Well, we’ve just seen the end of January – the first month of 2011 is gone, - and I feel like I’ve missed it; – it went so fast. While we were away on some much-needed leave, I took time to reflect on the past year, and what I see lying in store for us, as business-owners, in the ensuing months/years.

Many are complaining about information overload these days, and there is no doubt this is an ever-increasing problem. You just have to read some of the postings on the innumerable blog sites to realise that people are getting caught up in an environment where meaningless and idle chatter consumes much of our productive time – time taken to throw it out there into cyberspace; and time taken to read the responses, not to mention everyone else’s musings about nothing terribly important.   To see phrases like “Just woken; not sure if I should wash my hair or not…oh well” actually infuriates me! It infuriates me because I actually took time out to allow my brain to scan this drivel! I got caught – along with millions of others!

Business these days is tough! Don’t get me wrong, it’s always been tough – it’s just that it’s different now. The rate of change in the marketplace is increasing – new products and ideas proliferate, and many businesses get caught up in trying to keep pace with these changes. Rather like getting caught up in reading someone else’s dribbling in the social media, we also get caught up in trying to follow the latest product/fad/way of doing things – and we forget what we started our businesses for in the first place.

Business is actually not about the quickest and easiest way to make as much money as possible. That’s just one of the bottom lines. There are others – like contribution to society, the environment, the development of our people, a legacy – and we have to learn to hold all these things in balance. Perhaps the way to do this to focus on “the one thing” ; as chiselled out by the cowboy, Curly (Jack Palance), in the movie ”City Slickers”.   The conversation went like this:

Curly: Do you know what the secret of life is?

[holds up one finger]

Curly: This.

Mitch: Your finger?

Curly: One thing. Just one thing. You stick to that and the rest don’t mean shit.

Mitch: But, what is the “one thing?”

Curly: [smiles] That’s what “you” have to find out.

(For those of you who may never have seen the movie, it’s about three friends from the city, trying to find some meaning in life, who join a real cattle drive – and end up coming to terms with themselves.)

In a more genteel way of saying this, it’s about single-mindedness. It has been written that the double minded person is unstable in all that he or she does – blown this way and that by every new wind of change; every new idea or scheme.     If there’s one thing we need to focus on in these days as business owners, its being single-minded about what we’re good at.

Take some time out to reflect on your business.  Think about these things:

• Recall the reason why you started it; the hopes and dreams you had for it.

• Think about the way you do business.

• Are you still making your products as good as they were in the beginning? (or hopefully, even better!).

• Do your customers still feel that you’re the best supplier they’ve got – is your service still up to scratch?

• Are your employees growing in maturity, in their skills mix, and in their contribution to the firm?

• Are you still passionate about what you do? Or, – are you finding yourself constantly trying to follow a new trend, a new way of doing things – or simply trying to emulate your competition? After all, they’re gobbling up the market, so they must be doing something better than you – right? And you’re making so many changes, so many times, your customers are getting confused, your employees are becoming more and more frustrated, and your mind can no longer focus on anything for more than a minute or two!

And then along comes all those emailed newsletters (including mine), and magazines and books, many of which are not subscribed to, and many of which suggest you try some new management style, some new technique, some new product, some new way of attracting customers, and you find yourself running around like a novice squash player tracking the ball around the court. You feel like you have the attention span of a dog in a room full of bones!

Here’s a suggestion. Get back to the basics of your business!

• High quality essential product or service, delivered to your clients exactly when they want it, at a reasonable price – consistently; make sure you do what you do, well!

• Cash flow carefully managed – collecting your outstandings, and paying your bills, on time; and, most importantly, watching your spending on non-essentials – taking care to build up a bit of a war-chest of cash for that rainy day.

• Getting out of debt.  get out quickly, get out totally – and don’t go back there!

In those wise words from Curly, “One thing. Just one thing. You stick to that and the rest don’t mean shit.”

Dear Friends,

We’ve come to the end of 2010 – for many South Africans, quite a significant year with the Soccer World cup and all its implications.  Some of those implications are not going to be good, and there’s no good fooling ourselves about it!  Someone is going to have to pay for all the fancy stadiums, – many of which have largely been empty since the event, – and the enormous ongoing cost of their upkeep.  I can’t help but feel that a few people have scored big-time out of this – not to mention the money FIFA made – and that the South African taxpayer is going to be footing the bill for a number of years to come.

We go into the next few years in our country with some serious unresolved issues.  I believe the main ones are to do with the ever-increasing gap between rich and poor, and a shrinking middle class that are tending towards the latter group.  The land issue is a rumbling volcano – and it’s not just about farms!  The education issue is another time-bomb waiting to go off, with the standard falling – not just in the quality of education provided, but in the outcomes for students.  I believe that some 70 to 80% of all young people who enter the job market nowadays will be unemployed! Creating positions of employment for people in government is not really addressing the unemployment issue, when those positions are not really productive.  Having more people doing less work just costs the taxpayer more, slows down the administrative process, and will result in more labour unrest, until inevitably, the money runs out – and then, as Lord Rutherford once said, “..Now we’ll have to think!” And – the non-delivery from central and local government on basic services is reaching crisis with our water, power and sewerage systems at dangerously inadequate levels.

In short, these are all leadership issues – and that’s where our country probably has the biggest problem right now.  It seems to me that those in power are in a frenzy to make as much as they can, as quickly as they can, while the taking is good! The atmosphere and culture of entitlement is staggering!

From a business perspective, I think we’re all going to have up our game, individually and collectively.  Innovation and initiative will be crucial, and attention to detail – qualitative and quantitatively – an absolute must.  In the midst of adversity however, – and I believe that there will be adversity, and globally – not just in South Africa (in fact, I believe that business in the West could be faced with its biggest challenges ever!) – there will be opportunities.  Entrepreneurial thinking and snappy execution will be the triggers for success.  It’s not all doom and gloom!  Many are going to go to the wall, but it doesn’t have to be you – if you’re well prepared!

