Tag: SME’s

Brexit and the influence of Corporate Business: Money talks and the rest of the business community walks

Brexit 2The result of the European Referendum was a surprise to many, and that includes a substantial part of the leave side itself. Yet over a year on, with Article 50 Triggered over 3 Months ago and David Davies now participating in regular sessions of ‘negotiation’ with the European elite, nobody seems to know what impact Brexit will have on any of the key issues, and whether any of what are being considered as the obvious problems which led to the ‘No’ Vote will really have been resolved.

With Brexit constituting a polysemic reference point which in the imaginations of everyone will look as different as the number of people you might ask, it is perhaps no wonder that there really is as much confusion as there appears to be about the whole process.

Some do of course interpret what is already the natural anxiety which is accompanying these early stages of our departure from the European Union as change in the minds of the majority that initiated this whole process. Yet they would do well to remember that none of the reasons which prompted that significant choice on the part of so many have as yet been resolved, and especially so in the case of the many more beyond those generally accepted and not least of all the spectre of corporate and political self interest.

It should really be of little surprise that things have looked like such a mess in these circumstances and genuinely forgivable given the lack of pre-Referendum preparation for its outcome and the chain of events including a change of Prime Minister and an arguably unexpected General Election which has distributed power in peculiar directions.

What is less easy to overlook, and perhaps should be of great concern to us all, is the readiness of former remain-backing politicians to focus upon the opinion and input of sources from the corporate world who also sought the same outcome when considering what will or wont work for business-full-stop, when what they appear to hope will be an indefinite period of transition commences in March 2019 and we formally leave the Union.

Input of organisations such as the CBI, whilst important in its capacity as a member-based industry voice, is nonetheless representative only of the executives and companies for whom they work, and therefore the highly subjective and specifically profit-led interests that they all have in conjunction with their own trading arrangements with Europe – rather than what is objectively in the better interests of us all.

Whilst it may be to some degree inevitable that UK-European trade will come at a greater cost to all businesses in the future, these changes will in real or financial terms be no different than the changes in costs of manufacturing, supply and service provision which have accompanied change after change after change which have been instigated by a continual flow of new European Laws and Directives when they hit relevant businesses. In fact, it is only the fact that this is an industry-wide phenomenon, rather than just another hitting one sector or another, which really marks leaving the European Union itself as being markedly different from changes that to real business, would really be ‘just one of those things’.

It would be disingenuous to suggest that the Government is listening to the wrong people, but it certainly does not appear to be taking into account the realities facing the complete range of the right ones either, and when the views of Remain-lite big business are put into their true perspective, the news is arguably far from as bad as the comparatively few companies which are big enough to swim in the pool with the CBI and have influence on its own Policy would like us and the Government to think.

Motivation is regrettably key, and whilst it is considered normal to talk about the individuals who give voice to CBI membership and the corporate business community as being representative of the ‘business view’, very few, if indeed any of the people who have reached the top of these large Companies will have really cut their teeth in the furnace of SME business start-ups, development and management. It is here where you ultimately have no choice but to accept, get on and work with legislatory change, or get out of the market and let someone else have a go if you can no longer make it work.

Small business, which suggested by Federation of Small Business (FSB) figures makes up at least 60% of industry, thrives on being adaptable and embracing each and every change that it will face, which for most will come to them pretty much on almost daily basis. What it doesn’t have – even with membership organisations like the FSB  – which are again only technically representative of the views of their members with a voice – is a seat, or what should be a significant number of seats around the ‘top table’ when it comes to getting the ear of Ministers and indeed our Government.

This is a travesty, as the business environment which they inhabit is the real engine room of our economy, and the place where industry feedback is most open and reflective of the concerns and realities which really do face all businesses.

SME’s are the business equivalent of the electoral grassroots and the only place to go if Government really wants to establish the priorities of British Business to inform our negotiations with the EU as we transition through Brexit to what may then prove to be a much more productive world for the British economy beyond.

image thanks to news.sky.com 

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Osborne’s threats to break up Banks: True banking reform will take leadership by example rather than the issue of diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second

Commercial Altruism is perhaps an aspiration, but a term which certainly describes the kind of ethics that we need to see exhibited more often within industry and certainly within the Financial Sectors where its absence has been so painfully apparent.

Any resistance to George Osborne’s plans to require Banks to split their retail and less-stable investment arms in attempt to avoid further Taxpayer-funded bail-outs will hardly come as a surprise,  and particularly so when politicians themselves hardly exhibit anything near that type of mentality. But is this really all that the Government actually has within its power to do?

