Well we now have our very own Social Enterprise 100 list. The RBS SE100 index is an interesting albeit controversial (in parts) ranking. I am very much a supporter of anything which raises the profile of social enterprise and this report is a major piece of work. Ranking anything is always going to cause debate and argument but the authors have done a good job in addressing as many variables as possible.
I look forward to seeing future SE100 lists and the rate of change within the organisations being ranked. I have a feeling that many of the stars of 2010 will disappear rapidly with the cuts in government spending. As an example the withdrawal of the Future Jobs Fund will adversely affect many of the high fliers in this years index.
What this report shows is how important social enterprise is to the country with the 350 businesses listed having a turnover of £812m. I am hoping that there are even more entrants next year and that this list becomes as important in our industry as the FTSE100.
Size is not everything as we know but with "impact rankings" alongside growth and size we can see a real pattern emerging of what the sector has to offer. For NWES it is interesting to note that we are ranked at 24 in the "BIG50".
What the sector needs to do now is to use this information in putting across our message. We still struggle to define ourselves and I for one hate "third sector" but perhaps this will begin to change perceptions.
So well done to RBS and if you want to read the report then access it via: www.socialenterpriselive.com/se100
Thursday, June 24, 2010
Thursday, June 17, 2010
So what next for Business Link?
A really interesting article appeared in the Sunday Times on 6 June 2010. This was an interview with Mark Prisk the small firms minister who began to expand on thoughts first raised in opposition. With the cost of BL estimated at £190m pa can there be significant savings? Well for me the answer is a resounding YES! We have a great opportunity to radically reform business support in this country and my ideas would save c75% of the current BL budget.
The changes which have been mooted to the BL structure are to be welcomed. We do have a good relationship with BL as their main deliverers but we are keen to provide start up support directly once more and return to the enterprising economy last seen some 25 years ago. We are clear in our vision which has been consistent for many years:
- Information can be provided via an improved (over the already good) BL national website. This should be the first point of call for information on a number of business related topics and can perform a similar role to that of the universally acclaimed BBC site. This can be administered nationally under contract to an experienced website company. The budget for this can be agreed but should not be more than say 3% of the current national BL funding of £190m
- Those businesses which have reached a certain stage in their development, say 3 years, should be in a position to source and pay for any business support required. There may be exceptions at key stages such as first export, where generic support can be provided via the BL website and dedicated country export counsellors available via telephone, but in general the rule should be to let the market determine the support required. The budget for this is unlikely to exceed say 5% of the current BL funding.
- Start up support is absolutely vital in an era where the job market is likely to remain depressed for some time. Whilst support for unemployed people will be dealt with under the DWP programmes there is still a need for help for those who wish to leave the world of paid employment and seek self employment. These people are important as they leave vacancies to be filled and will in turn create employment via their own businesses. This is one element often overlooked in “self employment programmes” that on average every business created with help from an enterprise agency such as NWES will in turn create 2 new jobs. Currently BL pays lip service to start up support with a very low percentage of their funding going to support start up business. We would strongly support a separate start up programme to be delivered directly by the enterprise agency network for any individual who is not covered by the DWP programme. This could be delivered for approximately 10% of the current BL budget.
- There is a place for a national “enterprise in education” programme which will stimulate young people to harness their latent enterprising talent. This would require much discussion to agree on an acceptable way forward but should be a consideration for implementation during the lifetime of a parliament. Using our own experience this can be delivered in all secondary schools across the country for 5% of the BL budget.
- Beyond this we would suggest that there is little that should remain from the current BL offer. Therefore there are potential savings of 75% of the £190m currently spent - £140m. In turn we believe that the offer will be more transparent, that there will be little mourning in the business community beyond those with a vested interest, the savings in administration cots and bureaucracy in organisations such as RDA’s, and BIS could in turn be added to the cost savings.
Radical perhaps but now is the time to be bold - its over to you minister!
The changes which have been mooted to the BL structure are to be welcomed. We do have a good relationship with BL as their main deliverers but we are keen to provide start up support directly once more and return to the enterprising economy last seen some 25 years ago. We are clear in our vision which has been consistent for many years:
- Information can be provided via an improved (over the already good) BL national website. This should be the first point of call for information on a number of business related topics and can perform a similar role to that of the universally acclaimed BBC site. This can be administered nationally under contract to an experienced website company. The budget for this can be agreed but should not be more than say 3% of the current national BL funding of £190m
- Those businesses which have reached a certain stage in their development, say 3 years, should be in a position to source and pay for any business support required. There may be exceptions at key stages such as first export, where generic support can be provided via the BL website and dedicated country export counsellors available via telephone, but in general the rule should be to let the market determine the support required. The budget for this is unlikely to exceed say 5% of the current BL funding.
