Too Many Channels

Social Media for business is undoubtedly the thing! But where to start? There are outlets for your creative muse by the dozen. Actually there are hundreds of them but you have to pick ones where you feel comfortable and your audience is likely to be relevant for you. So explore before you belong, and see what sort of thing is going on there. It's like a giant party with groups of people drifting in and out of the conversations.

My own perceived difficulty is with the inspiration. If I see a useful article or some observation strikes me I can tweet about it, put it on my facebook business page, include it in an article I am publishing somewhere, put it on the 4N forum, Linked in Groups, Googleplus,  or any of the other outlets I have something to do with. The point is that having done one or two of those the creative inspiration has been used up for that little topic. I am not short of ideas but I am short of enough to service all these outlets.

Keep it under control

The obvious answer is to keep an eye on the response you get and service the outlets that are most useful. You are in business, TIME is your biggest resource problem and it is not cynical to ignore some of the chat that is constantly going on. The measure might be - would they miss me if I didn't bother for a few days? Harsh but fair!

Measured Response

You could go overboard and studiously examine the insights, the klout, the metrics and the various applications (apps) available to tidy up your social media. Probably it is worth keeping an eye on some of it but you can spend too much time analysing and worrying about all the measures and creating a bigger problem still.

Allocate your time

So my considered conclusion is that a mixture of outlets is useful. This should be a mix of what you perceive to be useful areas to keep in with and you do that by seeing if the material there is useful to you. There is also the social context. A little light distraction is not harmful, but don't spend all day on it.

Content

Of course you should talk about your business things, but not without humour and not incessantly. Equally I think it is unhelpful to talk about frippery and pointless inconsequential things. Have something to say, just as you would when chatting to a friend at a break in a meeting.

There is the key. It is 'social' media you are dealing with. Building up a circle of friends in business is always useful. Helping them promote their on line presence is not difficult and creates the goodwill you need.

Bob Shepherd Associates builds up businesses. One of the components - a sub heading under 'Marketing' in the business plan is social media and what to do about it. Off loading it to a managed service is okay only if you keep a close eye on what they say and supplement the whole with your own content. The arena for this is changing and evolving. Emails are no longer as effective, newsletters are  largely ignored, blogs are losing their impact. It's a moving floor and you need to keep your balance. Doing something involves allocating time to service it. Doing it badly is a waste of time. A strategy is necessary to make it worthwhile.

Missed The Point Again

Those who follow these writings will have gathered I think that the banks have a fundamental misapprehension about small business but here’s a particular example showing how the National Assembly in Wales have fundamentally misunderstood small business as well.

From the start I have been critical of the Wales Economic Growth grant which are funds left over before the grants were largely whisked away in 2010. I said it was too proscriptive, was open for applications for too short a time and sadly had missed an opportunity (otherwise known as ‘the point’) once again.

This business grant has only been open since the beginning of December and I have had enquiries where ineligibilty has been the downfall for potential applicants, but I have a better example which illustrates the inept thinking that has gone into it.

A business trying its best

A Torfaen based company has been paddling hard to keep afloat. This has been partly because it has been shouldered out of contracts with another local council in favour of a company from the Midlands in very questionable circumstances, but that’s another story. To counter this and diversify they have identified a product and a market that sits nicely alongside their own and is largely unserviced.

I was asked about the grant and a finance application. All the grant criteria seemed to be answered. The Directors had the information, were in a good area for the grant, had a nod from both the bank and from Finance Wales that lending facilities to make up the matched funding could be available subject to successful application, and the company was keen to get on with it. Although the grant advice documents do not spell this out the Directors were even aware that guidelines for new employment could be met. So the lenders had been spoken to, the Accountant had the latest recent company figures ready for sign off and it all looked constructive and positive.

What is the grant for then?

Most of the ticks in place so far, so what actually are we spending this money on? The grant minimum is £100k and the best case is a 50% match in some areas so we need to propose spending £200k.  

We need a couple of web sites, marketing and PR, a van, some employees, some equipment and some examples to install in show areas. Totting it up quickly, I stretch the list to about £90k and to be honest we could do it for much less.

It is immediately obvious that the Directors, over keen  at the prospect of much needed assistance from the Welsh Government have fitted the finance around the possible funding. We could probably get away with a loan of £10k, have one web site and use the workforce and vans we already have, start things slowly and take less of a commercial risk.

In summary the grant is completely useless for what they want. In fact it is difficult to see how it can be of any use to anyone unless by chance they happen to be in the middle of a project that could use a substantial injection to make it bigger and better than first thought.  The project has to be under way (but not ‘committed’ or it is ineligible anyway) because there is insufficient time to organise a new project for which this grant might have a part to play.

I am left feeling cynical, exasperated, and still somehow, after long experience, disappointed that Business Support in Wales can be so inept in its operation. 

