In this Month’s Issue

We are going to stop thinking like alogistics company!

David HawkinsRT Page

2

Recruiting in a “Buyers Market” Keith AtkinsonMarekt Focus

3

Getting it Right - Thinking aboutInsurance

Stephen GreenfieldGreenfield Insurance Services

4

General Election - The Economic Debate Jon GreenLewis Brownlee

5

Are You Planning AheadChartered Institute of Management

6

Serious savings on Office SoftwareOpen Office

6

Don’t waste a good crisis Institute for Independent Business 7

Smart Management - The Art ofDelegation

Institute for Independent Business 8

Nuero Linguistic Programming (NLP) Graham ConstantineVisit www.wholebeing.co.uk

8

Effective Web MarketingMarket Focus

10

Prepare for Take-Off David WilloxEssence of Business

11

We are going to stop thinking like a logisticscompany!This was the somewhat surprising announcement that Bob, our MD,made at our last management meeting. Actually, after he explained it,it wasn’t so surprising because he frequently comes up with some prettygood ideas and we all grasped it enthusiastically. What I didn’t grasp soenthusiastically was the announcement that I was going to write theintroductory article for the newsletter that is going to become a part ofthis new approach to being a logistics company!

Why, you ask, are we going to stop thinking like a logistics company?Believe me, I asked the same question. Bob explained, “Look, if we were the logistics department ofone of our customers we would be thinkingabout their business and bringing our logisticsknowledge to bear on the function. I know wealways try to put our customers first but I reallywant us to go further than that”.

He explained that it seemed to him that therewere fundamental differences in the approach.Delivering a good service is not the objective,delivering the right service is! All our customershave different approaches and needs in theirbusinesses and only by thinking their way couldwe really deliver what they needed.

We have been reflecting that a basic aspect ofour sales strategy should not be how we sellmore to our customers but how we help ourcustomers sell more. Hence the change inthinking.

It also explains the launch of this newsletter.You will find the rest of it is not about us! Weare fortunate in that we see many differentindustries so we are exposed to many differentideas. It seemed to us that, if we could gathergenuinely useful news, ideas and approachesinto one regular genuinely useful newsletter, wewould be able to help our customers andprospective customers develop their businesswhich would in turn help us.

A Special Introductory Offer forYoung Companies

As part of our commitment to helping ourcustomers grow their business we have liaisedwith a number of local companies to create aspecial package for young or smaller companies.

We know these companies represent the futureboth for the community and with self interest atheart so we want to help them to establish securefoundations. We also know how difficult thoseearly years are !

The offer includes:

� Significant discounts on warehousing

� Savings on insurance.

� Highly discounted Web Site Packages

� Help with raising finance

� A free business review with IIB businessadvisors

Work is continuing on this. The package isavailable now but full details have yet to befinalised.

If you start to work with us now you will recieveall the benefits once the details have beenfinalised. In the meantime if you want to knowmore then visit our website and register for moreinformation or call us on:

01903 736300

During the boom years prior to the recessionmany organisations found that their jobadvertisements produced only a small number ofreplies. With what amounted to fullemployment (despite the government reportedfigure of 1.5m unemployed) there was no pool ofapplicants sitting without work ready to jump atyour offer.

Today, with a rise in unemployment of 1,000,000amongst people who actually want to work, yourjob advertisements will produce a sizableshortlist from which to choose. It seems to be abuyers market! Unfortunately, all is not as itseems and recruiting the right people is harderthan ever.

While it is true that the pool of active job seekersis much larger than it was this does not meanthat you will be attracting more applicants thatare right for you. In fact, for a variety of reasons,it may be more difficult to attract applicationsfrom the people you really want and moredifficult to spot them when they do respond toyour advertisements.

Some of the applications will come from totallyunsuitable people - some people will apply forany and every job. These are a nuisance, taketime to sift and when confronted with a hundredCV’s, 50% of which are irrelevant it is possible tomiss a real gem.

The next problem is that while there are manypotentially good applicants amongst the pool ofunemployed it is also true that most companieswill bend over backwards to find ways to hang onto their best people when faced with makingredundancies.

When the economic climate is good people donot give up a job until they have found a newone.

In times of economic difficulty people stoplooking for new jobs. The security of an existingemployer which is riding the economic stormsuccessfully is such that even exceptionally good

people looking to progress their careers will beless inclined to follow up new opportunities.They may withdraw their names from theagencies and be less inclined to respond to jobadvertisements that do come to their notice.