- Start up support is absolutely vital in an era where the job market is likely to remain depressed for some time. Whilst support for unemployed people will be dealt with under the DWP programmes there is still a need for help for those who wish to leave the world of paid employment and seek self employment. These people are important as they leave vacancies to be filled and will in turn create employment via their own businesses. This is one element often overlooked in “self employment programmes” that on average every business created with help from an enterprise agency such as NWES will in turn create 2 new jobs. Currently BL pays lip service to start up support with a very low percentage of their funding going to support start up business. We would strongly support a separate start up programme to be delivered directly by the enterprise agency network for any individual who is not covered by the DWP programme. This could be delivered for approximately 10% of the current BL budget.
- There is a place for a national “enterprise in education” programme which will stimulate young people to harness their latent enterprising talent. This would require much discussion to agree on an acceptable way forward but should be a consideration for implementation during the lifetime of a parliament. Using our own experience this can be delivered in all secondary schools across the country for 5% of the BL budget.
- Beyond this we would suggest that there is little that should remain from the current BL offer. Therefore there are potential savings of 75% of the £190m currently spent - £140m. In turn we believe that the offer will be more transparent, that there will be little mourning in the business community beyond those with a vested interest, the savings in administration cots and bureaucracy in organisations such as RDA’s, and BIS could in turn be added to the cost savings.
Radical perhaps but now is the time to be bold - its over to you minister!
Thursday, June 10, 2010
Learning lessons from failures
The differing problems facing BP and BA set me thinking about how some household names were destroyed by a combination of lack of planning, staff unrest, poor strategy or marketing that went wrong. It is surprising how many examples there are when you start thinking about it. My list would include:
Ratners This must be the classic example of the wrong thing said at the wrong time to the wrong audience. Who could have guessed that a poor joke contained in a speech to the Institute of Directors in 1991 would bring down a high street giant? Cracks about a decanter being "total crap" and earrings lasting less time than an M&S prawn sandwich wiped £500m from the worth of Ratners. Where Ratners had previously cornered an important segment of the market at a stroke no-one wanted to be seen wearing their products and the company never recovered. Gerald Ratner has the dubious honour of being remembered as a man who destroyed a company rather than a great entrepreneur who built one. A lesson for everyone running a business not to dismiss your own product.
Enron A major player originally in the energy sector brought down by perhaps the worst case of corporate mismanagement ever seen. Diversification is generally a good thing but Enron moved into a huge range of sectors which it knew little about and then rather than managing it even with a modicum of ability it hid problems with a labyrinth of insider deals, associated companies etc and went from a $60billion company to bankruptcy in a heartbeat. This is a classic case of fraud, bad practice and incompetency which will hopefully never be repeated on this scale again.
DeLorean A favourite of mine because it exposed the soft underbelly of government support for big industry. Four years only 6000 cars sold and it went bust in spectacular fashion having consumed vast amounts of taxpayers money. Fraud was of course a major part of this but it should be a case study for any government looking to "bribe" companies to set up in a particular location.
Most dotcoms Our very own South Sea Bubble when the combined intelligence of the market was lost in a rush to enter a new unknown market. The number of massive failures is long but includes notable scalps such as Boo and Flooz. Technology advance is wonderful but normal investment rules should apply!
Hoover flights What idiot thought up the idea to give away a free gift worth more than the product being purchased - and worse what idiots agreed to run with it?! Spend a £100 on a Hoover and get a free flight anywhere in the world - it is thought to have cost the company £50m, its royal warrant and its independence. A juicy case of marketing gone mad.
Betamax I cannot decide if this is a technology or marketing failure. This was a product which was superior to its VHS competitor but lost out big time. Some say because VHS could record up to 4 hours on a tape whilst Betamax could only record 1 hour (a major flaw) whilst others accuse Sony of losing out to a worldwide marketing campaign. Either way Betamax is a footnote in technology advance but a good lesson that engineering on its own does not a good product make.
Swissair Perhaps the best case study there is about pursuing an overambitious expansion programme without due diligence. For 60 years one of the worlds best run airlines producing annual profits it embarked on an expansion programme (allegedly after advice from consultants) without targetting its takeovers and putting market share over profitability. It got the share but was saddled with huge losses and a lack of cash flow and within 10 years it folded.
There are many more examples but these should act as valuable lessons for businesses. I would like to think that we would see less failures as we go forward but I can spy the warning signs in several household names and expect to see a few more "staples" such as Woolworths disappearing from view over the coming years. Strategy and effective delivery is key and some companies suffer from a lack of both and will be found out.
