June 2000 - Small Business News

Up to 1million letters lost every week

Royal Mail admit to loosing 600,000 letters a week: consumer group the Post Office Users National Council (POUNC) believe the figure to be nearer 1million: 77 million letters are posted daily. The official number of complaints doubled to 10,000 from 5,000 in the previous year.

Ed says

So the 'cheque was in the post' after all!

Surely, the days of the Royal Mail as the main supplier of postal services are numbered. Those who thought that the local post office would replace the closure of rural banks had better look at Net banking as the local post office will soon be under extreme threat as more local offices are being closed than ever, over 380 in the past 12 months.

Late Payment Act not being used by small businesses

An article in the Sunday Times says the average delay in invoice payments has increased from 59 days last year, to 62 days this year according to a survey from Experian. A further survey by Nat West claims only 5% of small businesses have used the Late Payment Act to charge 'large companies' default interest. In the same survey, 28% of small businesses said that the reason for not using the Act was "fear of offending the customer".

NEW BUSINESS SERVICES

All the Services to Control Cash Flow and Debt
 

We have been listening to your comments over the past six months about the business services you want to see on BizHelp24. And more importantly how you want to access those services. We have listed them below and I hope that you familiarise yourselves with them, so that you know where to go if you need them. We have carefully selected the services and can assure you of our high standard of delivery. Remember, to be cost effective services must deliver successful results.  Good luck in your business.

DEBT RECOVERY
You can now place debts with us on-line.
NO COLLECT = NO FEE
A simple, tried and tested form can be completed on or off line and then submitted at the press of a button. 
Debtclaim

COMPANY REPORTS

We have some of the best reports available for small business use. From £4 upwards, there is something for everyone.  Company Reports

COMPANY FORMATION
Form a Limited Company and/or Registered Office On-Line Quickly and With No Fuss
Company Formation
 

Note: As with all of our articles, we put links to our web page where we have more information to help you understand the article. If you need that bit more information go on-line to our Newsletter where this article will be with many helpful links.

It’s a problem we face often: do we put the sale before the repayment ability of the customer? Is it a false perception of ours that customers will be offended by insisting on a credit application form? Will the customer go to our competitors if we insist on a credit check? Will the customer wait for the goods while the credit check is under way (getting a bank and trade reference can take up to 14 days, although a credit report can be obtained that day). What is the right thing to do?

New customer wants goods/service, supplier completes credit checking process and delivers goods (or refuses credit). The supplier sets a credit limit for that customer and both parties are happy.

New customer wants goods/service on 30 days credit as his "company only deals by monthly invoice to keep the administration low…" or, "my customer pays me monthly" or, "its 30 days or no order" or whatever, supplier delivers goods on 30 days credit (some you win, some you lose).

A ‘well known’ company want, say, an advertising campaign and instruct a marketing company (a third party) to run the campaign. As is usual, the marketing company invoice the ‘well known’ company and then pay the businesses (creditors) that are used to market the company's services. This means that your legal redress is with the marketing company (the term ‘third party’ is for reference only): to all intent and purpose the ‘well known’ company has absolutely nothing to do with the invoicing or any subsequent default. The building industry has always been rife with sub-contracting default problems. With the fast paced emergence of third-party service providers almost every company will face ‘third party default’.

credit application form, Terms and Conditions of Sale, the ability to take the necessary references you can never expect to have control over your debtors. So, no excuses, use the free BizStart24 software to administer the credit function.

Have your stationery, leaflets and premises etc. printed with ‘Trade credit available subject to status’, or ‘Apply for Trade Credit Today’: the latter is the best one as it gives you the opportunity to proactively credit check (without any risk).

