

bitcoinsRemarks by Jamie Dimon, chairman and CE of JP Morgan Chase, earlier this month disparaging the bitcoin virtual currencies as a “tool for criminals and money launderers” are perhaps no surprise. Nor is the scepticism that bitcoins are a bubble, an “Enron in the making” as quoted yesterday by Saudi billionaire Prince Alwaleed bin Talal.

For the mainstream banks the rise of cryptocurrencies represents the risk of a serious loss of revenue from currency exchange and other transaction charges.

However, cryptocurrencies like Bitcoin have been growing in popularity both among investors and SMEs, particularly those that trade via e-commerce or in several countries.

While there has been a significant growth in investors trading in bitcoins, this should come with a health warning.  Value can be volatile.  In January 2017 one Bitcoin was worth $800 and by June it had risen to $3000. But within a month the value had dropped to less than $2000 before rising nearly $3000 by the start of September.

Plainly, investment in the currency is only for the experienced investor with strong nerves and an ability to write off the investment at worst.

How useful is accepting payments in bitcoins to SMEs?

The advantages for businesses in allowing payment in bitcoins is in lower costs and therefore greater profits.

Accepting payments via debit or credit cards attracts significant transaction fees, whereas the charges made by companies that manage Bitcoins are significantly lower. Because bitcoins are not currencies issued by any government, trading in them is not subject to tax.

For small businesses the speed of transactions is another benefit. It can take up to a week before a credit card payment reaches the business’ account, whereas with bitcoins payments typically arrive within a couple of days.

Another benefit is saving on the high cost of currency conversion that is charged by banks.

Bitcoin payment is becoming increasingly popular with customers which presents an opportunity for those businesses that accept it.

There are, however, drawbacks to having a bitcoin account. There is no regulation in the UK, so it is not covered by the FCA (Financial Conduct Authority) and losses would not be covered under the Financial Services Compensation Scheme, which protects lost deposits of up to £85,000 from bank or savings accounts. There is also the perception, whether or not this is justified, that bitcoin transactions are used by those wishing to launder money, or by those operating in the ‘dark web’ or others trying to avoid paying tax. This is made easier by the distributed ledger payment system that confirms a payment without the need for disclosing a customer’s personal information. Use of bitcoins could therefore expose businesses to greater scrutiny by HMRC and anyone monitoring money laundering such as banks that receive the converted cash.

The other main risk is bitcoin value fluctuation, but this can be mitigated by using a payment processor to convert bitcoin transactions into actual currency (whether $US or £Sterling) and pay it into the company bank account.

For any business trading globally there are certain benefits to using bitcoins, but legitimate businesses need to have appropriate and secure systems supported by detailed record keeping in place.

Don’t discount the awkward people in your business

awkward people are coolSocial misfit, loner or nerd. These are all words that are often used to describe awkward people.

In this context awkward does not mean deliberately difficult, disruptive or aggressive, but describes people who don’t quite fit in or interact socially with their group, peers or colleagues. Indeed, all too many amateur psychologists ascribe people with these character traits as being socially dysfunctional, or being ‘on the spectrum’, or worse, as having Autism or Aspergers.

But US psychologist, author and relationship expert Ty Tashiro argues that such people often have striking talents.

The author of AWKWARD: The Science of Why We’re Socially Awkward and Why That’s Awesome, argues that while such people are less likely to be socially skilled or good communicators they also have what he calls obsessive interests.

However, being socially awkward is not synonymous with being on the Autism spectrum.

Tashiro says socially awkward people are likely to have considerable focus and energy and to deliberately practice something that interests them repeatedly until they achieve mastery of it.

How can this benefit a business?

It is almost a cliché that to achieve mastery in an activity or discipline requires a single-minded focus and hours of practice.

So awkward people can often achieve a high level of expertise in what interests them.

The pace of technological change is being driven by innovation and advances in science so it is easy to see why having some awkward people in a business can be a huge benefit.

With the right level of understanding and support, an awkward person’s skill is a resource that can result in a ground-breaking innovation that could put the business ahead of its rivals.

So, it makes sense to recognise that an awkward member of your team may have hidden depths and to find ways of nurturing their interests and skills for the benefit of the business, its profitability and the security of everyone involved in it. Respecting, understanding and supporting them takes time and effort but the rewards can be stunning.