Money Gets Everywhere

A lot of people struggle with money. Some of them go into business and struggle with money there too.

One thing you must never do is to shove all your bills unopened behind the clock, as it were. The money gets everywhere in business. It’s the measure of how you are doing, how big you can be and a stream of business consciousness. It is the lowest common denominator for all business.

If you do struggle with money there are some things you can do to get to grips with it. Ultimately you can get someone else to look after your business for you but that is undesirable in many ways. You must retain an overview even if you have a bookkeeper for example. Above that the pricing, the investments, the procurements are all down to your day to day management anyway.

Business Tips 

Some straight forward procedures will take away the mystery, the time wasting and the disasters. Some simple ones for micro businesses are offered below but the implementation is up to you and differs from business to business depending on the number of people involved and the scale of activities.

• ·         Have on line banking
• ·         Look at every morning to confirm what is happening
• ·         Have a list of invoices, with a tick box for sent, paid, chased with the dates.
• ·         Have a set date or method of getting your invoices sent off
• ·         Have a set date to chase any outstanding
• ·         Make sure money is cleared at the Bank before you pay against it
• ·         Keep all your receipts in a tidy file
• ·         Keep a note of your mileage in your diary as you go along. Use the trip meter
• ·         Make sure you have a system for pricing and stick to it

In short just be bothered to keep an eye on it all.

For larger SME businesses the idea is the same but the systems need to be more organised. Even so they do not need to be complicated . Do not be fooled into buying some complicated bookkeeping software that you will struggle to keep up with. I see so many businesses unable to extract reports and information from their computerised bookkeeping I have to wonder if they would be better off with a hand written chart or two.

Bob Shepherd Associates has a background in business money. It's not straight forward and there is no reason why you should already be experienced in dealing with it. There is however every reason why you should pay it attention. 

Why Banks Say NO

To hear people talk these days you’d think the Banks were always saying no. It is easy to forget that an essential part of their business is to lend money. It is not in their interests to not do that. Criticism can be directed at some of their policies and their blanket decrees about some sectors, and even individual lending decisions but even where wrongly applied, behind it all is a grain of sense.

Leaving all that to one side there are some fundamental principles to business that a Bank will look for and if some of them are in doubt, are not proved, or are simply missing the bank will take a negative view of a proposition.  A side aspect is that it is not their remit to spend hours of time muscling something into a bankable shape, though sometimes they will. 

How much better all round then when they get a proposition that is properly put together with all the ticks in order and the questions answered before they are asked? Bob Shepherd Associates has long experience in taking a proposition and turning a bankable purse out of a sow’s ear, to use an old expression. Some of the principles that may come into play with varying degrees of importance are:

Basic Business Information

It is easy to fall into a trap of assuming your bank  knows all about your business – it doesn’t. Probably they have the last 6 months of figures passing through the main account and not a lot else. You know your business well and it needs explaining in a well set out business plan that starts with who you are and where you have been.

Out of Date Company Financial Information (or none at all!)

If your Accountant has been slow in doing your Accounts they will be ‘historic’ which is a euphemism for being useless.  All they will show is a record of past performance which does have some relevance but in a limited way.  You need some up to date figures to confirm where your business  is currently and they need to follow on from the last Accountant’s figures.  Whatever the case the lack of up to date figures shows that you haven’t valued the information and have no idea how your business is doing. That is poor management and not encouraging.

Your Business Model

This is a term used to describe how your business idea hangs together. You want that to be compelling and convincing – see that business plan and make sure it is set out consistently, logically and with a full story evident. Don’t assume the bank understands it just because you do.  Look for the risks and make sure you have demonstrated answers. In short does it all make sense and are you actually in charge of it?

It is possible that the Bank will just not have belief in your business because it has specialist aspects. The Bank is after all only so good as the people who are in it (as your business is in fact...) and you have to realise that your cogent and articulate verbal presentation may not make it up the line with the same authority unless you have spelled it out well in that business plan.

Poor Credit History

Surely this self explanatory? If the bank has been slinging cheques back on you it can be no surprise that they are not happy to advance you further funds for that bright idea you have just had. If there is some evidence of poor financial behaviour you need to tackle this head on and explain convincingly that you are past the difficulties and it is not your normal attitude.

Financial Contribution

The Bank will want to see you putting in substantial funds yourself. That will imply you have a vested interest in the progress of the business and adds to the credibility of the whole thing. For small loans do not expect the Bank to put up more than 50%. For larger loans there is a limit to what an individual can be expected to put up and increasing weight is given to your contribution in an unwritten sense of proportion.  The package is made up of cash, and assets some of which may be available for security.

Bank Security

For any substantial lending the bank will look for collateral security. It is a safety net and you will never get a proposition through just because there is security. You may have it refused if there is no security available. What forms acceptable security is the subject of another article.  

