Archive
World Business Index
As regularly reported here. Here are the headlines from the latest edition http://www.bbc.co.uk/news/business-29813383
But for more detail and an often fascinating insight into each nation, this is the full report
Even better is this database search
Very useful
Tescos. It gets worse
Now under investigation from the serious fraud office. This certainly has been a horrible year for the fading supermarket giant but who feels any sympathy? They have frequently been regarded as bullies and not too many tears will be shed.
But the focus must also be strongly on their so called auditors, PWC. Equally culpable and many would say equally arrogant. A penalty should be paid
What should that be? In both cases, guilt, if proven should be met with a huge fine but I also believe that any audit firm that is complicit with false accounting designed to mislead the market should quite frankly have its licence suspended.
Targets
Although I focus less on credit collections these days, it is a still a core element of my consultancy. In fact I am due to see a new client tomorrow on this very issue.
One debate that crops up every now and again is the use of targets to motivate credit control and collections teams. You may assume that it is the perfect incentive but in truth the issue can be more complex
As so often is the case, there is a very good debate on this issue in the ICM linkedin group here
Dying Homebase
A quarter of Homebase stores are to close in the next four years. I sincerely hope my local branch is one of them. The “customer service” there is unbelievable. I will not bore you with the stories, but they give Dixons group a good run for the money
The staffing levels did remind me of the old joke…
If all the people in China stood in one line.. They still wouldnt open another counter at the post office
All this did lead me to wonder where Homebase stood in the market. The shopping experience there is invariably miserable so the urge to migrate to online is overwhelming. Supermarkets also dig into the bottom end of their market whereas specialist paint retailers and garden centres with staff who can be found and can string a sentence together, take the upper end
This does bring us back to credit assessment. Before even considering the figures, any underwriter or credit manager would do well to consider the debtors place in the market. Look at recent failures and a pattern emerges
And it is not just me that considers Homebase to be an awful store. They come near to bottom of a Which survey
http://www.which.co.uk/news/2014/05/the-uks-best-and-worst-shops-revealed-by-which-367358/
Marian Goodman. A beautiful new London Gallery
London is awash with galleries. For art lovers such as myself, we are spoilt for choice and it can be quite a challenge keeping in touch with everything you wish to see. Do we need more? Of course we do and additions such as the stunning new Marian Goodman gallery just off Golden Square in Soho are very welcome indeed
The current exhibition is later works by the great german artist Gerard Richter. You could not ask for a stronger opening.
The gallery is a very large space over two floors. The location is interesting because, somewhat surprisingly, Soho has relatively little gallery space. Similar scale galleries such as the White Cube, Victoria Miro and Gargosian are tucked away in Kings Cross and Bermondsey. Marian Goodman could hardly be more central and convenient
http://www.theguardian.com/artanddesign/2014/oct/12/marian-goodman-gallerist-golden-touch
The hidden benefits of a broker. But do they have these skills?
In the interests of market research I have posed as a potential borrower to a number of brokers, both online or offline. The reactions are interesting to say the least and whilst I will not comment directly on the frightening shortcomings and frankly dubious misrepresentations of some, it is fair to say I have found a couple of brokers ( both in the north of England) who’s approach was first class
So what sets apart a committed professional broker from the rest? Here are a few thoughts
– The broker will ring fence the client and will work for the client and only the client. No returned “favours” or reciprocal arrangements. The client has given the broker his trust and the broker must ring fence the arrangement.
– The broker will make every effort to understand the business. It is essential that a strong interest is taken and the clients business and there is a desire and dare I say, relish to do so
– The broker will within reason, always try to meet the client
– The broker will explore the full market. That is over 40 lenders.
– The broker will understand the debtors. Better still, they will have the knowledge to negotiate on the strength and weaknesses of the debtors. In my opinion, this is vital
– If invoice financing is not the right solution then the broker will say so
– The clients needs are paramount. Also their future plans are crucial. This is not about the here and now but about years down the line
And so on and so forth.
Ultimately you want the best for you and your clients. To put it rather strict and slightly legalistic soundng terms, failure to comply with the above does not deliver the best solution
China. Where next?