Few could actually believe the sums thrown at the rescue packages of the Banks which had effectively beached themselves through little more than acts of greed and complete disregard for anything other than maximising profit on the part of a few – all at the cost of people who have paid perhaps not just once through fees; but twice by then paying out on the losses when speculation – upon what is effectively thin air – crashed to the floor, as anything without true foundation surely would. The true wonder is how they kept the charade going for so long.

Forcing banks to ‘ringfence’ funds and therefore prevent further Government intervention through the creation of dedicated retail arms, is hardly likely to encourage a growth in benefit to domestic or small business customers. It is in fact more likely to increase the cost of basic banking services to people who already struggle to make ends meet and to those small businesses that need to be subsidised themselves, rather than to be given no option but to subsidise focussed services that banks are currently reluctant to give.

The development and provision of a an easy-to-access or ‘peoples’ bank which would provide the basic account services that everyone is entitled to access is the responsibility of Government, and should be set up as such.

Providing basic free-banking services in this way would provide Government with many advantages such as access to unfettered borrowing streams without 3rd party profit margins being included. But it could also support the administration of ‘smart’ card payments to retailers by customers, restricting the purchase of certain items by those being encouraged into work, with the added benefit of instantly losing the stigma which would be associated with payments made with a non-bank-derived payment card.

Better still, a Government-based bank run as a public service and with a customer focused culture, rather than one based upon benefits to employees and stakeholders may be able to provide many of the products which those on low incomes currently seek such as ‘payday loans’ without the utterly unrealistic levels of interest, and also provide the low-cost services and low-margin lending which new and existing small businesses need in order to survive and then thrive as we have so very long been seeking.

Creation of such a new bank – or indeed adaption of one of those that the Taxpayer already owns – would require a radical change in thinking and the type of leadership which has been sadly lacking in British politics for far too long. But it could be done.

The real question here is whether the Chancellor and the Government really want to affect change in the way that the Financial Sectors operate.

True banking reform will take a lot more effort than simply telling the banks to split their operations or even go back to employing managers within every branch.

Reform will take leadership by example and the provision of the best services possible for those who have the least money first; not by sound-biting newsworthy diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second.

Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

So what motivates you at work or within your business? Is it doing the very best job that you can; or is it simply to earn the greatest amount as quickly as possible and perhaps keep yourself in that lucrative job that you already have, maybe progressing you to an even better paying or profiled position?

Whilst admitting that it leaves a bad taste in the mouth just as soon as the realisation dawns that other people may have noticed; for a growing number today it will be the latter and for very practical reasons that they may never really have even considered at that. Perhaps strange then that it’s a feeling of guilt which often accompanies that understanding when it arrives, as few will ever argue that we would all like to earn more or have a better lifestyle if given the option to do so.

The reality is of course that people feel bad about making money when questioned, if they hadn’t realised that it has become the purest motivation or aim in what they do, rather than being the very healthy side-effect of a career undertaking or vocation, and then doing it damn well.

With a growing concern about the ethics employed within business, not least of all illustrated by the Libor scandal, one must ask if a loss of conscience is one of the very negative aspects that the distance created by increasingly elaborate supply chains and the rise of the Internet have created?

Many of us have simply adapted and in many cases thrived from the changes and opportunities brought into being by the rise of the Communication Age.  So workers within Internet and information technology reliant businesses are perhaps excusably less aware of the fallout hitting customers they may never even see from decision making which is without a tangible fear or concern for the ‘human factor’. One also wonders if they are therefore insulated from the future catastrophes they now have the power to create in what may seem little more than parallel lives, which to the more aware would only ever be dressed as distant elephants that look less than the size of a gnat on their horizon.

To perhaps emphasise the downside of distance more effectively, I will take a step back to an industry that we all love to hate. A profession that has always had the benefit of distance between business and customer once they have been commissioned; but a distance which is also created by time and process rather than by the remote contact of a broadband cable.

Within the property market, many are quick to become cynical of the inflation-setting-overpricing of houses and wonder how they find themselves unable to afford even a modest home.

Some would blame the gargantuan super-tanker that was ‘right-to-buy’ as set in motion by Margaret Thatcher, but can quickly forget how it was that very act in the first place which encouraged massive property ownership within parts of society where people would never have dared even dream of being homeowners before her tenure, and perhaps led to those very same people being able to aspire to making such dreams their reality to begin with.

Others would look perhaps more accurately to the realms of Estate Agents who have ruthlessly pushed prices up and up, month-after-month and year-after-year in order to secure greater and greater percentage based sales fees.