With that in mind, I would like to encourage all of you to go out there in the New Year and make tracks, set the pace, blaze the trail – become the standard everyone else aspires to.  South African entrepreneurs are bold, courageous and always ready to adapt.  There’s no reason why we should throw in the towel – just as things get exciting!

I pray that you and yours will have a restful, and peaceful, holiday during this time – from all of us here at Finserv.    Please note that our offices will be closed from midday on the 23^rd December, and we will be re-opening on Monday the 10^th January 2011.

After nearly 40 years in the marketplace, and some 14 of those helping small business owners, I am convinced that this is one area where most small businesses just don’t cut it!  I will even go so far as to say that the greater majority of these small business owners never start with a properly structured plan, nor do they bother with one later on; not nearly enough attention is paid to even the most basic business plan.  In fact, I think it’s safe to say that the only time most small business owners prepare a plan of any kind, is when it is demanded of them by their banker or potential lender.

 Think about it for a minute! 

 The biggest investor you have in your business is you.  It’s quite likely that you have ‘hocked’ yourself to the back teeth to finance the venture. It’s also quite likely that you have no idea whether the business will survive or not. It’s ‘seat of the pants’ stuff. Its ‘a wish and a prayer’ stuff!

 Not so long ago, I asked a small business owner a question about where he thought his business was headed.  His reply was simple:

 “I just have to make it work.”

“How do you anticipate doing this,” I asked.

“I just have to get out there and find the business – I have no option!” he insisted.

 While I understand the tenacity, I think its folly. (And he certainly does have an option – he could even close the business down and start something else!).   It has to be the biggest waste of time pounding away at something that may never work.  And it can be exhausting too.  Imagine you’re in a jungle, hacking away aimlessly at the bush surrounding you, hoping you’ll get to a road or river so you can find your way?  Imagine how you’d feel if you realised that just 100 meters away there was a road, which you’d be able to see, if you just stopped hacking, climbed a tree, and looked around?

 There are a number of Proverbs that speak volumes of wisdom about the need for planning. I’m going to take the liberty of quoting some of them here:

 “For lack of guidance a nation falls, but many advisors make victory sure.”

 “The way of a fool seems right to him, but a wise man listens to advice.”

 “Plans fail for lack of counsel but with many advisors they succeed.”

 “Make plans by seeking advice; if you wage war, obtain guidance.”

 “A plan in the heart of a man is like deep water, but a man of understanding draws it out.”

 Paul Yongi Cho, who heads up what is probably the largest Christian church in the world today, says that “…if you fail to plan, you are planning to fail.  Plan to succeed and you’ll succeed with your plan.”

 I believe that the main problems these business owners face are two-fold:

• Finding the time in their busy days to put the plan together, and
• knowing how to put it together!

 There are a couple of key fundamentals to consider when writing out your business plan.  Owners must realise that it’s harder these days for established small businesses to get a banker or investor interested in reading—never mind funding—their business plans. Here in South Africa we have a New Credit Act, commonly referred to as the NCA.  This has resulted in a great deal more scrutiny by lenders than ever before, and credit is now significantly more difficult to obtain, from anybody.  Venture capitalists too, are becoming increasingly finicky about the types of small firms they will back with expansion capital.

Certainly, most of these venture capitalists probably read only one out of ten plans that cross their desk. One of them even went so far as to say: “Lenders want to see solid, incisive business plans that clearly demonstrate an entrepreneur’s credit-worthiness and his ability to build and manage a profitable company.”

So what are these fundamentals?

• Don’t make outrageous claims of financial potential.

Who are you trying to fool?  You won’t fool a canny lender, and it makes no kind of sense trying to fool yourself.  The business world is no place for foolish dreamers – imagination and innovation, yes! Determination and tenacity, Yes!  But, always grounded in well-informed reality!

The investment community is still looking for the basics—a balance sheet, cash flow, sales-and-profit projections, market forecasts, summaries of managers’ experience and so on. But, I don’t think they put too much credence in the financial projections anymore.  In my own experience, I have rarely found a financial projection that pans out with any certainty – especially if there’s no yardstick on which to measure the projection.  Any potential investor is going to be more interested in how you propose to solve an important problem for customers with your niche product or service; how you plan to reduce their transaction costs; or how you plan to improve on the quality and service of the product they currently use.

•  Know how much money you really need.

Most small-business owners don’t have a clear idea of how expensive it will be to build their product or service, and more importantly, to expand their sales and distribution network. Investors will look them in the eye and ask for detail, and they need to be clear about these details. They will ask hard questions such as, ‘How much time will it take to develop this product? How long will it take you to get the quality you will need?’

Entrepreneurs also fail to honestly estimate how long it will take to get enough revenues flowing – good old-fashioned cash flow – to get a good return on their investment. Any investor will have questions such as, ‘Do you have customers for your new widget? Have you talked about pricing with them? How many additional sales representatives do you plan to hire?’ Business owners need to know the answers to all these questions.

• Make sure your marketing and distribution plans are simple to implement, and easy to maintain

These need to prove that you understand the competition and can offer something superior in your niche market; and that you can establish the right sales channel for reaching customers. It might mean forming a strategic alliance with another company that can help you distribute your product, and you may need to have strategies for expanding your brand and product line in place, as well as plans for broadening relationships with your customers.

• Make sure you have a management team that can actually manage!

Investors demand solid management experience, and they want to see team members that have at least three or four years’ worth of operating experience in the industry you’re targeting.  This is not the time to employ cousin Bob because he’s been out of a job for a few years!  Nor is it time to employ Bongani just to meet some BEE criteria in the hope you’ll attract government work! And it certainly isn’t the time to take people on because their salary demands are low. If you pay peanuts you’ll usually get monkeys.  Remember this too – it’s now much harder for a 28-year-old with little experience to secure funding to start or expand a company.

