Business Finance | Alternative Investments

Business Finance | Alternative Investments

In recent times the alternative investments markets have received more attention and publicity. There are realistic markets in Diamonds and Wines, Stamps and coins as well as Gold and other metals, Fine Art and Antiques and Classic Cars.

You can have an investment in Wines for example, have the broker store it for you and never actually lay eyes on it. If you are cold blooded about it and study the 'form' you can make money from these things. In a more casual way you can watch the TV programmes and see what excites you. if you are a collector by nature you will probably have an idea what your own collection is 'worth'. Always become knowledgeable before you step in and commit your savings. 

As a collector.... To read the full LinkedIn article by Bob Shepherd Associates, just click here. It's that simple.

Things Ain’t What?

To a large degree the traditional Bank Manager has ceased to exist. Some Twenty years ago the main stream banks split 'retail' and their 'commercial' business and headed pell mell for Business Managers working separately. Later this was refined accounting for size of business, and then they realised that they had quite large accounts that didn't actually borrow much but were still worth looking after. That meant a mix of targeting responsibilities based on Turnover as well as Lending came about. This coincided with a cultural swing towards sales in a cynical and robust way that they had never done before. 

In many cases this meant the idea of service first went out the window (and is the basis of all the claims for PPI (Loan Insurance selling) that we have seen lately). At the same time many bank people couldn't, or wouldn't swallow the change in philosophy and took the opportunity to leave. This suited the Banks anyway because the retail/commercial split facilitated centralisation of just about every function one by one, leaving the High Street premises to function as little more than cashing shops. 

The idea was to create 'centres of excellence' with a concentration of skills. This achieves an economy of staff needed to push a processing system. That was fine for a while as everyone knew all about the processes anyway, but as time went by the centres began to believe that the branch folk knew nothing about what they did while the branch folk realised that the centres didn't care about them or their customers much, as they had their workflow problems to worry about and anyway they didn't have to actually look at the customer. 

Training need 

New people appeared in branches and business manager roles so a giant 'training need' opened up with anyone facing customers having to go on an ' awareness course ' to know what to expect and how to service it for the banks' systems. The more this happens the less they know by experience. The 80/20 rule applies in shovel loads. If your case is at all unusual or requires a little interpretation, and doesn't quite fit, then you will have a major problem on your hands to get past an initial negative reaction . 

A few of the old school managers are still out there but since the Banks were shedding staff at a colossal rate with their centralisation, many of those who are still there are those with a survival instinct. They may know their stuff still but they are subject to the targets and sales pressures and the latest flag waving new ideas that their younger colleagues have in their little folders. 

Clip Board Thinking

In ten years time or less there will be nobody who came up through the old pyramid structure and has all round experience including processing, cash handling, security (collateral security for loans that is), investments and trustee work, administering a business (ie - the ‘Branch’ which was largely a business in the local community) along with staff management, premises, alarms, credit balances, lending and credit control, reporting and putting together applications plus all the business experience out there etc . 

Most of the modern bank staff wouldn’t know what a garnishee order is if it sprang up and hit them. The modern answer will be that they don't need to know, because specialist departments exist to deal with these things. And so the circle is perpetuated. Or perhaps it’s a downwards spiral. The less a customer facing manager knows (and most of these bear no relation to the public's memory of such a thing), the more he or she has to rely on their clip board training. You can't do that, the computer says no has become the reality and not an excuse. That is especially so in the retail sector. Anything out of the ordinary is referred quickly away to a central processing centre which has no personal interest in sorting it out.   

Customer Loyalty 

In short, the idea that anyone has been loyal to their bank for 30 years is a whimsical throwback and has no currency whatsoever. In the face of an application for finance the bank would have the current flow of entries through the account(s) for a year or so and would take note of the last three years' Accountant's published figures but there it would stop. What a Manager might have recorded as an opinion about a business 5 years ago has no weight whatsoever. In many cases the opinion of the local manager who has actually been to and looked the local business in to eye is a minor tick on the list. 