Ratners This must be the classic example of the wrong thing said at the wrong time to the wrong audience. Who could have guessed that a poor joke contained in a speech to the Institute of Directors in 1991 would bring down a high street giant? Cracks about a decanter being "total crap" and earrings lasting less time than an M&S prawn sandwich wiped £500m from the worth of Ratners. Where Ratners had previously cornered an important segment of the market at a stroke no-one wanted to be seen wearing their products and the company never recovered. Gerald Ratner has the dubious honour of being remembered as a man who destroyed a company rather than a great entrepreneur who built one. A lesson for everyone running a business not to dismiss your own product.
Enron A major player originally in the energy sector brought down by perhaps the worst case of corporate mismanagement ever seen. Diversification is generally a good thing but Enron moved into a huge range of sectors which it knew little about and then rather than managing it even with a modicum of ability it hid problems with a labyrinth of insider deals, associated companies etc and went from a $60billion company to bankruptcy in a heartbeat. This is a classic case of fraud, bad practice and incompetency which will hopefully never be repeated on this scale again.
DeLorean A favourite of mine because it exposed the soft underbelly of government support for big industry. Four years only 6000 cars sold and it went bust in spectacular fashion having consumed vast amounts of taxpayers money. Fraud was of course a major part of this but it should be a case study for any government looking to "bribe" companies to set up in a particular location.
Most dotcoms Our very own South Sea Bubble when the combined intelligence of the market was lost in a rush to enter a new unknown market. The number of massive failures is long but includes notable scalps such as Boo and Flooz. Technology advance is wonderful but normal investment rules should apply!
Hoover flights What idiot thought up the idea to give away a free gift worth more than the product being purchased - and worse what idiots agreed to run with it?! Spend a £100 on a Hoover and get a free flight anywhere in the world - it is thought to have cost the company £50m, its royal warrant and its independence. A juicy case of marketing gone mad.
Betamax I cannot decide if this is a technology or marketing failure. This was a product which was superior to its VHS competitor but lost out big time. Some say because VHS could record up to 4 hours on a tape whilst Betamax could only record 1 hour (a major flaw) whilst others accuse Sony of losing out to a worldwide marketing campaign. Either way Betamax is a footnote in technology advance but a good lesson that engineering on its own does not a good product make.
Swissair Perhaps the best case study there is about pursuing an overambitious expansion programme without due diligence. For 60 years one of the worlds best run airlines producing annual profits it embarked on an expansion programme (allegedly after advice from consultants) without targetting its takeovers and putting market share over profitability. It got the share but was saddled with huge losses and a lack of cash flow and within 10 years it folded.
There are many more examples but these should act as valuable lessons for businesses. I would like to think that we would see less failures as we go forward but I can spy the warning signs in several household names and expect to see a few more "staples" such as Woolworths disappearing from view over the coming years. Strategy and effective delivery is key and some companies suffer from a lack of both and will be found out.
Wednesday, June 9, 2010
Getting paid during the tough times
As I have mentioned before cash flow is the most vital component of any successful business. The day that the cash dries up is the day your business folds. With many companies pushing credit as far as they can what can you do to minimise the effect on your business? Here are a few of my tips to consider:
1. Raise payment terms at the point of sale not at the bottom of the first invoice. It is a common misconception that this may mean you lose the sale. I would argue that only poor payers will be frightened off and you can do without those types of customer. So play to their integrity and explain that you operate on fair trading terms - you will be surprised at how many people will agree with you.
2. Where possible get payment in advance. I would suggest wording such as " We never ask our good customers to subsidise the few customers who abuse credit terms by not paying on time. As a result we ask that payment is made when the work is started/goods are delivered etc
3. Offer huge settlement discounts! Take a tip from some of the major retailers. If your target price is £250 then price it at £350 and offer £100 off for payment within 7 days - it works.
4. People pay people they like. Just as the adage that people do business with people they like the same goes for payment. So be approachable, pleasant, deal face to face or phone not by letter, appeal to their fairness, thank people for payment and dont threaten unless you intend to follow it up!
5.Give prompt payers an "added extra". Low cost giveaways such as an upgrade, next day delivery, extended warranty, discount on next order, priority etc
6.Payment is not just the job of the finance team. Use your whole team and exploit their contact with customers. Reward your team and make it into a fun team event.
7. Hold a prize draw. as an example put all prompt payers into a monthly draw with say a meal, champagne or vouchers for the winners. At £100 a month it costs £1200pa - good value for increased cash flow.
8. Ensure your systems are in place. So that you invoice promptly, chase when due and follow up promptly - you will be paid promptly!
9. Offer finance for your customers. Work with your bank and you may even make money out of it. Just think car dealers, golf clubs, electronic stores etc.
10. Be bold. Generally if you do not ask you do not get - so be bold and ask/insist on your terms. A sale is only a sale when you are paid - never forget that.