• Understand your competition, and what makes you different from them.

Many business owners just slam their competitors without offering real facts. This turns investors off, and proves not only that you’re ignorant but arrogant too. You need precise data showing why the competition cannot meet the needs of your target market.

IF YOU’RE TRYING TO RAISE FINANCE:

If you’re preparing a business plan to raise investment and/or loan capital, please bear the following in mind:

• Don’t use the shotgun approach!

Nobody looks closely at a business plan that arrives in the mail addressed to “Whom It may Concern”.   The most important thing is to get an introduction to the prospective funder through someone you know. Any introduction, – even a casual one, through a friend of a friend—is better than none. If you don’t know anyone, hook up with other entrepreneurs who’ve received funding.

Once you’re introduced, follow up with a phone call or e-mail message—without being irritating, of course.  You’re dealing with busy people – never forget that – and they don’t like having their time wasted!    When you call to set up the meeting, offer to send along the one-page executive summary of your plan. This summary must be clear, short and sweet! It should show

• how your company differentiates itself,
• what the market is, and
• Why the management team is uniquely prepared to drive your company to success.
• Also submit names and phone numbers of customers who will verify your reputation and the solidity of your business.

Don’t hand over a daunting document.

Keep the packaging professional but pointed.  No one likes a massive tome which repeats and repeats your dream list.  Quite the contrary!  I would advise that you build the key points in PowerPoint, which forces you to be crisp, tight, and clear. The first few slides should contain the 30-second elevator pitch, which defines the product or service, the market opportunity vis-à-vis the competition, and the value proposition. Some of this can be done very convincingly with graphics. In addition to the PowerPoint presentation, you should have additional documents covering the financial details and background on the team.

Remember to submit resumes on your key staff members. Investors will want to review detailed resumes for each member of your management team, including their job history, job titles, and their specific responsibilities and achievements. After that, make sure you are always reachable, whether by e-mail, cell phone, or at home. Investors won’t phone twice!

IF IT’S NOT ABOUT THE FINANCE:

Even if you’re not trying to raise money for expansion, and for launching a new business venture, as the largest investor in your business, with the most to lose, you should be addressing all these issues for your own peace of mind.

 They can be summarised as follows:

• How will you reduce your customer’s transaction costs?
• How will you improve on the quality of the products they already use?
• How long will it take to develop your product and market?
• How long will it take to get a good return on your investment?
• Do you understand your competition? How do you differ from them?
• What plans do you have for broadening relationships with customers and expanding on product lines?
• Do you have access to the necessary experience?

If you haven’t got the time or the know-how to do all this, employ the services of a specialist to help you.  It may cost you a few thousand Rand (anything between R5,000 and R15,000 for the average small to medium sized business.) but it could save a fortune – literally – in the long run!

I heard today that SARS are issuing warrants of arrest for errant taxpayers, who – presumably – are ignoring demands and summonses to submit tax returns.  One story involves someone who was arrested in the dead of night and then incarecerated along with every other kind of felon!  This is not something one wants to experience, especially here in South Africa.

May I suggest that if you’ve been delinquent in handling your income tax affairs – you start taking them seriously, - and if necessary, get them to us so we can sort them out with SARS on your behalf.

Thanks to the development in information technology, and the ease with which we can all communicate today, many of us can now do our work almost anywhere in the world. This is especially true in many consulting-type environments.

When I was first articled to an accounting firm in Pietermaritzburg, in the early 70’s, computers were only talked about, – and even then in hushed tones, We didn’t even have pocket calculators at that very early stage, relying as it were on huge manual adding machines to total up columns of figures. Monthly management accounts were almost impossible to prepare within a few days of a month end, and the most exciting accounting system around for most small business was one called “Kalamazoo”. (In fact, it was so good, it’s still around today!) And it never involved computers in those early days.

Today, sophisticated systems can be bought off the shelf for a few thousand Rand, and they’re really good, if you know what you’re doing. Some, like Quickbooks, are very simple too and especially designed for non-accounting types. The need to employ a full-time qualified bookkeeper is not as essential as it used to be. Nowadays, an outsourced bookkeeper, on a one-or-twice-a-week basis, is probably all most small business needs, to keep their records up to date and accurate.

Even with this technology available, many small business owners still resort to calling someone in to do their bookkeeping or to sort out any accounting problems. There hasn’t been much of a change in the mindset about just how efficient modern technology can make this simple service. Have you ever been with someone (slightly older, like me!) who wants to make some notes and/or calculate something? In front of them, they will have a notepad, a pen, and a calculator – right next to their laptop. Notes will be made on paper, figures written down, and then entered into the calculator and the answer, also written down. If they’d taken a few seconds to think: “what is the best way to do this?” they would have realised that they could have done everything on the laptop – in a spreadsheet, in a fraction of the time, and it could also have been filed away immediately! Old habits die hard!

Over the years, I have been slowly changing my own ways of operating – I have to, to keep costs down and become more efficient and effective. When I started Finserv just over 13 years ago, technology was nowhere near as advanced as it is today. Laptops were frowned on – they were expensive and problematic. Nowadays, they’re the only way to go – especially with the power problems we face. Even cell phones were severely limited by comparison then. Skype was unheard of and the social media of today was just a thought in someone’s mind. If a client needed help, I went out to see him – or he came to see me.

It’s very different today. Digital cameras can provide incredibly detailed photographs of a workplace environment, and in seconds they can be uploaded and sent to me. Documents like financial reports and tax returns can be scanned and PDF’d to me in minutes. Whole backups of accounting systems can not only be emailed to me, they can even now be stored in cyberspace, where – with permission – I can access them, and make the changes needed by the client. I don’t need to be there anymore, and this means that the client can be saved a lot of money, and I can be saved a lot of time and wear and tear on my car!