You and the Management

The Bank is not lending to the business so much as to you and your team.  No Bank official is going to sit with you day by day and direct you. Once the lending is agreed only occasional checks are made that all is well. You have the trust of the bank. If you and or your fellow Directors do not demonstrate a record of successful management expertise you can’t expect the bank to be encouraged.

Summary

In short it is up to you to make your case. It is up to the bank to check what you say, interpret the risks and come to a conclusion about your chances of succeeding with the business proposition.

It starts with you – your standing, your financial worth, you history and track record, and you association with the bank.  That comes before any real examination of the business on the basis that if you are known to know what you are talking about the likelihood of you getting this one right has more credibility. 

The proposition has to make sense, be in proportion, be lawful and respectable, have realistic ambition and a forecasted future that continues to make sense.  Proof of all this is looked for so far as can be ascertained.

Consider this - if a stranger came up to you in the street and asked to borrow a substantial amount, what would you wish to know? 

'Pub Talk'

Banks get a mixed press and I for one have been very disappointed in a number of things I have seen with my clients in recent months. However sometimes the bank is justified in its view. I was once called upon by an SME to advise them because their bank was suddenly taking away their £65k trading overdraft.

The reality was that they had had a £25k overdraft which had been increased after consultation to £65k for a 3 month period to cover the circumstances. That 3 months had expired and an extension had been granted to cover some further crisis and so on. 6 months after the first expiry the bank was saying 'this can't go on, we want to revert to £25k at the end of the month'. Not unreasonable when you examine the case and quite different from what I was told initially.

By producing information, preparing forecasts and approaching the bank properly Bob Shepherd Associates managed to get the £65k retained as their normal overdraft. While I was at it I noticed the company's leasing arrangements for equipment were all over the place and I re-sheduled that lending creating £4k extra cash per month in the business.

I call it 'pub talk' where an ill informed half story gains currency. Banks are wide open to it all the time and often cannot answer without breaking confidentiality.

Your Best Customers

Sometimes your best customers are not your best customers! There is a difference between turnover and profit, and how many extras do you do to keep that big customer happy?
I went to see an engineering company with one major customer accounting for 85% of the turnover. They were taking 90 days to pay I was told, instead of the agreed 60 days. When we looked at the sums they were actually taking 120 days.
The engineering company was struggling. No money was spare, and the owners had stopped taking a wage. The trade accounts were maxed out and a lot of time was spent juggling the creditors. When I asked why we didn't go and talk to the major customer I was told we could not upset them and we did not want to rock the boat.
After some discussion a nervous business owner went cap in hand, touching the forelock, to see if he could get a payment.  They said 'We wondered why you hadn't asked for a payment. This cheque has been on the desk for a week!'
Business turnover is not profit
Another client was a transport company. An old family firm was pouring money into the company each month to keep it going. They were accepting contracts which meant they were driving from Cardiff to London for little more than the price of the fuel. The argument was that this would keep the driver busy and keep them on the road. As I have described it you will see immediately that there are other costs - for the lorry, but also the admin, the fixed costs, the finance, and all the rest. Madness! An old family firm was being mismanaged into the ground.
Little jobs for little companies
Plenty of small firms take on jobs that make me wonder. If you are a landscaping firm or an electrical contractor  for example you should be getting work because your sign written van is parked outside. That big 10 week job is only giving you the security of having work for that time. In every other respect it is doing you a disservice. You probably discounted your price for quantity of work. You may have underestimated the travelling costs. You may have to settle for materials before you get paid. If it turns to a bad debt you have one big bad debt you can't handle. You may have to cope with wages during that time. All that can be handled if you have made suitable arrangements. However your van is stuck in one place for all that time and off the radar. Your ability to generate new work is stymied. Your Bank account will have major peaks and troughs. Your profit margin is likely to be lower. Altogether, smaller jobs are better.
So look carefully at your customers. Are they really your best customers?
Bob Shepherd Associates will help you define your strategy and sort out your priorities. A little forethought goes a long way.

Bankers Not Getting Their Feet Muddy

The BBA ( British Bankers' Association) held a conference in Cardiff last week hosted by the SW Chamber of Commerce. It was a good event but I was left with a feeling of depression. Amid all the rhetoric, and the unintentionally patronising declarations of openness for business, intentions to be accommodating, and figures defending the banks' position as a key player in the economy ..... there is a fundamental lack of understanding going on which is either staggering or cynical, depending on your view point.