There has been a degree of focus on China in the last couple of weeks. The protests in Hong Kong continue and there has to be a suspicion that the Chinese authorities are looking at this situation with a great deal of unease. On a less elevated level but perhaps just as newsworthy to many, the Brazil Argentina match in Beijing was threatened by heavy smog. Not an ideal advert for the country
Hong Kong is interesting. Although assumed by many to now be very much part of China, culturally it is a very different place. They certainly see themselves as very separate from the “mainland” and this is especially so in business and the rule of law. My direct experience is that there is considerable contempt for the “mainlands” way of doing business
But what of the overall situation in China? This is a very illuminating article
http://www.theguardian.com/business/2014/oct/06/beware-chinese-slowdown-recession
Some interesting points as follows
But, in an economy where debt has exploded to more than 200% of GDP, it is not easy to rein in growth gradually without triggering widespread failure of ambitious investment projects. Even in China, where the government has deep pockets to cushion the fall, one Lehman Brothers-size bankruptcy could trigger a major panic.
And he makes an interesting point about electricity
So where is China’s economy now? Most evidence suggests it has slowed significantly. One striking fact is that annual growth in electricity demand has fallen sharply to below 4% for the first eight months of 2014, a level recorded previously only in the depths of the global financial crisis that erupted in 2008. For most of China’s modernisation drive, electricity consumption has grown faster than output, not slower.
But this is perhaps most significant
As China’s economy grows relative to those of its trading partners, the efficacy of its export-led growth model must inevitably fade. As a corollary, the returns on massive infrastructure investment, much of which is directed toward supporting export growth, must also fade.
A fallout from China would now greatly effect the world economy of course and there has to be great concern that with the official figures seemingly continuously massaged, the risk is higher than imagined
Which brings us back to Hong Kong and Beijing. The populace may well have grudgingly accepted the authoritarian and frankly corrupt leadership in return for increasing prosperity, but when pollution becomes unliveable and there is inpspiration from those that seek true democratic representation, who knows what the next step will be?
Interesting times
Angel Investors.
Whoever coined the term Angel Investor really should receive an award for the perfect PR. I am absolutely convinced that many businesses genuinely believe that angels fall out of the sky with barrowloads of banknotes simply to hand over to a start up with the proviso that you can “pay it back when you can”
Businesses that I have met have often asked about this option sometimes thinking that i might click my fingers and an angel would descend from the sky ready to fulfil every requirement
This is of course is far from being the case. The fact is that they have a genuine role with start up businesses but the returns required are often eye watering
Angel investments bear extremely high risks[17] and are usually subject to dilution from future investment rounds. As such, they require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least ten or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition. Current ‘best practices’ suggest that angels might do better setting their sights even higher, looking for companies that will have at least the potential to provide a 20x-30x return over a five- to seven-year holding period. After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones, however, the actual effective internal rate of return for a typical successful portfolio of angel investments is, in reality, typically as ‘low’ as 20–30%.[18] While the investor’s need for high rates of return on any given investment can thus make angel financing an expensive source of funds, cheaper sources of capital, such as bank financing, are usually not available for most early-stage ventures
Quoted from wikipedia
Many start up businesses believe that this is one of the only options available to them. This is not true and naturally this is leading to a plug for my own services..
Invoice financing is available for start ups. Many are surprised that this is the case but it is often forgotten that this form of financing is simply secured on the debtor books. Once you have the orders, you can borrow
The invoice financiers would not and should not call themselves angels but compared to the demands of an investor as well as the loss of control, it is certainly a far more cost effective kick start
The world economy. The ten biggest threats
If you can dare to look, here are the biggest threats to the continued economic recovery across the globe
Interesting observations from a journalist always worth following but I there is a slight feeling that the number ten was selected first and the “threats” subsequently. The possible oil spike doesn’t really make a lot of sense given that a very small proportion of the worlds oil is extracted in areas currently threatened by war and that on the other side of the coin, there is a glut. Also the “ageing population” issue is surely long term and gradual rather a sudden threat for 2015
Wonga. Losing the plot?
It has hardly been a good couple of weeks for this widely disliked lender and sympathy is in very short supply. However at the same time, it appears that their management has completely lost its way
http://www.bbc.co.uk/news/business-29530615
Their latest TV ad does not give the interest rate. This is apparently in contravention of ASA regulations.
I have some experience of this having worked for a number of years in advertising. My company dropped a clanger by producing ads for a client which claimed that tea had health benefits. This was unproven and extensive and substantial costs had to be written off. You could argue that that was a marginal mistake rather than an outright blunder but heads still rolled
Quite how, in the current climate, Wonga and their agency screwed this is up is hard to fathom.
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