In fact, I can now help anyone with an accounting need, or a business problem, anywhere in the world, in a matter of minutes. (Provided they operate in English or Afrikaans of course!). What’s more, with Skype and broadband, I can now not only talk to my client, but we can see each other at the same time. Amazingly, I can now attend a board meeting in Cape Town, while in my study at home.

Our new Business Buddies programme also means I can involve four or five very different specialist skills, on conference call, at the same time, to assist a client – and each one of us could be in different cities around the world, at that time. This is the stuff of dreams for me!

Clearly, this doesn’t all just happen naturally; nor is it inexpensive to set up. One needs the relevant hardware and software to do this – both the client and myself – but once this has been set up, man -what a difference it makes.

The only downside to this is the loss of the human connection; the handshake, the sense of fellowship, the presence – and one mustn’t ever underestimate the power in this. We need each other in person – we can’t deny that. But, we don’t need it all the time – and it makes a significant difference to the way in which we run our businesses.

So, – why am I telling you all this?

Well, I’m about to make a major change in the way I do my work. I’m going to be moving from Hilton, where I currently live, down to the Western Cape, to a little town called Montagu, in the Breede River area.

A few people have asked me, “why Montagu?” Well, my wife and I have always loved the place, and felt that we would probably like to put down roots there one day. At the same time, my aging parents still live there – now well in their 80’s – and if something were to happen to one or both of them, it will be a great deal more traumatic for them to move (and for me to move them too!), than it will be to care for them in their own home. I’m told that apart from death and divorce, a move – especially when you’re an octogenarian, – can be fatal! We’ve bought a piece of land down there, and will start building – God willing – in early February, hoping to move there by the end of July next year.

People have also asked me if I’m retiring. Well, – first of all, I’m too young and I don’t believe in the concept. As a Christian, it’s not biblical, while ‘work’ certainly is. And what’s more, – I actually enjoy my work! I love helping people, especially in the business field. Secondly, – I know that I can help more people, a lot quicker, in this way, than if I have to jump in the car and travel out to them all the time. I’m looking at it as a relocation, not retirement; – a relocation of my home, and not my business! In fact, my business – FINSERV – will continue to operate from its base in Hilltops Office Park, Pietermaritzburg – along with its existing – and growing team of great people. And, – I do intend to make quarterly trips back to Pietermaritzburg, to maintain some of my longer-term, existing relationships, on a more personal level.

You see, – most of the work I seem to do these days, involves advising business owners how to get out, and stay out of trouble. I also spend quite a bit of time advising potential business owners how to set up new businesses, with the right structures and the right people. With the advance in technology, I can now do this more than adequately, via the internet – but, (and this is still a big ‘but’!) it needs to be easily seen and understood in this fashion, by business people out there. (Including existing clients.)

So, – how is this all going to work? To be honest, – I’m not entirely sure right now; I’ve never been this way before. However, I am confident in three things – my experience in a variety of business over nearly 40 years, the excellent team I have in support, and the beauty of modern technology – which just seems to be getting better and better by the day!

First-time clients will be able to access my services either via the web site, by logging on as a user, or by direct referral from other clients.

The following exchange is how I see a client’s problems being thrashed out – in cyber-space!

Client: “I have a curtain-making business in Cape Town. All of my work is jobbing and I have to quote on every one, not knowing whether I will get the job or not, until I do. I don’t know how to plan my cash flow anymore, and I’m battling to pay my bills. Can you help?”

Answer 1: “Absolutely! But, to assist you I need to know a few things: first, you need to give me a list of your fixed monthly expenses and the average day in the month when these expenses are paid. Second, – you need to give me an idea of what your average monthly sales have been over the past year, and how they fluctuate according to time of year etc. Third, I need to know what your average mark-up on material costs is. Fourthly, please send me a summary aged analysis of your customer’s and supplier’s amounts due; and lastly, what is your current capacity – is there room for growth?”

Response: “I’m attaching the list of expenses and details; and the most recent aged analysis of debtors and creditors. My average monthly sales are R250k, and they are fairly steady during the year, but with about a 10% higher turnover in November and December. My average mark-up on cost is 50% and I’m running at about 65% capacity.”

Answer 2: “I will need to do some spreadsheet work for you. I estimate that it will take me about a day to complete, and the cost to you will be R5000 plus VAT. Before we go ahead, I will need you to complete the attached Client information form, which will give me all your details, and my banking details, for payment. If these terms are acceptable, please respond by email accordingly, and I will commence the work.

Response: “I’m happy to go ahead – please attached forms duly completed.”

Answer 3: “I’m attaching a spreadsheet for you. It contains two worksheets – a budget for the year and a Cash Flow forecast, on a weekly basis, covering the next 13 weeks. It’s also includes a “help” sheet, explaining how the forecast works. The forecast contains all the information you sent me. You will need to update it on a daily basis. If you have any problems, email me, or give me a Skype call. I will be available to clients every workday for this purpose, between the hours of 10h00 and 15h00. If I can answer the question directly by email – without having to do any number-crunching – then I will respond within the hour. If it involves some accounting work, I will endeavour a turnaround within 12 hours.”

And remember, – we don’t just have to write stuff to each other; with Skype we can see and talk to each other over the internet. I’m not just some faceless name on a written page. I also don’t have be a lightning-fast typist anymore either – not with Nuance software’s “Dragon Naturally Speaking” (which converts my spoken words into print.) and ‘Audacity’, which records my voice into MP3 format, and which can then be sent via the internet using “YouSendIt” to handle larger files. (And the last two are free downloads on the internet too.) And, if there’s a real problem that requires more hands-on, then with TeamViewer (also free to private users), I can access a client’s computer and do the work there myself!

The first help-out will be free.

Thereafter, I believe that a monthly retainer payable by debit order, will give clients access directly me to me, on a daily basis, for whatever advice I can give. Just being there, as a listener; as a sounding board, for many a lonely, small-business owner, will be worth it’s weight in gold . (This is also to help me with my time management in dealing with those clients who phone, ask me if I have a minute, and then spend the next thirty discussing their problem!)

