Opening the Chamber of opportunities….

I am writing this from a meeting room overlooking the lake of Zürich. Last night I enjoyed an aperitif from a 5^th floor restaurant overlooking this picturesque Swiss city, enjoying some splendid views before listening to a quality speech from former EU trade commissioner Lord Brittan, somebody who clearly knows what he is talking about when it comes to international business. It’s a tough life.

It actually could have been a really tough life. Trying something new is always a leap of faith. It involves an element of risk and moving out of your comfort zone. Without forethought and planning it may be a disaster. Even with planning and help there is no certainty of success. For me, as a naturally cautious accountant, trying to promote our outsourced CFO offering in a new market was potentially a daunting task.

Fortunately I had some excellent help from the British Swiss Chamber of Commerce (BSCC) and the team based in Zürich. Aside from organising a great event, they furnished me with contacts and introductions, and allowed me to use their office to work in when I had some spare time. Their encouragement to visit Zürich for the AGM, at which Lord Brittan was the keynote speaker, was a real spur to get me to move my Swiss project forward.

The whole experience brought to mind another recent meeting at Canary Wharf (again with panoramic view – if I was a photographer this would be a great job) as part of my involvement in the London Local Chambers initiative. This is aimed at publicising the existence of the 20 plus locally based chambers of commerce within greater London, chambers that have a real feel for local business opportunities, and which offer good local contacts as well as engagement with local government on business issues. 

People often see chambers of commerce as networking organisations, there purely to provide sales opportunities. However their real value is more than being a good way of building contacts and relationships that may develop into opportunities in the future. They can also provide an opportunity to contribute to a wider movement dedicated to increasing business and trading opportunities for everybody, particularly on the international side. This mixture of international and local knowledge and presence is a major reason why well run chambers continue to be the first port of call for organisations looking to develop new markets.

Was it worth the visit? Ah that would be telling, but there is a clue in the fact that I am really glad that I took the opportunity of visiting Switzerland for the BSCC AGM. You have to take a chance if you want to develop something new. However moving out of your comfort zone does not mean you have to take silly risks. There is a lot of help available and existing networks to work with. These are clearly no guarantee of success, but they make it a lot more fun trying, and who knows where it will lead to one day.

Growth through Dividends……

Dividends are the forgotten element of successful investing. Like the proverbial Aunt Sally, they are often derided as unimportant. Capital gains are much sexier, the stuff that creates the wealth of dreams. They of course enable investors to ride off into the sunset to enjoy their remaining years, or not, as the case may be.

And yet surely some cash in the hand has to carry some value? There are so many tales of the destruction of the share price by ambitious “highly incentivised” executives that a promise of jam tomorrow should be treated with a healthy degree of scepticism. Certainly equity income funds are quite popular in some quarters at present. However I leave it to my Enterprise Britain colleagues John Greengrass and Jon Levinson to comment on how dividends affect investor sentiment in the wider economy and markets.

My own focus is dividends in smaller, primarily owner managed, businesses. Even here there is an element of misunderstanding as to the real value of dividends. They are either dismissed in entrepreneurial circles as starving the business of investment cash or they are promoted by accountants as being a tax effective way to extract income from the business, always assuming that distributable profits are available to cover such income.

(A brief word of warning here. It is amazing how often businesses that pay regular dividends in lieu of salary forget this basic principal and end up paying them illegally. If you have been advised to take out regular dividends make sure you prepare some management accounts to ensure you are making enough post tax profit to justify your dividend.)

And yet regular dividend payments from sustainable business revenues are normally a good sign of a healthy business. A genuine dividend payment requires profits and cash. Old fashioned concepts I know, particularly in a world where business social networking site LinkedIn can be valued at 25times its sales revenues (that is sales not profits). However as a route to future growth and wealth they are concepts that are hard to beat.

I am certainly not advocating that dividends should be paid regardless of the cash needs of the business. However I do think that when businesses are planning for future growth, either for their existing owner managers, or to attract new investors, a little thought as to how much of the return will come from regular cash dividends could pay ..er.. dividends.

All the world is a stage….

What a week! So far that is, as it is yet to finish. Loads of appointments and meetings. Arranging a trip to Switzerland. Last week of rehearsals before stepping on stage in front of an expectant paying audience. Oh and keeping clients happy and serviced as well.

Whether employees or freelancers we all get weeks where it seems there just aren’t enough hours available to do everything. In the end there are of course, although sleep is never quite given the priority that the body says that it should be.