The overall result is that your advertisements arelikely to attract more responses from a generallylower quality pool of job seekers.

To paraphrase the RSPCA Christmas campaign “anew recruit is for life not just the immediatefuture!”

Because effective recruitment is such a keycomponent for building a successful organisationand because it is that much harder whenunemployment is rising we will be bringing you aseries of articles over the coming editions.

In the next edition we begin with “Defining theJob and developing the person specifications”and in future articles we will look at advertising,agencies, screening, interviewing andassessment days. We will also cover such thingsa remuneration and bonus schemes, inductionand training as well as looking at key legal issues.

Keith Atkinson is the owner of Market Focus aconsultancy specialising in corporatedevelopment.

www.marketfocus.biz

katkin@marketfocus.biz

Recruiting in a “Buyers Market” by Keith Atkinson

Insurance is, all too often, an after thought!Which doesn’t matter, until you need to make aclaim. If you’ve got it right you can deal withthe issue in a relaxed confident manner securein the knowledge that all will be well even if youare “somewhat stretched at the moment!”

If you’ve got it wrong then all the premiums youhave paid over the years will have been wastedand your business may even cease to exist.

1. Make sure that you are aware andunderstand the full range of Insurance coversavailable to you and how they are designed toprotect your business. Ensure that you knowand fully understand the Insurance covers thatyou currently hold and how they protectspecifically your business. Insurance Policies canvary considerably in the cover they provide andthe method of claims settlement. Does yours dowhat you expect it to do?

2. You should make sure that ALL your Businessactivities are insured under the Policy/Policiesthat you hold. Does the Policy “Tradedescription” accurately describe your FULLtrading activities? If you undertake work awayfrom your premises is this correctly coveredwith regard to Liability cover?

3. You should check that your sums insuredaccurately reflect the actual values at risk,especially if the policy provides for claims to besettled on a “Replacement as New” basis.Under Insurance can mean a proportionalreduction in claims settlement.

4. Loss of revenue following an insured loss caneasily cripple a Business and it is thereforeessential that the Business InterruptionInsurance be correctly arranged with regard tothe sum insured and also the period of

indemnity required following the loss. Delayscan occur with planning permission, installationof specialist machinery or your business may beseasonal.

5. The Liabilities of Businesses and the claimsmade against them are changing constantly andyou should ensure that your Liability Insurancesare adequate to protect you. Limits ofindemnity that may have been adequate 2-3years ago may no longer offer sufficientprotection. Also bear in mind that claimsagainst individual Directors & Officers of theCompany are on the increase and needseparate cover to be arranged.

6. Times of economic uncertainty create moreproblems that end up in litigation either asresult of contractual disputes, problems withpayments by customers or HR issues. LegalExpenses Insurance can save considerable timeand money in dealing with these issues. PolicyCovers and Terms and Conditions varyconsiderably & must ensure that youunderstand what you are buying.

Get the cover right first. Then think about theright premium!

Greenfield Insurance Serviceswww.greenfieldinsurance.co.uk

www.

Getting Insurance Right by Stephen Greenfield

On 6 April, Gordon Brown visited BuckinghamPalace to ask for the Queen’s permission to dis-solve Parliament, and a General Election datewas set for 6 May. The campaigns of the threemain parties got underway immediately, andthe debate has so far focused almost exclusivelyon the economy.

Most voters see the economy as the biggestchallenge facing the UK today, and as such itmay well be the issue that decides the election.

The main parties predictably disagree on how toguide the UK back to prosperity and reduce theUK’s record budget deficit.

Labour

Labour pledge to halve the deficit within 4years, and as part of this, plan to freeze or cutspending in all areas except ‘front line’ NHSservices and schools.

Labour’s tax policies include the new 50p rateof income tax, a pledge to keep the basic rate ofincome tax at 20p throughout the next Parlia-ment, increasing stamp duty on propertiesworth over £1m and giving an exemption forfirst time buyers of properties up to £250,000,raising National Insurance (see below), andfreezing inheritance tax thresholds for fouryears.

The Conservatives

The Conservatives pledge to eliminate ‘most’ ofthe deficit within 5 years, and say they will cutspending in all areas apart from health and for-eign aid, suggesting that there are significantsavings to be made by reducing the size of thepublic sector, and increasing efficiency.