All this means the business case for whatever is in mind now has to stand alone largely with some comforting references to past records. There has to be a ‘way forward’ and a progressive plan for the exercise contemplated. The old idea of seeing your Bank manager for a little help to get through some choppy waters is a big alarm bell, despite what it says in all the published codes of practice. Do that and you are likely to find you are shouldered into some kind of special care department where specialist managers will look after (nurse) your account at a substantial cost to you in interest or fees with a strict sequence of management activity designed to get rid of the problem or you. 

Things certainly ain’t what they used to be. In some ways that is good. In many ways it is not. Unless there is a major change in attitude and corporate culture the whole set up is designed to get worse. Bob Shepherd Associates has the experience and the contacts to do the best for you with your Bank and if you are under pressure to see how you can get out of the mire.

Money Is A Figment

The Royal Mint picked out nearly £2m in fake £1 coins last year it has been reported. Actually when you think about it all the coinage and the notes we use are mere tokens anyway. 

The few exceptions are special issues of sovereigns and £5 coins made of gold  that are the other way round. They have no relation to the value of the coin either. They are legal tender but you wouldn’t spend them in quite that way.

If you were paid in gold coins the face value of the coins would be very low and presumably you would not be liable for tax, NIC etc. There was a legal case in America that decided you couldn’t do that but I am not sure it has been tried and tested under UK law. There is the minimum wage legislation however.

I pointed out to my Corporate Finance university class that most money doesn’t exist.  Banks work on the basis that not everyone will want their money in their hand at the same time and have done since 1931.  Therefore it is safe to lend most of it back out and when that person spends it and pays it back in, we’ll go round again.  One of the problems a year or two ago was that erstwhile respectable banks had stretched this principle beyond the limit.  The consequent ball of knitting could not be untangled.

Attempting to do so results in a run on the Bank. Selfish motives overtake academic principles. If the BBC reports queues around the Block to withdraw money from your Bank you are going to get down there yourself. I have been told that at the height of the banking crisis more than one major bank was within minutes of closing down the ATM cash tills!

Almost unbelievable, but then so was much else going on at the time.

So should we all go back to bartering? My expertise and knowledge is worth 53 of your lovely cabbages? We need a lowest common denominator of course. Other things besides round metal tokens have been used within living memory. Cigarettes in prison, or PoW camps for example. When paper IOUs were issued as a standard amount paper money was born.

There are interesting quirks around paper money -  who can issue it, where it can be issued and is it legal tender? (only sometimes) .  Other payment methods, cheques, credit cards, etc are not legal tender either.  It’s a minefield but actually, day to day, most people are happy to get on with it.  And not worry too much. 

‘Go to the Bank!’ declared my 5 year old (some years ago) when I said we had run out of money. As if the bank was a benevolent provider.

So money is all a big confidence trick. But what would we do without it? It is a measure of resource, a measure of success, a common denominator. (Who needs all those cabbages? ) Moreover money gets everywhere in business. Every department of business needs and uses it and could always do with a bit more in the budget. You do need to understand how it all fits together, and what your Accountant is on about with those papers he does for you. 

If your business needs developing, money will be part of the equation somewhere along the line. Let Bob Shepherd Associates sort it all out for you to your best advantage. We will help you Save Money and Make Money!   

Changing Values

Harry Enfield did a wonderful take off Stafford Cripps wondering about inflation in one of his black and white parodies of early fifties public information films. After the ravages of war most working people were unaware of economics in those days as a subject, needing to focus their interest on their take home pay.

In 1952 Colin Brine was 15 and started work on the Railways at £1.17s.6d for a six day week. Teenagers hadn’t been invented and he had only essentials to spend his money on. He probably gave his Mum most of it for his ‘keep’, saved some and went to the cinema on Saturday evening. Translated to decimal currency that is around £1.87 a week. The nearest equivalent now is a 16 year old, below the age for minimum wage rates and earning £140 per week or £7280 per year.