And with the monthly cost less than a DSTV subscription, it has to be value-added!

Well, – the end of the first decade of the 21st century is in sight. I can’t believe how fast the past ten years have gone – it seems just like yesterday that everyone was panicking about Y2K, and the prophets of doom were forecasting a meltdown of all our information systems!

In retrospect, sometimes I wish it had happened!

I don’t know about you but I get so many emails – most of which are some form of advertising – so many invitations to join some or other new social networking service – and the worst of the lot, all those ridiculous scams advising me about the millions of dollars I’ve won, by people calling themselves Dr Peter McWealth, or some other ridiculous name! And then there are genuinely funny emails – rip-offs of all and sundry, funny pictures and anecdotes – and which I’ve also had occasion to send to everyone on my mailing list from time to time.

But have you ever sat down and evaluated how much time and concentration gets sucked up, just opening and reading these mails, not to mention what happens if you decide to forward them to your mailing list? And the time that’s wasted every time a new email pops up on your screen? I’ve been in a meeting with a client, and in the middle of a conversation, when one of these emails pops up on his computer screen, and involuntarily, he reaches out for the mouse, clicks, and reads the mail – even when it appears to be irrelevant to his business. I think it’s a form of subliminal diversion – subversion for short – and it brings new meaning to the word.

The Wikipedia definition is: “Subversion refers to an attempt to overthrow the established order of a society, its structures of power, authority, exploitation, servitude, and hierarchy; examples of such structures include the state. It is an overturning or uprooting.” I have a sense that this is exactly what is quietly, unobtrusively, but very definitely happening in the world today.

The point of this though, is really to highlight the fact that we need to use a lot of that wasted time on more value-added pursuits, within our businesses. I’ve become concerned of late how little value small business people place on annual budgets; and even if they do have budgets, how rarely (if ever) they actually use them. Sound business planning, followed by sound implementation, has been subverted. “We don’t have time for that sort of thing anymore!” is the cry. I’m also seeing less and less value placed on the importance of accurate and regular financial reporting by these same small business people. As long as the off-the-shelf accounting software manages sales and debtors, they’re happy. Benchmarks and targets are not set. Actual expenditure is not monitored against budgets, until cash flow becomes a problem – and clearly, cash flow is a very real indicator that something is not right in the state of one’s business!

Then, all hell breaks loose! Sales are generated at any cost, credit terms are violated, cost-cutting is implemented without any thought to whether the costs cut, are value-adding costs. And someone has to be to blame – employees, customers who don’t pay, the bank, unreasonable suppliers who insist on being paid on time! The list goes on… And this is what happens with subversion.

Now I’m not suggesting that all our business woes should be laid at the door of the internet and email. That would be ridiculous! But the time we spend, unthinkingly, on this entire information overload, is taking us away from more important business activities – like planning.

We are about to go into a new calendar year, and here in South Africa, a new financial year for most businesses, within three months. Traditionally, many manufacturers close their factories for half of December and January each year. As a result, traditionally, business is much quieter in the latter part of January and February each year. This is a good time to set aside a couple of days – even a week if possible – to brainstorm where your business is, where it’s going, and where it fits in the whole economic situation we find ourselves in. Once the brainstorm is done – and I would suggest using your own key people, and one or two objective value-adding outsiders, in this process – then prepare your budget for the next three years. This can then be reviewed at the end of each year.

Many small business owners lack the financial skills and experience to facilitate these brainstorming sessions, and to prepare these much-needed budgets. This is where we come in, and we’re good at it! So, – if you would like to make use of this opportunity, and the quieter period leading up to the end of the financial year, please let us know, so we can set aside the time now. We already do this for a number of our clients, as a matter of course, and the available time is filling up fast, so we look forward to hearing from you shortly.

Don’t forget, – and on the positive side of internet and emails – we can do this for anyone, anywhere in the world, so – just because you’re not geographically close by, doesn’t mean we can’t help. Give us a call….

I had an interesting experience the other day while visiting a client.

While we were chatting, his firm’s buyer popped his head into the office and said (almost gleefully), “I’ve just been told by XYZ Company they won’t be able to deliver the goods when they promised – and this is the second time now!”

“They’re useless!” the client said, “It’s about time we used someone else! I’m tired of people making their problems, my problems.” He carried on with: “But listen, I know the owner of XYZ and I don’t want to create an international incident, so don’t tell them – just use someone else. If XYZ ever finds out – we’ll deal with it then!”

“I agree!”the buyer said, “And I know who to use.” And off he scuttled.

An hour-or-so later, our meeting was interrupted by a phone call – which my client said he had to take. What followed was almost comical. He was being hauled over the coals about not being able to deliver as promised, by one of his customers – and there he was, making excuses, blaming his suppliers, and making his problems, his customer’s problem! I recalled the words of Jesus: “Why do you look at the speck that is in your brother’s eye, but do not notice the log that is in your own eye?”

We are never going to be able to deliver on all our promises all the time. There are circumstances beyond our control, which may occur from time to time. Sometimes we may just forget; or we may slip up. It’s normal – no matter how good our systems are, or how hard we try. The issue though is how we deal with it – both as a supplier and as a customer – because we must never forget that we are both, at some stage.

Let me suggest you do the following:

1. When your supplier lets you down, contact him immediately and let him know – and ask him what he is going to do about it. Regardless of the response, give him the benefit of the doubt, and make a plan to overcome the supply problem before it becomes your customer’s problem!
2. If the problem re-occurs at some later date, contact him and remind him that this is the second time, and that it will be the last time. Let him know, in no uncertain terms, that it must not happen again or he will lose your business. He now has the opportunity to shape up, or….!
3. If there is a next time, don’t backtrack on your promise to stop buying from him. You need to be seen as someone who does what he says.