Company owners are forever asking me if they should provide credit openly. The answer is an emphatic YES. This is, of course, conditional to a degree of ‘surplus’ cash being available as borrowing from, say, your bank to allow trade credit is only advisable where profit margins are higher than normal. Always having cash in the bank may keep your stress levels down, but you are missing out on real growth potential. You should be using the cash to increase production capability, new staff (at all levels), increasing the customer base (who you have educated in the use of credit). Budget for a level of credit sales and adjust monthly or seasonally. The effect of conducting credit the right way is increased profitability, which in turn gives you a quality product with a competitive price (well it should). One of the most successful industries of our time has credit off to a fine art: the BANKS, not rocket science!!

This area is all about guess work: and I know there are thousands of you out there who have the ‘gut feeling’ to weed out practised debtors. However, with net profit running at 10%, a £500 write off will cost you £5,000 in turnover. Your gut feeling does not have to be that wrong to suffer debts that wipe out 2 years profitability from that ‘diamond customer’.

credit limits (this will make them happy as they are now setting up a line of credit). MAKE THE EXPERIENCE A POSITIVE AND DISCRETE ONE.

If the customer is using you for your competitive price you STILL have the upper hand. Using the tips in the above paragraph, with an emphasis on future competitive pricing and/or discounts, the customer will be receptive to phrases like "over the year a saving of £2,500 will be gained…," and "we deliver within 24hrs of an order with our vetted customers…". These phrases make the experience attractive for the customer.

If the customer has no real reason to order from you (i.e. your price and/or quality are only ‘so, so’) you may think that this customer is the one that will walk away if you mention credit checks: FALSE. Every customer chooses the supplier, not the other way round, and at this point the customer is 100% satisfied with your whole approach. It is of little relevance why the customer chose you at this stage, what is important is that you use the window of opportunity to get the relationship off to a ‘safe’ start..

bank reference into their bank and have the bank ring you with the reference reply. Get two trade references (it helps to know of at least one of them) and ring the owner for a telephone reference. You will probably get a more truthful answer by ringing the reference, as they do not have to put in writing anything negative about the prospective customer. If positive or negative (especially) do not ask the reference to put it in writing as their comments have no legal recourse, and if you want to call them again in the future they will be co-operative. Get a good credit reference report. Finally, either you or someone you trust should visit the customers premises (openly or covertly). All of this can be completed in a day: if you want to!!

The Third Party Way 2

"Well known company want, say, an advertising campaign, and instructs the marketing company to run the campaign and pay the businesses (creditors) that are used to market the companys goods/services."

First, there are as many payment problems with third party involvement as there are without. So, the involvement of the ‘well known’ company does not, in most cases, have any influence in the relationship between the other two parties. Don’t expect to successfully complain to the ‘well known’ company if things start to go wrong.

You are legally within a trading relationship with the marketing company if they are the ones that invoice you, and they, like any other third party, will want to keep as much of the available cash as possible. Further, the third party company may well have its own cash flow problems: who vetted the third party? Not the ‘well known’ company, probably not you either as you were told by the third party that the ‘well known’ company is behind the deal and you are suitably impressed: we’ve all done it!

credit check the third party to the amount of the highest amount of credit that is possible at any one time. Why would you do any different? Is the third party a safer risk than someone who has filled in a credit application and passed by yourself within the past two months? Certainly not!

Inform the marketing company (the third party) that you will have to credit check unless they pay in advance. And that you maintain your product, quality and pricing by observing your credit policy. Finally tell them that the ‘well known’ company would expect you to maintain your standards and would certainly want to use your services for this marketing exercise..

Directors Guarantee’ making the debt a personal one, or ask the ‘well known’ company to sign a ‘Company Guarantee’. It should never be an option to accept a debtor that falls short of one basic standard: that they can pay you!!

Successful companies use credit to drive sales, not to support them. Credit is a tool, but not using that tool to its full effect because of the mild discomfort of ‘some’ potential debtors would mean that your whole credit operation is based on ‘some you win, some you lose’. Whether dealing with pushy new customers, or third parties, stay in control of your cash flow.