The acting is a great release. This time I am playing a Victorian German Anarchist, as you do, and, as you can imagine, it has all been a lot of fun. Our audiences enjoy it too, and their appreciation is one of the reasons that I am so addicted to amateur dramatics. Of course I always remind myself that I am only as good as the next performance I give in order to keep my feet on the ground. Can’t have accountants getting ideas above their station….

Putting together the Swiss trip to promote our inward investor offering has also been enjoyable. I have been working with the British Swiss Chamber of Commerce  which has been very helpful in providing me with contacts for potential meetings.

Organising the flight has been a particular eye opener though. “Things ain’t what they used to be” is a common refrain from those old enough to actually remember how it used to be, and the airline industry is certainly an industry where nostalgia for a so called golden age can still bring a tear to the eye.

However the make up of the ticket price has astounded me, particularly as I am using some leftover airmiles to make the trip. After adding in taxes and surcharges my “free” flight is costing nearly £100. Indeed since it became a commodity product, for many people flying has been a pain. Add in the “enhanced” security set up that now exists and you can see why it isn’t only finance directors who echo that wartime staple “Is your journey really necessary?” 

Much like regular commuting though, frequent flyers learn to cope. You have your own rituals that start with your journey to the airport, through check-in (if you have to), security, café/business lounge (delete where applicable), getting on the plane, enduring the flight, getting off the plane, dealing with passport control and coming out at the other end. In short you just get out there and do it.

Closer to home it is great to see that in spite of the conflicting economic data there are so many business people out there working hard to promote their businesses. Whether it is through the efforts of the various Chambers of Commerce, or other business networking events, being seen matters. That is one of the reasons I am going out to Switzerland. Face to face meetings remain essential if you are to develop the right level of trust for future business relationships.

All the world is a stage and maybe we are all merely players. It can be tempting to see many of our activities as a chore. However we need to remember that we are so lucky to have the opportunities that we do and that we need to make the most of them and enjoy them as much as we can. Even if it makes sleep an optional extra…..

Falling on one’s sword……

An interesting poser for Nick Clegg after last week’s election debacle. At what stage does he chuck it all in? Not only has he presided over the biggest electoral defeat in the modern history of the Liberal Democrats, and suffered a severe blow to his reputation and credibility, but he has also probably seen the issue that is most dear to his supporters’ hearts, electoral reform, kicked into touch for the foreseeable future. On this basis there could be a strong argument for him standing down and letting someone else take over.

Of course politics is not like the real world. Or is it? There is much discussion in business and in politics about doing the decent thing and resigning over poor performance. People must be held accountable. Barely a week goes by without somebody calling for the head of this business or that or organisation, or, more commonly, the minister for a poorly performing department.   

Accountability may sound good in theory but is very difficult in practice. At one extreme you have football managers for whom a run of bad results will probably result in the sack even if it is the fault of the players or the board. At the other end of the scale you have time serving civil servants who will probably never be dismissed however poor their performance or disastrous their decision making. In between there are varying degrees of culpability and a sufficient number of grey areas to make a “should they stay or should they go” decision extremely difficult to make.

And where does that leave the average business owner in Enterprise Britain? Ok were they to make mistakes of the magnitude of their bigger rivals they would probably not be in business anyway. But if they do survive, well, what then? Resigning is clearly not a viable way out as it is likely that that the business would fold anyway. They often have to plough on best they can, putting it all behind them and making the most of what they can salvage from their situation.  

Failure is still a cultural issue in UK society. We are not allowed to admit to it. We are expected to take responsibility for it. We are very rarely permitted to learn from it. Is it any surprise that in many cases people chose to cover it up or deny that it even happened?

And yet failure is often a precursor to success. It is only by trying things out and making mistakes that we often stumble upon what works. As long as it is not the result of recklessness or incompetence failure can be a valuable lesson that is then used to create something really successful.

There is no easy answer as to whether failure should result in instant dismissal or a second chance. It is often down to whether there is another option, whether the lessons have been learned or whether the individual concerned is capable of turning the situation around. In the case of Nick Clegg, dear reader, I’ll leave it to you to decide….

The real value of time….

Back to work after yet another holiday weekend. Actually what am I saying? There is no back to work about it as I had to do some work over the holiday weekend. Well that’s what happens when you have your own business and you don’t get paid holidays. You have to make the most of the days that the rest of the country is working to get your billable days in.