Give your suppliers’s some grace and some space, but please communicate your views directly and honestly. At the same time, never forget that at some stage, it may be you on the other end of the line. Hopefully, what you have sown you will reap, and you will be given a second chance. If you do get one, don’t muck it up!

I would rather my customer told me that I’d messed up and gave me a second chance to improve, than lose him forever and have him bad-mouthing me all over town! Let’s treat our suppliers the same way.

Some of the most important role-players in your business are your suppliers.

If they don’t supply on time it can disrupt your business and cost you money.

If they don’t supply at all because you haven’t paid your account, it could be terminal!

Most small businesses that are having financial problems, have very poor relationships with their suppliers. They treat them badly! When they want goods delivered they scream and shout, but when they’re expected to pay for those goods, they’re nowhere to be found.

Small business owners need to get their minds right about their relationships with their suppliers. Here are a few ways:

THE CREDIT AGREEMENT

When completing the Credit Agreement with a supplier, make sure that you have answered all the questions honestly and completely. Suppliers will ask for a number of things, to assist them in lessening their risk. The most common are:

• A set of your financial statements.
• A suretyship from yourself as surety and co-principal debtor for the debts of your business.
• Cession of the book debts of the business.

If you don’t want to supply these then don’t do so. Simply say ‘No’ to the request for financial statements, and cross out the sections that deal with sureties and cessions. If the supplier really wants your business, he’ll more than likely accept your amendments – the decision is actually his at the end of the day.

TREAT THEM LIKE SHAREHOLDERS.

Because that’s what they really are!

If you’re a small business owner, most of your larger suppliers will probably have injected as much, if not more, capital into your business than you did. They will have done this by extending credit to you and by carrying a degree of risk in doing so. As a result, they should have a right to know how your business is doing, so that they can monitor that risk.

They should, but they usually don’t.

Even though it’s generally not expected, extend them the courtesy you would to an investor by keeping them in the know. I would suggest that for your key suppliers, you make time to meet with one of their decision-makers and have an open and frank discussion about your business, some of the problems you may be facing, and what you can do about them. You may even get some unexpected assistance!

At the end of the day, it is vital that you see the marketing process being driven by a team effort – and that team is you and your suppliers.

KEEP THEM INFORMED OF DEVELOPMENTS

This is particularly important when your business is ‘in distress’. Suppliers will be very aware that something is wrong as soon as you start delaying payments or making excuses for not meeting your commitments. However, most of them will only resort to legal recourse when there is no other option. Experience will have taught them that the only people who win in those circumstances are those in the legal profession.

So – what are the kind of things they will want to know from you?

• Is your problem serious?
• Is it a short-term problem or something that will continue indefinitely?
• What are you doing about it?
• When can they expect some form of payment?
• How much can they expect?

If you don’t have accurate financial records you will not be able to answer any of those questions with any certainty. Uncertainty breeds suspicion and suspicion can result in unnecessary litigation – not to mention a loss of credibility which will affect you for a long time.

Make sure your records are up-to-date so that you can keep them informed of developments. They need to know that you are confident about the performance of your business and that you know where it is going.

There is also another way of keeping suppliers informed – indirectly – and that is through the auspices of some of the Credit Guarantee insurers. These insurers are being used by more and more suppliers today, to reduce the level of risk they have to carry. Before the insurers provide this cover they like to carry out a fairly detailed assessment, and in order to do this they require information. It’s the only way they can quantify the risk they will carry. Interestingly enough, many of these credit guarantee insurers make risk assessments without accurate information – and when this happens, you can rest assured that the assessment will not be in your favour. Quite naturally, this will be conservative and as a result, detrimental to the business being assessed. It is in your interests to provide them with as much relevant, and if possible, certified financial information – even if it hasn’t been requested. You will be surprised at the support you get.

NEGOTIATE A PLAN OF ACTION

Once you know you’re in trouble, you’ve got to find out what it will take to get you out of it. Once you know the parameters for turning the business around you can begin to negotiate with your suppliers on the basis that you need their support to make the plan work. Remember – you’re treating them as shareholders now!

Most suppliers will gladly give that support if:

• They are able to see the plan and can buy into it. I have known suppliers wait up to two years for their money, and even continue supplying on account, because they have felt confident the business will turn around.
• They have been involved from the outset and whatever has been planned has been adhered to.
• Whatever you have said you will do, you do. So, when making commitments, it would be wise to err on the conservative side, to give yourself some leeway in the event of an unexpected circumstance.

It is at a time like this that you will need to be able to fall back on those soundly-built relationships. Provided they have been based on mutual trust, this shouldn’t be too difficult.

I must add a word of warning at this stage. It is quite clear that LEGALLY, by admitting that you cannot meet the terms for payment of your account as laid down in your credit agreement (and you will effectively be doing this once you start to negotiate a payment plan.) you will be setting yourself up for some unscrupulous creditor to ‘have a go’ at you in court. He will have sufficient grounds to obtain summary judgement against you in respect of your indebtedness to him. If it is only one supplier it may not be too bad but this can have a serious domino effect if all the other creditors take fright and ‘have a go’ as well!

So, it would be wise to consider all your options – talk to all your major creditors and sign nothing until you are certain that they have bought into the plan. In my experience, I have only ever come across one creditor who was prepared to write off his entire (and quite considerable) debt, purely to have revenge! This is rare, but we must be aware that there are idiots out there willing to shoot themselves in the foot!

PRO-ACTIVELY COMMUNICATE

One thing that suppliers hate with a passion is the customer that won’t communicate. When businesses go through tough times, the person responsible for paying the bills invariably goes ‘walkabout’ to coin a phrase. He’s either “not available”, or “he’s in a meeting”, or “he’s off sick”, or “he’ll get back to you” – and then he doesn’t!

Or, – you manage to get through to him and he gives you a long story about why he can’t pay your bill and promises to come back to you the next day. And then he doesn’t!