Don’t be defeated by your own perception, and remember, you want customers to come to you for your product first, and then for your credit terms: it must never be the other way round (although unfortunately it very often is).

PERSONAL / PROFESSIONAL DEVELOPMENT

"Try to learn something about everything, and everything about something."  Thomas H. Huxley.

It should go without saying that being good at your chosen career is an absolute must.

However, where professional relationships are concerned the skill of one-upmanship is more important: along with whom you know of course. To be seen and heard to be in control, intelligent and charismatic, amongst others, is a skill in its self. Knowing what to say in company, for instance, can elevate your standing beyond your working ability and achievement.
 

Prepare to Have Your Say

We have all heard of the advertising campaign "no FT, no comment". The fundamental message is clear: you need to acquire information to take part in the game. However, only reading the headlines can leave you exposed to more in-depth questioning. The answer, pick, say, one topic per month that you know will be discussed relatively soon. Read all you can about the subject, and drop the subject into conversations. You are almost guaranteed to be the expert in the group on this subject and any other that you prepare for.

Quotes are the domain of the intelligent and can earn you respect quickly.

"Ungexoshe mpalambili" You cannot chase two antelope at once - Zulu Proverb

"Money is paper blood" - Bob Hope

"When we come to that bridge, we’ll jump from it" – Anon

Do you find people lean towards you when you talk? THEN SPEAK UP!

If someone has to change his or her posture to have a conversation with you it is almost certain that some of what you say will be missed. This means that the reply from the other person will not be complete: let this happen two or three times and both parties will avoid a similar situation in the future. Watch for the other persons initial movements and adjust your volume: some people actually step BACK when in discussion (loudness and spitting being the culprits - Yuk).

Nothing is more embarrassing than loosing the thread of a conversation. I have suffered this at an interview and needless to say I did not get the job.

Most of us know whether we are susceptible to this curse and a solution must be sought. The days of attending an interview without a note pad have long gone. You should have your CV and a pad with five boxes pencilled in:

My strengths and weaknesses

My impact in this new job will be…

My prepared questions

My achievements (you get the idea)

My threads

One word for everything will suffice. When we are about to lose the thread our brain informs us by sending us a message "I’m going to forget this": this never fails to happen, so jot it down then, or be dammed!

If you are in a conversation, without a note pad, the easiest way to remember two topics at once is to picture something simple: an egg (on-line bank), smile (yes, another bank). If you are talking about Sage financial software and someone briefly changes the subject, and then asks you a question about the new subject, think of a turkey to remind you of your previous thread – sage and onion… OK lets move on, quickly!

Interrupting someone while they talk means that you have stopped listening to them: if you ever did in the first place. Why should the interrupted person listen to you?

You should listen and think at the same time. You can evaluate their opinion as they talk: your mind thinks quicker than you mouth can talk (yes, we all know someone who dispels this theory).

Two people have different opinions: both talk, but do not listen. The end result is that you know no more about the subject, or the other persons view than when you started. Now, if you listened to all the other person had to say, together with your own knowledge, you will have improved your chances of persuading the other person to accept what you are saying: try it, it does works.

It is far easier to deliver speech when standing: posture, breathing and freedom of movement (arms and legs) are the major benefits. At a recent weeding, the best man stood in front of the ‘top table’ with his back to the main group and the guests at his front. The squashing effect was noticeable and the presentation spoilt.

Your environment is crucial to the successful delivery of your speech (it is also true of any meeting). Talking to the boss about your current project while both of you are at your desk is a safe environment and helps your delivery without you being aware of the benefit. However, explain the project in the bosses office and incompetence is written on your head with every bead of sweat. Always be aware of your surroundings and use it. "Your office or mine?", "mine" you say.

There are many areas to cover on this subject and many specialist books are out there to help your personal development. People around you will notice any change in your self-development and will subconsciously be attracted towards your leadership: sorry, one-upmanship.