Bank Lending Figures 
An example is the BBA figure 85% of lending applications for SMEs are granted. Accurate I don't doubt, but far from being evidence of banks pulling their weight in this sector I think it's an appalling admission and a patronising complacent assertion.
-  It ignores those propositions that the local business manager hasn't given a nod towards.
-  It ignores the BBA's own figure earlier this month that 55% of SMEs didn't even approach their bank last year because they thought they would get turned down anyway.
-  It ignores the fact that the local business managers don't have time to spend with their sme customers who are borrowing less than £500k (say..) to knock a proposition into shape.
-  It ignores also the indifference or ignorance of the local business manager towards referring possible projects to a paid consultant who can spend the time with them to get them into shape.
-  It ignores the fact that most small business SMEs have no idea what 'shape' is in the banking sense.
To say ( as was done at the conference) that 2/3rds of SMEs did not seek finance last year as corroboration of the Banks provision of service being okay in a straightened market is paradoxical at first glance and a head in the sand concept at second glance.

Banks and Project Merlin
Banks are not in the business of not lending. A good phrase to use but not backed up by observations on the street. The Project Merlin ( banks agreed to have targets for SME lending imposed) figures are all behind. No surprise there. Then you realise that most of what has been cheerfully put forward as banks doing their bit despite the reluctance of customers to come forward with sensible propositions, is accounted for by repeated lending and renewals of facilities and not new money.
It is the reluctance of Bank seniors to get their feet muddy that bothers me.

Building Businesses

After months of consideration I hit on a way to describe what we do when I deliver a short introduction at business meetings. Bob Shepherd Associates is good at building businesses. That phrase is positive and constructive and does actually cover the case.

When we view a business we look for all the components to fit together and all fire at the same rate. If they don't then there is something to work upon. For a new start up business it is more a question of making sure the business has all the components available,  but the principle is the same.

They all form part of a business plan if it has been done properly. They all form part of a cycle of business if you are a theorist. In  practical terms - if any of it is not there the business will struggle.

Building businesses is not a question of applying a template. Each business is different. The components we look for have a place in the business. They are always there but have different weighting in each business. That is where the experience and knowledge of the business adviser comes in. The balance has to be right. Building businesses can only be done if the foundations are strong and the business is well put together.

So what are the components? The main labels are Physical, Invisible Financial, Markets and Marketing, People and Money. The list of detailed components within each heading is very large.

Think of it like a large jigsaw. The picture is known, the edges have been done and there are many pieces in the middle and some still in the box. Putting it all together takes patience, resourcefulness, time and preferably a little help.

The jig saw analogy is a good one. Bob Shepherd Associates is good at building businesses, and probably good at jig saws.

Economics? What's That?

To paraphrase a well know advertising campaign 'I thought Mackro was a cash and carry until I discovered Economics!'  That's a finance world joke that is sort of funny. It refers to macro economics which is about the big strategic stuff rather than micro economics which is the homely detail.
There was an event at the new university building in Newport this week put on by a major Bank to give the business world a briefing. I expected a summary of where we are with things, some guidance to the cutting edge thinking of the moment, some tips on areas for special interest and a command of the whole thing better than my own.
Business Finance Guidance
I also thought we have guidance on what this major organ of the UK financial world was doing to contribute. They had a go at that. We had a specialist - a well qualified economist flown down specially from the bank's Head Office to disseminate vital information to the grass roots. But when a question along those lines came up he handed back to the local regional Director.
We had a good summary of the current economic trends and thinking, but no better than I get by listening to Radio 4 and the BBC News.
In short we had a summary of UK economics with nothing innovative to add. There are no inside tips. The bank's central economics unit has no real interest in what the bank is actually doing for its local region it would seem.
Project Merlin - Bank Lending to Small Business
Some figures were given that showed the bank is lending more than anyone else under 'Project Merlin' - the government's initiative to have them lend more to small business. Might be right; not convinced.
Still we all had a nice lunch with a beautiful chocolate dessert. I forgot to note who the caterers were. We also saw the inside of the new Uni building, which is impressive. There was always the chance of bumping into someone useful, as with any networking event. It was good.  

Bank Lending To Small Business SMEs

Business lending by the UK's largest banks fell during the last quarter (BoE  Q2 2011) despite what Barclays says about its own performance. Of course it did - any consultant working on a local scale will report similarly.

Until Banks get training for their local business managers and then trust them to exercise some discretion to liaise with the Credit/Lending department the position will remain. So too will the belief out there that Banks aren't lending to small business. Therefore the business economy will remain flat.

The first signs that someone is thinking they should do something about it that I have seen came at a local level with an invitation to talk by a Regional Business Manager for one of the big ones. His new on the block business manager had 4 years in the Bank and 3 weeks on 'the Business Side'. An awareness course and a clip board to follow, is all he had, plus a few ideas he picked up from the family shop. Oh dear. Who is going to talk to him with any expectation of understanding? 

As it is, a report has said that last year 55% of businesses didn't even bother to go to their Bank because the word is out that they will be turned down.