Estate Agents actually do a job that they could choose to do very well on sensible margins – even in a good market. But repeat custom is to them a very long game and if someone else is saying they can sell a house for more, it doesn’t take much excuse to follow or to lose out because the risks to them seem very distant indeed.

After all, very few owners will willingly lose many thousands of pounds on a sale just because one agent tells them what its actually worth, when another says different. The agent who ‘does what it says on the can’ will have ‘priced to sell’ and done what they were commissioned to do, whereas the second agent plays the long game, watching the market rise to the price they suggested, thereby getting the fee they want but paying little note of the pain that their customer experiences in the meantime. No wonder then, that so many Estate Agency businesses have stopped trading or been forced to make substantial cutbacks during the economic crisis.

The long-term effects of such business practices are potentially incalculable and one can only speculate on just how overpriced our homes now actually are, and how far back in time standards of living and subsequent social mobility could actually be pushed as a result of the out-pricing of starter homes for young people; a situation created purely on the basis of making higher and higher margins for just a few without any apparent risk to the many from doing so.

So with the rise of the Internet and information technology, many more businesses now find themselves enjoying a distance between themselves and  customers which is to such a degree that the abuse of such apparently lucrative opportunities could create all manner of future problems, which may only ever become apparent much further down the line.

For instance, a once heavily hands-on recruitment industry which only a few years ago interacted with perhaps every candidate who made the effort to post them a CV, has been replaced by one which has discovered a seemingly bombproof level of security from risk of losing fees by targeting ‘perfect fit’ or tick box candidates, simply by focusing on electronic advertising and administration techniques. 800 applications through an Internet Job Board sounds a lot to handle; but not if you have set up a machine to identify perhaps a minimum of 8 ‘keywords’ or phrases from 10 in those CV’s before the hand of a human with any kind of feeling will go anywhere near them.

Nobody talks about the longer-term threat to hiring businesses of all shapes and sizes that comes from recruiting candidates from what by default effectively becomes a closed field of applicants who only know and understand a specific discipline within business, illustrated by the use of a series of words. Words which may themselves actually just be buzzwords or the esoteric ensemble of a recent graduate.

And why in purest profitability terms should recruiters care when today’s bottom line is secure and they achieved it with the benefit of never having to even speak to perhaps 3 times as many candidates as they actually did. Candidates who may have provided the recruiter’s customer with benefits and untold added value which they never had the chance to see but paid for nonetheless.  A situation leaving perhaps the best candidates finding themselves removed from the running by a software package that reduced the time involved for the recruiter to all but a mere fraction of what they would have ‘wasted’ otherwise.

It is quite concerning that labour and cost saving technology for one business can itself create the opposite effect not just for one, but potentially many others. But then if you also look at the dark-art-creativity of the financial sector and money-making ideas such as cereal futures and funds that own shares in supermarkets and dairy processors, you can quickly begin to see just how the mechanics of distance and its ability to negatively affect the lives of many people actually are. After all, what is 1p on the price of a pint of milk every couple of days when you had a £1 Million bonus last year?

On the one hand, technical advances and the heralding of an information-based communication age encouraging openness and sharing is driving a potentially buyer-led age where businesses have no option but to sell on the basis of making ‘just enough’ profit and delivering quality on time every time.

On the other, the opening of doors to many more  ‘golden-egg’ opportunities which are great for those picking up the product as it is found, but like the ever expanding and deepening ripples from a tiny stone tossed into a still pond, can cause mayhem and disaster in places that they had never even considered.

So the question needs to be asked; Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

Peer to Peer unsecured business lending for SME’s is on the rise. But are you surprised?

The internet culture of openness and sharing is promoting massive changes for businesses of all sizes, as the continuing upsurge in businesses aiming to develop both our social media knowledge and use will easily confirm. But the gaps which have been bridged in one way by new basic communication mediums are now developing into fully fledged by-passes in others and not least of all through the proliferation of peer-to-peer lending sites such as Funding Circle.

When taking my first real plunge as a start-up with a solid distribution contract 8 years ago, I would have leapt at the chance to obtain £250K unsecured lending from a range of private investors. Instead, I had no option but to give a charge against the equity on my home to a high street retail bank. I’m sure that many who have driven the development of an SME whilst being the sole bread-winner at home will relate to the experience of having your partner crying as you call in at your solicitors to complete the paperwork.

But business is inherently risky, and that’s why not everyone does it – or receives the benefits that come with it. Banks however, look very much like they have become ‘penny wise and pound foolish’ when it comes to business vs corporate lending and you won’t have to dig far in to the realms of the recent Banking Crisis and the current Eurozone debacle to see where the big money has been going.