Tory tax policies include reducing the main rateof Corporation Tax to 25%, scrapping Labour’sproposed NI increase (see below), and raisingthe Inheritance Tax threshold to £1m.

The Liberal Democrats

The Liberal Democrats’ economic theme is tomake the tax system ‘fairer’, increasing the levelat which people start paying tax to £10,000,

placing more of the tax burden on higher earn-ers, and cutting what they see as ‘lower priority’public spending, such as the Trident nuclearmissile programme.

An area of particularly intense debate in thecampaign so far has been Labour’s planned 1%rise in National Insurance from April 2011. TheConservatives say they will abolish the rise foreveryone earning less than £35,000 if they winthe election, arguing that an NI rise will hinderthe creation of jobs and thus harm economicrecovery. They point to support from prominentbusiness leaders to justify their position. Fund-ing for this, they say, will come from ‘efficiencysavings’ in the public sector, although Labourhave criticised this as not being properly costed.

Formal publication of the election manifestosare due in the next week, which will shed morelight on the plans of each party.

The Conservatives have seen their healthy leadin the polls whittled down to as little as fourpoints in recent weeks, and a hung Parliamentis currently the bookies’ favourite outcome.

However, with millions of voters still undecided,this is likely to be the closest and most hard-fought election battle in many years, and thetask of winning the public support on economicpolicy is likely to be the key to victory.

Jon Green is a partner in Lewis Brownlee Char-tered Accountants, based in Chichester, WestSussex.

jgreen@lewisbrownlee.co.uk

01243 782 423

Next month: tax considerations for purchasing

General Election 2010 – The Economic Debate- By Jon Green

Are You Planning AheadDIRECTORS are putting their ventures at risk byfailing to adopt long-term managerialstrategies, according to research by theChartered Management Institute.

The study revealed a discrepancy between theareas that were identified as potentialweaknesses and the strategies beingimplemented to overcome these.

Nearly two-thirds (60%) said skills and talentmanagement was the key challenge facingemployers but only 32% put ‘developing talent’down as a significant issue.

Similarly, with a failure rate of 74% for ITprojects, the number of respondents whothought that keeping abreast of technologicalchange was a priority was just 24% and only10% said effective use of IT andcommunications was a big challenge.

Other business priorities were protecting thecompany reputation (38%) and managing theimpact of regulation, cited by 35%.The findingsalso revealed a worrying level of over-confidence in UK companies, with only 38%claiming managing risks was important in thecurrent climate.

“Questions need to be asked about how UKorganisations will be able to manage in thefuture if they fail to address key operationalissues,” said Jo Causon, director, marketing andcorporate affairs at the CMI.

“Rather than simply focusing on ‘what shouldbe done today’, the inability to plan properlymight lead to questions of a more criticalnature: ‘what opportunities have I missed’ orworse, ‘how did the organisation not see thatcoming’.”

The research did find, however, thatorganisations see themselves as up to speedwhen it comes to monitoring the competition(with 70% answering positively) and 65% saidthey were effective in identifying changes insociety that could impact on the business. “In

the current economic environment the need forhigh levels of efficiency are all too apparent, soit is encouraging to see some positive signs,”said Causen.

“However, it is not an excuse to become toocomfortable with the situation as successdepends on the ‘principle of preparation’:namely the ability to juggle tasks, managechange and meet market expectations.”

Planning ahead is not simply a case of reflectingon what needs to be done but on visualisinghow the organisation will need to behave in twoor three years and then developing andimplementing plans to ensure it is capable ofdoing so.

Serious savings on Office SoftwareDoes your company use Microsoft Office? Yes!Why?

The answer is probably because you did notrealise there was an alternative or just forgot toask.

There is actually a very good alternative - OpenOffice. This program - or suite of programs -offers :

� Word Processor� Spreadsheet� Presentation� Drawing� Database

Completely compatible with MS Office andabsolutely free. Yes, you really did read thatcorrectly.

It is an “Open Source” project that has beenrunning for over 20 years bring out updatesregularly to take advantage of thedevelopments in technology rather than to gaina marketing benefit.

We will talk more about it in future editions butyou can learn more about it at :

Open Office

IN A CRISIS, they say, be aware of the danger— but recognise the opportunity.

This downturn, recession, depression or blip islike no other I have known. It is not by anymeans universal — neither by business sectornor geography.

I now have a list of over 30 business sectors thatare doing well — in some cases exceptionallywell — and over a dozen countries withsignificant GDP growth forecasts.