April has been a month where maximising income has had to be squeezed into the reduced number of working days within the month. Admin, marketing, business development, CPD etc. has had to be done outside of these days. Such is my life, although please don’t shed any tears for me, as this is what I have chosen to do in order to be able to provide the best value service to clients and the best lifestyle for my family.

It is an ongoing challenge for all time based businesses to maximise income and yet still allow time for the work that needs to be done on the business. Many do have to use “spare time” to catch up. If you are an owner or a partner this effectively means your own time, or more frequently you family’s time.

It can be argued that maximising income does sometimes come at a personal cost. However professional services organisations often fall into the trap of seeing cost in their own terms and not their client’s. They are sometimes so focussed on maximising billings that they forget that this is a cost to their clients, a cost for which the client expects to receive value.

It is therefore important to put yourself in your client’s shoes. How does the work you have been doing look in their eyes? Yes you may have done the time but have you created the value? It is an approach that has served me well and keeps me on my toes when carrying out assignments.

Of course the logical extension of this is employees, especially senior executives, should also start to think in terms of the value that they add rather than the salary and benefits they receive. So many executives negotiate high packages because they believe they are worth it. They are very rarely called to account in the same way external consultants can be over the value they create.

The value mindset is critical for a successful professional, particularly in these challenging times. Regardless of how many hours are worked or billed clients have to be happy with the end result. Something to keep in mind when the next bank holiday comes around perhaps?

Happy Holidays……

This is a great month to be an employee. Maybe not such a great time to be an employer. Possibly disastrous if you are self employed. Two long weekends in quick succession mean that for some people taking three days annual leave will give themselves eleven days away from work.

Funny things holidays. The Germans love them. The Americans don’t. The Japanese do but don’t take them. It’s often argued that we don’t have enough in the UK and therefore one extra one to celebrate the nuptials of William and Kate should be welcomed.

I have read all the legal bumf about whether a holiday actually has to be given for the Royal Wedding or not but in reality you’d look a really mean employer if you did not give it with the consequent impact on staff morale it would have.

In a salaried office environment such as say a government department holidays can be absorbed and the impact of the extra day minimised. For an SME trying to stay afloat and dependent on every working hour the challenge of coping with that extra day is that much greater.

Fortunately most employees will take the holiday and then work doubly hard to ensure that the business does not suffer. It is this unwritten commitment that is the backbone of many businesses, which is the main reason why the raft of employment regulations tends to grate so much.

Ah well, like it or not, it’s there so make the most of it. For those of you who celebrate it, Happy Easter, for those who don’t have a good break.

You make your own news….

Inflation down. Unemployment down. There you go, this week there has been some good economic news. Last week it was probably bad. To be honest I can’t remember. And as for the week before…..

But then again does it matter? We live in a media age where 24 hour news outlets are desperate for a story. Online, TV, radio, hard copy, everywhere you look. Any snippet of news will be magnified and analysed to the nth degree. Bad news is inevitably given a higher priority than good news. Everything, however trivial, is important for at least a few minutes.  

I am often asked when preparing strategic plans how macroeconomic events should be taken into account. For example should GDP growth forecasts be factored into the numbers? How should inflation or unemployment predictions be accounted for? What should be made of interest or exchange rate trends?  

My answer is always be aware of them and consider them but don’t let them rule your plan. They should form part of your PEST (Political, Economic, Social, Technological) analysis certainly. But when I am dealing with an SME I tend to get them to focus on their SWOT (Strengths, Weaknesses, Opportunities, Threats).I want them to think about what they can influence not about what they can’t.

Because smaller businesses have small market shares there are always opportunities to grow and be successful. It is about knowing your market and using your strengths to develop the right products and services to exploit your niche or expertise. Your strategic planning should focus on the resources and steps necessary to achieve this goal.

Alternatively it is about recognising the inevitable. If your offering is not right or your business is badly run no amount of positive economic news or GDP growth will lead to real success. Indeed positive economic news might lead you down a path that the fundamentals of your business are screaming at you not to follow.

External factors do come into play and it would be silly to pretend they don’t. But it is easy to be seduced by a stream of bad news into negative thinking. Many businesses are thriving at the moment. Concentrating on the basics of running a business well and on what you can control will give you your best chance of success and enable you to create your own headline. One you can control. At the end of the day it is up to you write your own news…..