In the past, decisions on lending were actually made by a branch manager at the local bank, who wouldn’t have to talk to a faceless lending ‘specialist’ on the phone or enter all the relevant data onto a network to see if your sweat-soaked business plans were credit worthy, because they took the time to know a client and could see where real risk would lie. I can honestly remember the reverence that the ‘bank manager’ was given when I was a child – not unlike that of a GP or a Dentist. And Oh… how the times have changed.

I would guess that I am far from being alone in having sat with a Business Relationship Manager to talk through the acorns of an idea to see if the will was there to provide funds, before taking a nod away with meto go and commit many further hours of work to creating a written business plan, to then have it quashed in moments when it travels further up the chain by someone or something which basically has nothing more in mind than having one’s cake and then eating it. Put bluntly, it looks very much like interest, security and surety are the 3 requirements of high street retail business banking to small and new business today, and any more than  2 such caveats are not only unrealistic, they are wholly unreasonable.

Not one moment too soon, peer-to-peer lending has arrived, giving entrepreneurs the opportunity to put great business ideas to open-minded lenders who are able to listen to the thought and actually experience the passion behind an idea, and then make an emotional evaluation of the weaknesses and strengths of that concept or perhaps just a plan for expansion, before deciding whether they want to make a similar leap of faith. Even the Government has been caught on-the-hoof with this growing concept pledging no less than £100 Million to support this type of borrowing.

The irony is that for those ‘peers’ choosing to lend and perhaps spread £100K in £5K chunks across 20 different projects, they are spreading their risk widely after making a proper evaluation of all the lending AND receiving a good level of interest too. Banks would perhaps do well to bear this in mind as they go chasing the sure-thing of that golden egg dropping into the basket which comes from a hen with a great set of teeth…

If your Business wasn’t started just to create jobs, why should you have to run it like you did?

Businesses are not established with the aim of creating jobs. Yet we hear and see an increasing amount of news about wages, employee benefits and employment Laws which would strongly suggest otherwise and leave many of us wondering exactly when the micromanaging hand of Government and European Legislation will actually be stopped in its tracks. SME’s in particular are burdened with rafts of Legislation which many owners are simply not able to afford to manage by hiring specialist management or consultancy input that would otherwise be unnecessary.

When you set up a small business on the back of a particular skills set which then begins to grow and requires staff, should a financially-strapped Government really be placing barriers in the way of entrepreneurial growth and survival by insisting that you understand and enact the many stages and steps that you have to chronologically take before you can remove a bad, perhaps livelihood-threatening employee?

I’m sure I was not alone in wondering if at last some sense were beginning to prevail following the announcement in March that the Government had began a Consultation on ‘No Fault Dismissals’ and that perhaps hard working business people and innovators would now be trusted not only to grow their enterprises, but to also look after the staff who ultimately look after them.

Like every situation in life, a workplace will have its share of good and not so good employees, but it is simply ridiculous to place the burden of proof upon an employer in order for them to expeditiously remove disruptive, troublesome and sometimes poisonous staff who can potentially destroy a business through their actions and continued presence. The bottom line is after all that it is only in extreme circumstances that any genuine SME employer realistically wants to have to take the trouble to remove any employee on an immediate and individual basis, unless they simply can’t afford to keep them anyway. Redundancy is and should always remain a different thing entirely.

At this point, the argument that simple staff under-performance would result in unfair summary dismissal as a result of changes is likely to be introduced. But for any of us who have employed and managed people within an SME setting where you don’t have the benefit of dedicated HR or Recruiter resources at your call, we know only too well how much time and expense it actually takes to recruit a replacement employee for any job and especially those roles which will be key to growth and continuance. It is hardly therefore likely that most of us would do anything other than make the maximum effort to bring staff up to the required standard if it is actually possible to do so.

It is sensible to accept that there will always be those employers who will abuse trust and operate in an unscrupulous manner towards their employees. Thankfully, I believe that they are now very few in number and with staff basically being the primary asset of any business, those leaders who treat them badly will soon reap the rewards of what they have sown without the interference of unnecessary legislation and the all-too-often misused threat of Employment Tribunals hanging over them.

Having seen all too many potentially great small businesses halted in their tracks, simply because the owner doesn’t want the problems associated with employing staff and also witnessed larger businesses brought to a standstill because of the self-serving militancy of charismatically influential individuals, it’s high time that Laws which have been created for the sake of having such laws were repealed and taken back to the point where most of us would accept they were actually doing some good.