I simply can’t emphasise strongly enough that,unless we are in automotive, construction orreal estate, then almost certainly we remain incontrol of our own future — no-one else.Indeed, even in the automotive sector it is notuniversal gloom — I see that not only didVolkswagen have a record sales month inFebruary but that the German car industryoverall still expects to sell 200,000 more unitsthis year than last and further that Toyota hasactually increased sales in the US this year.

There are many growing markets like these withmoney to spend — target them!

I recently spoke to a group of business leadersin London and was emphasising the need,especially in these times, for businesses — allbusinesses — to be proactive in seeking out andconverting new customers — in other words,“prospecting”. A man came up to meafterwards and asked for clarification of what Iwas saying. He was, he said, the ManagingPartner of a legal practice with 15 partners andasked what I meant by “prospecting”.

“Seeking out new clients who have notpreviously used you”, I said.

“Oh”, he said “how?”.

“For example”, I said “do you ask for referrals?— do you ask each of your satisfied clients torecommend others to whom you could sell yourservices?”.

“That goes against the grain“, he said, “I’m notsure about that”, and walked away.

That Managing Partner is running a business —just like any other business — and whereas we

may have had the luxury in the past of newclients finding us, THAT TIME HAS GONE.

I believe that we must assume that the basicrules of business now apply to all businesses —we all need to seek out new customers, weneed to sell to them, we need to provideunrivalled products and services and we need totreat those customers like our life depends onthem — because it does!

None of this is rocket science or new, none of itis things we should have been doing anyway,but I do believe it’s going to be those businessesthat really get their act together that comethrough these times really humming.

There is a risk — a big risk — that the rest willfall by the wayside and I see no reason tomourn them. In addition to the business sectorsthat are growing, there are national marketsalso to consider. For example, the OECD saysthat Brazil will likely avoid recession completelyin 2009. Petrobras — its state oil company has afour-year $174bn expansion plan, whilstEmbraer remains one of the largest passengerjet makers in the world. Brazil is seen to haveoutperformed India and China and has a well-regulated banking system that is not exposed tosubprime. Go and sell to them.

There are other nations who are continuing togrow and invest — maybe not as fast asheretofore — but, nevertheless, at rates ofgrowth that are the envy of most other nations.Go and sell to them.

If we are running a business or are involved inrunning a business, I believe it is ourresponsibility to develop and implement agrowth strategy to ensure that our business andour employees thrive through these times.

That’s our job — now more than ever!

Don’t waste a good crisis

YOU’RE WALKING TO YOUR OFFICE and anemployee stops you to give you a rundown ofwhat’s happening:

“I made a phone call to Bill. He says that wecan’t get the project done until July 7, so I’mgoing to work on the Smith account, and afterlunch turn MY attention to the Lion account.“The newsletter project will be finished on June17 and, by the way, the copy machine is broken.Should 1 call a repairman?

” As you get to your office, another employeestops you to give a rundown of his situation.This lasts another three minutes.

Frustrating? You bet. And you wonder, whycan’t these employees take more responsibilityand not drop every detail of every project inyour lap?

Maybe it’s not them, but you. Maybe you arenot delegating effectively. Here are some keypoints to remember

Stress results, not detail.

Make it clear to your employees that you’remore concerned about the final outcome of allprojects, rather than the day-to-day details thataccompany them.

Don’t be sucked in by giving solutions toemployees’ problems.

When employees come to you with problems,they’re probably looking for you to solve them.Don’t. Teach them how to solve problemsthemselves. This, too, can be frustratingbecause it takes time. But in the long run, you’llsave yourself time and money.

Turn the questions around.

If an employee comes to you with a problem,ask him or her for possible solutions. If anemployee comes to you with a question, ask forpossible answers.

Establish measurable and concrete objectives.With all employees, make your objectives clear

and specific. Once this is done, employees willfeel more comfortable acting on their own.Think of this plan as a road map — and youremployees will, too.

Develop reporting systems. Get your feedbackfrom reporting systems: monthly reports,statistical data or samplings. Or consider weeklymeetings with employees.

Give strict and realistic deadlines.

If you don’t give clear deadlines, employeeswon’t feel accountable for the completion oftheir tasks.

Keep a delegation log.

When you delegate an assignment, jot it down.You’ll be able to monitor the progress anddiscipline employees when necessary.

Recognise the talents and personalities of youremployees.