It makes creditors very jumpy! And ‘jumpy’ creditors are liable to do irrational things which can have a seriously terminal effect on your business.

Once you’ve opened the lines of communication by informing them of developments, and then by negotiating extended payment terms with them, keep those lines open by being pro-active. Don’t wait for the creditor to phone you. Make it a habit to call every one of them, weekly if you must, but at least fortnightly, to let them know how the process is going. Tell them the truth! A creditor that knows what’s going on is a creditor that will support you all the way.

AND IF THINGS ARE REALLY BAD?….

Whatever you do, if things are really bad and the light at the end of the tunnel is the train coming your way, – don’t, and I must stress this again, – don’t keep buying from your suppliers, knowing that you will be unable to pay them. This is just dishonest and tantamount to theft. I have known people who continue to support their profligate lifestyles out of funds that are actually due to their business suppliers. Why, I don’t know – because common sense must surely tell them that it has to come to an end at some stage?

The courts are taking a dim view of company directors/members who carry on trading in insolvent circusmtances – they regard it as reckless trading. As far as the courts are concerned, reckless traders are corrupt and may be held responsible for the debts of the company in their personal capacities as a result.

My wife and I have just returned from a few days in the bush – communing with nature. It was quiet and it was peaceful – no noisy dogs barking; no drone of heavy trucks from the highway. We were blessed to have sightings of the all the big five – with the exception of leopard (which continues to elude us) – in as natural a habitat you’re going to get in this 21st century.

Elephant Rock lodge in the Nambiti conservancy, just outside Ladysmith is one such place. It takes a maximum of ten guests in beautfiully appointed stone-under-thatch chalets, overlooking a waterhole. It just so happened that we were the only two guests there for the three days. The staff of the lodge were attentive and knowledgeable – and I had the sense that it didn’t matter that we were the only guests; I think they treat all their guests that way. We were treated to two game drives each day in an open Landcruiser and I managed to get some great pictures of the animals we saw. Many might say, “yes, but those private lodges are too expensive for the average South African!” And, I guess that would normally be correct. However, we managed to book our stay on a ‘special’ rate – which you can ask for, and when I worked out that it would include all food and transport, and our own personal guide; and compared the rates to that being charged by Ezemvelo, for instance – where you have to provide your own food and drive yourself (unless you pay a lot extra) – it was really worth it.

The point of this article, however, is not just to give Elephant Rock Lodge a send-up, but to highlight the fact that it was the people who worked there that made the difference. If the lodge had been full, I can imagine the staff would have had to be at the top of their game. Having only two people – and easy-going ones at that – to care for was probably a breeze for them. Yet, we felt they were always giving of their best, and nothing was too much trouble to them. Clearly, they were passionate about the bush and about the animals, and about their lifestyle. I have no doubt that their remuneration – relative to the hours they have to work – leaves a lot to be desired, but without them, we would not have enjoyed our stay nearly as much. You can have a great business and a great product, but if your people are not engaged, you’ll soon have nothing.

If we get another chance, we’ll be going back!

In previous newsletters I have drawn the connection between the level of engagement of your employees with that of your customers. Its not really rocket science!

I can heartily recommend a little book by Mark Sanborn called “The Fred Factor” which goes directly to the heart of this issue. Based on a true story and an actual person called Fred Shea, it made a significant impact on me – and in many ways helped to shape my view of work – and more particularly, the way in which I do business.

In summary, the story is about a real-life postman called Fred, and his attitude to the fast-disappearing concept called ‘the work ethic’. Mark Sanborn, the author, is a professional speaker who travels around a lot, and Fred became his postman when he moved to a new home in Denver, USA.

In the foreword to the book, John Maxwell says this:

“Let’s face it – if a guy named Fred, who has a less-than-glamorous job working for the US Postal service, can serve his customers with exceptional service and commitment, what opportunities await you and me to help others, and in the process achieve deeper personal satisfaction? If I were to write out a list of individuals who would benefit from reading The Fred Factor, here’s whom I would include:

• My employees and business associates – for they will learn the secret behind how to better serve customers.
• Professional acquaintances in management positions – for they will be shown how to inspire an entire organisation to see unprecedented levels of excellence.
• My family members – for they will discover the benefit of showing genuine appreciation to those they love
• Graduating students – for they will find extraordinary insights into achieving lifelong success not taught in classrooms
• Finally, I would wish to place the book in the hands of everyone I know who wants to turn the mundane into extraordinary experiences.

I’ve just bought a number of copies to hand out to my staff and associates. You can get them fairly inexpensively at the following link:

http://www.take2.co.za/books-fred-factor-the-3598945.html

But, here are also a few tips to keep in the forefront of your thinking when dealing with your all-important customers.

DON’T MAKE PROMISES YOU CAN’T KEEP.

Mrs Jones is in desperate need of a plumber because her electric geyser has sprung a leak and she can’t use any hot water. She phones the nearest plumber advertised in the Yellow Pages – Electric Plumbers. “Don’t worry, Mrs Jones, – I’ll get someone round there this morning.” The morning, and eventually the whole day, comes and goes. Two more calls to Electric Plumbers elicit no response. Electric Plumbers have not only lost the work from Mrs Jones, but they’ll never get any work from Mrs Jones’ neighbours, her family, her church or anyone else she comes into contact with.

If you can’t do the job in the time required, say so! If you can, get there on time and do a great job. Even if your business is struggling, this is the time to really deliver. The result will be ‘electric’!

DELIVER ON TIME

I was involved in the construction industry for a number of years and nowhere is it more important that goods and/or services be delivered on time, than in this industry. The cost to a contract of having labour standing around waiting for materials to be delivered can be enormous. The same can apply to an assembly line, or a manufacturing process.

Apart from the cost implications of late delivery, there is also the added frustration factor for the customer. Nothing irritates me more than waiting for a promised delivery that is late because it impacts on my own time management and can cause me to be late for a valued appointment.