It is also called “leadership”.

Older employees – a valuable resource to retain and retrain?

older employees reverse mentoringSkills shortages in the UK have been an issue for some years and to an extent the gaps have been filled by workers from the EU and other countries.

However, continued uncertainty about the eventual status of EU citizens as the Brexit negotiations stumble onwards is prompting many of them to consider whether they have a future here and making others think twice about coming here.

The skills shortage is not simply a problem that can be solved by recruiting from overseas, though. A combination of near-full employment, an ageing population and rapid technological change is compounding the difficulties businesses face in finding people with the right skills.

Already, according to Open University research carried out in July 2017, the shortages are costing UK businesses more than £2 billion a year in higher salaries, recruitment and temporary staffing costs.

The new Government Apprenticeship levy from those companies with an annual pay bill above £3 million only came into force in April this year. Those businesses below the threshold for the levy were also promised financial help towards training apprentices, 100% for 16-18 year-olds and 90% for those aged 19-plus.

The new scheme aims to produce three million new apprentices by 2020. Even if this figure was met, it would still be some years before these newly-qualified young people build up the experience needed to fulfil many roles in the workforce.

More than half of those businesses asked in the OU survey said they were employing people with a lower level of skills than they had been recruiting for and were paying for training to build up those new employees’ skills.

But addressing the skills shortage requires more innovative thinking.

How many businesses have older, long-standing workers who may not be up to date on the latest developments in their fields and are assumed by their employers to be coasting gently into retirement?

As retirement ages are pushed further and further back no business can afford to ignore the potential there may be in these older employees.

Recently, the BBC introduced a scheme called reverse mentoring in which young employees in their 20s were asked to help older colleagues, in this particular case to understand the likes and dislikes of millennials.

However, the idea of reverse mentoring has been spreading into other sectors. It has been used to help bring older employees up to speed with new IT developments and to modernise out-dated working practices.

The corporate mind-set has regarded the over 55s as old and not to be considered for investment or further career progression.  But such people could be seen as a resource already being paid for, experienced and committed and worth the investment of time and energy in helping to update their skills to be able to contribute even more productively to the business.


How should a business in difficulty choose a turnaround or insolvency adviser?

trusted advisorAll too often directors can feel overwhelmed by the problems they have to confront when their business is in difficulties.

In fact, they may have been hoping the problem will resolve itself for some time, while instead the situation has escalated to a crisis point.

However the problem has arisen, the result is often a shortage of cash and the knock-on problem of not being able to meet payroll, buy supplies or pay creditors. This is where the early intervention of a trusted expert can be crucial to business survival.

Calling in a turnaround or insolvency advisor to look at the whole operation, not just the finances, is essential as their independence will mean any recommendations are honest and impartial.

The questions to ask when choosing an advisor

Advisors may not come cheap, but there is a good reason for this.  The best advisors have a breadth of knowledge and experience across a range of disciplines.  While the most obvious and pressing problems may be insufficient cash and impatient creditors, the right advisers will look for and advise on overall solutions for the business that may involve operational reorganisation, not just a short-term financial fix.

In the course of their investigations and subsequent work to save the business the advisor may have to cover financial analysis of statutory accounts, cash flow forecasts and be able to forecast trends. They will need to understand legal compliance requirements with HR and employment, especially if staff are to be made redundant as a means of saving the business.  If they have run their own business so much the better as they will understand your own anxieties.

They should be able to identify viable parts of the business with potential for growth and be able to negotiate with clients, creditors, employees and union representatives, suppliers, HMRC, banks and if relevant insolvency practitioners, who often represent banks.

Advisors often need to deal with Winding Up Petitions, attempts of seizure of assets by Bailiffs or High Court Enforcement Officers and other action by creditors. This requires them to know the different procedures and the legal options for dealing with them.

Professional qualifications, a track record in saving businesses and people skills are all aspects of restructuring work that directors would be advised to explore when choosing the right advisor. Being aware of the difference between different types of adviser may also help since insolvency practitioners generally work for creditors while turnaround professionals work for companies.

It goes without saying that some companies cannot be saved but with the input of objective and impartial advice from the right advisor, there are normally myriad options for saving most of, or at least part of, a business.