Being a good delegator is like being a goodcoach of a sports team. You have to know whatprojects each employee can handle and whatprojects they can’t.

Nuero Linguistic Programming (NLP)Many of you will have never heard of NLP.Many of those who have heard mention of itwill probably think it is some “New Age” fadthat has no place in a business publication.They couldn’t be further from the truth! Manyof the worlds top performing companies haverecognised the contribution the techniques canbring to their performance while top athletesuse them to reach the pinnacle of their sport.NLP offers a range of techniques that providethe ability to:

� do whatever you already do reasonablywell, even better

Smart Management - The Art of Delegation

� acquire skills and attitudes to do what youcannot do right now, but would like to beable to do

� think more clearly

� communicate more effectively with others

� manage your thoughts, moods andbehaviours more effectively.

So what is NLP?

� NLP is a method of personal development -a tool for improving your own and others'performance

� It is also a model of effectivecommunication - a practical and pragmatic

collection of insights and methods that canenable you to improve how youcommunicate with yourself and others

� And it is a means of modelling - or creatingmodels of human behaviour in order toreplicate them.

Seem like mumbo-jumbo? Well, I have seen itwork in the most spectacular ways – and veryquickly.

I believe everyone in the business of managingpeople should at least have a look at it which iswhy I have asked Graham and Claire fromWhole Being to contribute a series of articles,the first of which you can read below.

I saw an email this week from Steve, a friendwho has just moved to live in an idyllic cottagewith an open fire overlooking a mountain inWales - "and it's all your fault !!!!" said theemail.

So I sat at my PC and I said to myself "What re-sponse do you want when you communicatewith somebody else?"

I had simply asked Steve "where do you  wantto be in five years time?"

He replied "I had never really thought about ituntil you asked me to imagine myself in thatplace, imagine the sounds the smell etc."  so Igot the response that I wanted as Steve de-scribed his dream home to me and now he's liv-ing there

So I decided that I will pick three opportunitieswhere you can use this pattern and start to askwell-targetted questions.

First sit in a room with a potential client, andstart to ask them "What will your sales team belike when they are performing at their best?"and secondly sit down to coach a colleague ask"How do you want to be six months from now?"and in relating closely to a partner ask "Wheredo you want to go for Christmas?".

I realised that it makes such a huge differencewhen I have an idea in advance of what re-sponse I want, so that I know what I'm lookingand listening out for.

Seems too obvious doesn't it.

Yet knowing what response you want and whatresponse the person that you are communicat-ing with wants is key to negotiating a win-winoutcome.

The starting point that I have found useful is toask yourself the question "what response do Iwant?"

Make a movie in your mind of what this willlook like, sound like and feel like and comparethis with the response you are getting and keepin mind the question "what can I do next?".

This will lead you in a direction of becomingmore flexible in your communicating as yourealise that you are getting the response thatyou want more of the time.

Find out more about NLP!

Visit www.wholebeing.co.uk

Neuro Linquistic Programming - continued

I’m to blame - again! By Graham Constantine

The Web offers unprecedented opportunitiesfor you to reach a wider potential customerbase than ever before. This does not howevermean that you can build a web site and expectthe world to beat a path to your door. Far toomany companies find somebody to build a website for them, put it on-line and then forgetabout it. A year later they review the resultsand some bright spark says “told you so, itwon’t work for us”.

It’s a bit like building a shop in the middle of awood where nobody goes and wondering why ithasn’t helped your sales. And believe me whenI tell you – being found amongst the 200 millionor so sites is about as unlikely as finding a nee-dle in a haystack

Web Marketing is part of your overall marketingstrategy and your web site is only one part ofthe web strategy.

For some reason many organisations,sometimes otherwise quite sophisticated ones,seem to forget the traditional approaches tomarketing when they come to develop theirweb sites.

Over the coming editions we will be looking athow to produce a web site that really is anasset. There really is quite a lot to understandand get right.

We will assume that you do have a clearmarketing strategy and you know how yourweb strategy will be a part of this. If youhaven’t produced such a strategy do notembark on web development!

There are many components to effective webmarketing including:

� Search Engine Optimisation(SEO)� Blogging� Discussion boards� Pay per Click advertising(PPC)� Banner advertising� Affiliate marketing� Social networking sites� Database Marketing� Extranets� Webcasts

We will look at all of these over the comingeditions. However, before we begin to considerthem you have one fundamental decision tomake.