So, – don’t promise delivery at a certain time and then be late. Rather give yourself some leeway and arrive early and you’ll have a happy customer.

INVOICE AT THE RIGHT PRICE AND ON DELIVERY.

There are some unscrupulous distributors out there who quote a certain price and then once the order has been given, invoice at a different price – usually more! Or, – they will oversupply on an order, hoping the customer will just accept it! When it is not justified, the distributor will take a chance that the customer won’t detect the increase, and if he does, – well, an apology and a credit note will do!

There are also some distributors who take orders for goods and invoice them immediately, even if the goods are only to be delivered in the ensuing month. This usually happens close to a month end when sales targets need to be met and it can help to speed up the cash flow process.

It creates additional work for the customer, wreaks havoc with your own monthly performance and is a great source of frustration.

You, as the owner of the business, may have nothing to do with it! It may be an unscrupulous employee. However, you’ll get tarnished with the bad reputation and it will eventually lead to your downfall. So, – be vigilant! Ask your customers to contact you directly if they experience any problems and deal with them immediately.

WATCH THAT QUALITY!

Develop a code of excellence in everything you do. (The Fred Factor). This will encourage your employees to do the same. This will filter through to customer service and, in particular, the quality of your service or products.

In South Africa, mediocrity is more acceptable than in other parts of the world (even though it shouldn’t be!) but if you want your venture to become a world-class business, you will have to determine to be the best. I remember two experiences in the past few years which illustrate this perfectly:

The first one occurred when I went to a large general wholesaler to purchase a bell which visitors could use to announce their presence at the electric gates outside my house. It was in a sealed ‘bubble-pack’ and priced at about R100. When I got home, I wired it up and then discovered that it was faulty. I then had to repack it, get in my car, drive the fifteen-or-so kilometres to the wholesaler, go through a lengthy ‘returned goods’ procedure and then collect another one. This time I asked the attendant to unpack it and test it before I drove off. It was really irritating!

The second one involved the replacement of the exhaust system on my motor vehicle by a well-known franchised exhaust shop. The modern concept of ‘fast-fit’ has to be a misnomer. The forty-five minutes that was promised turned out to be double that. As I drove away, I discovered that the new system was banging against the bottom of the vehicle so I had to go back again and wait while the fitter had another go at it. Eventually, over a few days, three visits later and a good R2000 worse off, the car was right. This was even more irritating!

In both instances, there was no apology, no attempt to reimburse me for the inconvenience or lost time – just the comment, “if you have any problems please bring it straight back.” As if that’s doing me a favour – as if that’s an indication of good service! PULLEASE! They missed the point – we should not have to go back and we should not have to be inconvenienced!

Now I’m not trying to suggest that one should never make mistakes – that’s not possible because we all do. But if you embark on a process of excellence and it becomes a culture in your business, you will become known as the supplier of choice. Once you’ve attained that lofty ideal, price almost no longer matters. (I said ‘almost’!) There is no substitute for quality!

FOLLOW-UPS

Have you ever received one of those after-service follow-up calls from your local motor dealer? It seems they are the only ones still doing it these days.

I like it! If I’ve had a problem it gives me an opportunity to voice my concerns. If I’m happy, I tell them. What concerns me, however, is what happens after I’ve told them I’m not happy with the service – quite often, nothing! This is usually because there is no link between the very pleasant female voice doing the follow-up and management responsible for action.

Make sure that wherever possible, you personally attend to the ‘action’ part. It helps you lead on to the next aspect of customer service, which is..

BUILDING CUSTOMER RELATIONSHIPS

This is commonly referred to as CRM (customer relationship management) these days. In the twenty-first century, I believe building great relationships with your customers is the key to business longevity and success.

In short, what we want to achieve is this: – we want our customers to rate us as their supplier of choice. We want them to order goods from us without giving consideration to price. They need to be confident that we will provide them with quality goods, at a reasonably competitive price and delivered on time. In order to ensure this level of confidence, we are going to have to work very hard at building strong, long-lasting relationships with them.

Most of us find ourselves in a situation where we do not have a captive market and so we’re all after a slice of the same pie. It has never been more certain that ‘if you snooze, you lose’, than it is today. Because the pie has got smaller! We don’t want customers going to the competition when we’ve worked so hard to keep them.

So how do we do this?

The first thing we must understand is that every sale must be considered an evolutionary process and not an event.

Perhaps the best way to describe this process is to draw an analogy to the construction of a house. When a house is built the most critical aspects are the foundations and the first cornerstones above the surface. If the foundations have been badly prepared and laid, the house will, at the least, develop serious structural defects, and at worst, fall down! If the cornerstones have been laid incorrectly, the walls will not meet and they’ll end up skewed.

The first sale is like laying the foundation to a building. It should happen with no hitches. The next few sales are the cornerstones of the wall. They set the pace for the relationship that follows.

Although the foundations of a house are so important, they soon get covered up and forgotten and all the attention is focussed on what can be seen above ground. In the same way, all the hard work that went into the initial sale is soon forgotten and every sale from then on is judged on its own merits. However, if the first sale was handled in an exemplary fashion, and the process continued thereafter, it is unlikely that a small mistake will chase the customer away.

The second thing we must understand is our customer’s business. Now, I don’t mean we have to become involved in the day-to-day running of his business, but I think we should be able to provide him with assistance that goes beyond just selling him the goods he wants to buy from us. I have a client who makes it a point of offering his customers sound advice whenever he thinks it will add value. That can involve sharing some winning ideas he’s come across or it can involve providing links to other customers to create synergy.

Thirdly, become familiar! Get to know him as a person and not just an organisation, get to know the names of his wife and children – socialise with him from time to time without living on his doorstep.

There is a universal principle that states: “As you sow, you will reap.” And any farmer will tell you that if you spend your life stripping the soil of everything it has to give, without putting anything back, you will eventually end up with nothing.