Curiously though it doesn’t translate. Things have changed. The only way you might find a comparison is to examine wages and spending power. That can only be done with things that are available in both registers. So a pint of beer would have been about 2d, less than 1p. Minimum wage (47 hours a week then) was £5.8.1d (£5.42) a week. Presently it is about to go up to £5.80 per hour for ages over 22.

Roughly then wages are about 50 times what they were in 1952. The price of a pint of beer is not. Later in 1971 when decimal values for the pound were adopted, a gallon of petrol was 33p. At the time an average wage was about £15.00 per week. Trying to make comparison with today’s petrol price of around £5 per gallon and the present day average wage of about £450 per week makes no sense. Petrol was far more expensive then than it is now evidently.

The differences in life style, expectations and living arrangements generally make comparisons very difficult and hugely subjective. From the book that cited Colin Brine I read that the crossing keepers in Somerset who lived in the railway houses had two large cans of water delivered by one of the passing freight trains each day. They were not on mains water in the late 50s and early 60s. Until the late 1950s television was very limited and not common. My own in- laws were given a television in 1955 which sat in the corner for a year because they had no mains electricity. Refrigerators (‘Fridges’ in modern parlance) were only common from the 60s onwards. The history of every day private life is only recently coming of age as a study. We probably have the war to thank for that. The idea of enforced rationing and the notion of evacuating your children away to the countryside to spend 4 or 5 years away from you is fascinating for the television writers.

The Land Girls were largely unsung and just family tales from Grandma’s repertoire until it was noticed they were disappearing fast. Now they have a certificate signed by Gordon Brown and a badge to wear. So the television is only reflecting a general resurgence in interest. All the retro programmes and interest in past re-enactments is an attempt to put it all in focus and give perspective. Was it all better then? Some of it was, most of it was not. The things that were better seem to be attitudes and work ethics. What is known as the Fabric of Society.

Why is it that once unassailable aspects of British society that earned world wide respect evidenced by emulation across the world no longer stand scrutiny and are subjected to howls of criticism from our own press and media? Recent attacks and criticism have been aimed at a dysfunctional education system, a ruined Royal Mail, an NHS that does a poor job in many cases, a police force that no longer can be trusted, bus companies that are not there to provide a service any more, railway companies that just can’t cope, banks and financial worlds that fall over, MPs that can't organise their expenses honourably, a farming industry dying and other national institutions that are on their knees, either through inefficiency and an inability to adapt to modern needs or as victims of political dogmas that have not seen the advantage of a commercial strength. The Newspapers themselves are dying on their feet and struggling to adapt old methods of income to new channels of news delivery.

It’s not just globalisation (for which we are in large part responsible) or the fault of one political party or another. Nor is it the dying flickers of a once unbelievably powerful empire that is now allowed criticism and vitriol from those with a particular angle of view to support. I don’t feel it is the old ‘uns complaining things aren’t what they used to be, much to the frustration and exasperation of the young. It might be a mixture of all these aspects and probably more besides.

The same changes in values allow the discrimination laws, health and safety, and any other sort of ‘Rights’ generally to be abused and mocked for the very clip board mentalities they promote, bringing even the standards that we thought were taken as read, into disrepute.

Any sort of fractionalised approach, in industry, education, transport, health, defence, has a short term gain and a long term loss of way. The answer is not to re – nationalise everything. I do think it is to encourage a positive view of what is good and not to drag everything down. The thought is not new. In the seventies we had an ‘I’m Backing Britain’ campaign for just the same reasons. It was good for morale if nothing else, and was not condemned out of hand.

Some positive views are needed, and the rest will slowly follow.

See Bob Shepherd Associates for a positive yet practical view of your business tempered with a realistic perspective.