Static or Dynamic Site?This is not a reference to the aesthetics of thesite but to the way it is rendered into a browsersuch as Internet Explorer.

Static sites are hard coded and if you want toadd a page or article you have to produce thecode (HTML) and upload it to the site.

Dynamic (sites with a Content ManagementSystem, CMS) sites are driven from a databasewhich holds the text and pictures. Initially, atemplate (or several templates) are produced.To make changes to the site no coding isrequired - you simply upload the new article viaa simple submission process.

These differences may seem unimportant untilyou appreciate the importance of regularupdating. Unless your site is new, up to dateand offering something new your customersand potential customers will not returnregularly to it. Probably more important is thefact that search engines will not rate it highly.

In addition if you are not changing it regularlyyou will not be availing yourself of one of theweb’s major advantages - the ability to test newapproaches in an inexpensive and quick way.

The advantages of a Dynamic site are that:

� You and your staff can update it yourselveswithout waiting for your web company.

� You can test new ideas quickly and easily� You can add offers and remove them at

will� You will not have to pay a web company to

make the changes.The decision is to us a “no brainer”. If you arestarting from scratch then go to a web companythat uses Dynamic CMS approaches. If yourweb company charges you for each change toyour site discus CMS systems with them.Next month we will look in more detail at CMS

Effective Web Marketing

So we had the absurd situation of demand andsupply of goods to consumers increasing whilemuch of industry ceased to invest because theyknew the economy was in decline. Crazy?

In addition many companies did not investbecause they would have to borrow to do soand the banks simply had no money.

So what is going to happen now?

The first and obvious effect is growth in thethree sectors that have been hit the hardest.Companies start to replace the vehicles,building projects will increase in pace and thebanks will show a return to profitability. Thislatter will not be difficult when you realise thatmany of their assets are in shares and shareprices have bounced back.

Other suppliers of capital goods and thosesupplying them will see an increase in sales.

The retail sector and those supplying it are notso fortunate. It may seem strange but retailsales have now started to decline. They beganto decline in November, almost at the pointthat the economy as a whole started to grow.In fact it is not so strange since much of thegrowth in retail spending over the last few yearshas been supported by the easy availability ofcredit.

But what about the credit crunch during the last18 months or so. Well it is true that the bankshad less money to offer but business as a wholesignificantly decreased its borrowings for capitalexpenditure and the banks were notenthusiastic to lend purely to resolve cash flowproblems, which was seen as risky. Which

Prepare for take-off - David WilloxIn this fairly lengthy article we examine theimplications of the economy moving out ofrecession sometime in December and considerhow you should respond to the challenges it willpose.

If you are happy to accept that:

� The retail sector will probably see a declinein the rate of growth and possibly an actualdecline in total demand growth

� There will be growth in most business tobusiness sectors

� There will be significant growth in theautomotive and construction sectors andthose that supply them

� There will be severe pressure on cash flowsupport from the banks but there will bemoney available for investment

then you can skip the next section - Respondingto the Challenge

Unfortunately the business world today is notquite as it seems.

We have just had a recession, but throughoutthat recession retail sales continued to grow.This is not supposed to happen!

If we are to understand the recovery we have tounderstand what happened to the economy inthe recession.

Total GDP fell but the amount people werebuying actually increased. In other words theeconomy was producing less in total but peoplewere buying more.

So where were the goods coming from?Importing? Unlikely since the pound declinedsharply in value making imports more expensivewhile companies were reducing prices in adiscounting frenzy. Actually, the total value ofimports declined by 17.5% from its high in 2008.

In fact, some sectors of the economy werecontinuing to grow strongly while others weresuffering very substantial declines. Threesectors in particular were hit; automotive,construction and banking. These had a knock oneffect in other supporting industries and manycompanies reduced capital expenditure.

means that they did actually have money tolend to individuals which grew by 0.9%.

Unfortunately, the effect of fewer people beingin work and the shorter working hours manycompanies have used to avoid redundancies isnow kicking in (we know the number ofunemployed has decreased but that is not thesame as an increase in the number of peopleactually working).

To summarise, retail demand is slackening if notdeclining, businesses see the headline GDPfigure rising so they will regain the enthusiasmfor investment in new plant. They will need toborrow for this from the banks reduced pool ofavailable funds.

This means that there will be less moneyavailable to support general cash flow demandsat a time when sales in many sectors will startto increase. Unfortunately, of course, any salesgrowth invariably puts pressure on cash flow.

In summary therefore:

� If you supply capital goods to otherbusinesses or are in the automotive orconstruction sectors - you are likely to seesignificant growth opportunities

� If you supply any goods or services to anyof these sectors you will see growth

� If you supply to the retail sector you maysee a decline in sales volumes

� Which ever sector you are in you will seepressure on your cash flow

Responding to the Challenge

The usual advice given by accountants and bankmanagers, when consulted on cash flow issues,is simply to chase creditors more zealously andseek extended credit terms. While I am all forgood credit control and seeking the bestpurchase terms you reasonably can, can youspot the fundamental flaw in the logic!

Industry, generally, is going to suffer from cashflow problems! Overall funds available toborrow have declined but we are trying to fundmore economic activity which means thatneither your suppliers nor your customers havethe money to extend credit or pay you morequickly.

So, if you are in one of the growth sectors, howdo you take advantage of the opportunitywithout running out of cash?

And is there a way of capitalising on othercompanies cash shortages?

The simple answer is yes, but you will have toexamine some sacred cows.

You appear to need more working capital. Anybusiness that is expanding sees an increase indebtors, needs more stock, more raw materials,has more work in progress (WIP) and thereforeneeds more cash to fund it all.

Or so the conventional wisdom goes!

But think of your business as a very large pipethrough which your working capital travels . Atthe moment this pipe has a certain diameterand length and therefore holds a certainamount of liquid (or working capital).

Suppose you could speed up the flow. Youcould then use a smaller diameter pipe but getthe same amount out at the other end. And ifyou did that you would have considerably lessliquid (working capital) tied up in the pipe.

This is not some pipe dream (forgive me) but isbased on something called the Theory ofConstraints which has been used by some of theworlds most successful companies.

They focus on accelerating the speed at whichwork passes through the entire process fromraw material to money back in the bank.

This has many implications but results in lowerWIP, less stock and, incidentally, smaller morefrequent deliveries to their customers whichbenefits the customers as well.

The consequence is less demand for workingcapital and lower borrowings.

If you are in manufacturing it almost invariablymeans smaller batch quantities for example.Intuitively, this implies higher costs. However,surprisingly this is, in reality, not the case andwe will explore this in depth in future articles.

Your focus should be on seeking ways to ensurethat individual pieces of work flow through theentire process as fast as possible.

Avoid the temptation to focus on reducingstocks, WIP and debtors. We want to focus onthe cause of these being high. If you do focus

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We only want you to pay for wines you love. Sowe will refund in full for the ones you don't.

And if you tell us which wines you did like wewill recommend new wines to you that weguarantee will blow your socks off.

We deliver next (business) day for £4.99. Mostof our competitors take about a week andcharge £6.99.

If you want to taste the wines before you buy,no problem. Sign up for one of our tastings.

And finally, we are called Naked because wehave nothing to hide. You can see exactly whatour customers think of the wines for yourself.

Naked Wines was set up, Rowan Gormley, and17 deranged and passionate friends (Rowan’swords - not the editors), who left sensible safejobs, slap bang in the middle of the biggestrecession since the Great Crash.

What's the big idea?

We set up Naked Wines because we could seeone thing about the wine business that neededto change. And that was this...most of theexpensive famous wines we were tasting weremediocre. And some of the unknownwinemakers were producing stunningwines...but nobody had ever heard of them.

The wine business is a bit like celebrity chefs.When you eat at a Gordon Ramsay restaurant,you don't get the great man cooking foryou....but you do pay for the name. So our ideawas to hire the people who actually do thecooking. Give them the finest ingredients - andsell them on to you without the huge celeb chefprice tag. The exact OPPOSITE of everyone else.

We don't just buy wines. We make themhappen.

Every talented winemaker wants to make winestheir way...without compromise. But to do thatsomeone needs to give them a break. Their first

on them you may achieve a short termimprovement but invariably they rise again asyou run out of a critical item, slowing theprocess down causing the other stores workingcapital to increase as well as increasing deliverytimes .

Whether you are a manufacturer, projectoriented, service or retail organisation there aresome very simple ways to examine how to

accelerate the business process - withoutinvesting money - and we will explore these infuture articles.

In the meantime remember:

Speed of the entire business process

Find out more from

Market Focus

Prepare for take-off - continued from previous page

Do try their wines - they really are prettygood - and they are a nice bunch of prople

The Editor