1. Raise payment terms at the point of sale not at the bottom of the first invoice. It is a common misconception that this may mean you lose the sale. I would argue that only poor payers will be frightened off and you can do without those types of customer. So play to their integrity and explain that you operate on fair trading terms - you will be surprised at how many people will agree with you.
2. Where possible get payment in advance. I would suggest wording such as " We never ask our good customers to subsidise the few customers who abuse credit terms by not paying on time. As a result we ask that payment is made when the work is started/goods are delivered etc
3. Offer huge settlement discounts! Take a tip from some of the major retailers. If your target price is £250 then price it at £350 and offer £100 off for payment within 7 days - it works.
4. People pay people they like. Just as the adage that people do business with people they like the same goes for payment. So be approachable, pleasant, deal face to face or phone not by letter, appeal to their fairness, thank people for payment and dont threaten unless you intend to follow it up!
5.Give prompt payers an "added extra". Low cost giveaways such as an upgrade, next day delivery, extended warranty, discount on next order, priority etc
6.Payment is not just the job of the finance team. Use your whole team and exploit their contact with customers. Reward your team and make it into a fun team event.
7. Hold a prize draw. as an example put all prompt payers into a monthly draw with say a meal, champagne or vouchers for the winners. At £100 a month it costs £1200pa - good value for increased cash flow.
8. Ensure your systems are in place. So that you invoice promptly, chase when due and follow up promptly - you will be paid promptly!
9. Offer finance for your customers. Work with your bank and you may even make money out of it. Just think car dealers, golf clubs, electronic stores etc.
10. Be bold. Generally if you do not ask you do not get - so be bold and ask/insist on your terms. A sale is only a sale when you are paid - never forget that.
Monday, June 7, 2010
The new New Deal?
I attended a “meet the ministers” event in London for New Deal suppliers on 2 June 2010. The event was hosted by DWP with Chris Grayling and Lord Freud. In general the message was that there will be rapid changes and they want to build on the best but free providers to get on with the job. In the new scheme the government is looking to transform welfare to work and any new system will be providers paid on results – not for “inputs”. It is likely that there will be a single scheme instead of the myriad of special programmes currently seen and the volumes going through are likely to be much higher as claimants are moved from IB onto JSA.
The message was clear that this is not a rebranding but a radical transformation. The government is clear that intensive provision is not a role for government and should be provided by the private/third sector. It is likely that clients will come with different amounts attached to their heads with the “hardest to help” coming with the most money. Providers will then be free to deliver whatever is required to get these people into work. This could include confidence building etc along with direct work related activities. The government is clear that the idea is to get people into work and not a job i.e. as long as they are off the register that is fine and for instance they could become a temp moving from role to role rather than staying in one job. Providers will be paid on sustainable work so the claimant would have to be off the register for an agreed period e.g. 2/3 years.
This system means that providers need a strong capital base as payments could be 12 months+ down the line. By strong capital base the indication was “needing city help” i.e. £100m+. Companies will need scale and “rich” coalitions are encouraged with multiple disciplines aligned with good management, innovation and creativity. Changes will be made in days and weeks not months and we can expect to receive individual communication soon regarding what is happening to current provision and expect more details in 4-6 weeks on the new programme.
In answer to some questions:
- Is FND2 dropped? No decision today but preparation work will not be wasted
- What will be the geographical contracting areas? Not yet decided but hints as to FND1&2 areas. Not looking to shake up unnecessarily
- What is the role of the 3rd sector? Want to see 3rd sector involved at highest levels but capital may be a problem
- Will the risk be put down to the smaller players? It is the job of the prime contractor to fund the contract!!!
- What happens re the benefit trap? Claimants will be better off working with hints that 55% taper rate on benefits e.g. claimants will keep 55p of every £ earned.
- Is the government still committed to Work for Yourself? Yes!
All "good stuff" so far then and little to argue with. However as with any government programme the devil is in the detail and I do have some queries, concerns and questions which need to be answered. In particular:
- Safeguards that the small and medium sized members of the coalition will not be squeezed by the prime contractor - the "Tesco effect" - risk needs to be equally shared and not passed down to the end deliverer
- A maximum amount that prime contractors can "cream" from the contract
- Where contractors do not deliver then they cannot simply bid and win another contract without previous performance taken into account
- Weighting given to consortia including the third sector
- Work for Yourself kept as a separate contract as it is not about employment and needs a specialist approach
- Clarity over contract areas - not too big or local provision disappears and a lowest common denominator approach prevails
So we can all look forward to more detail coming soon and I am sure that we can expect some radical changes - I certainly hope so!
The message was clear that this is not a rebranding but a radical transformation. The government is clear that intensive provision is not a role for government and should be provided by the private/third sector. It is likely that clients will come with different amounts attached to their heads with the “hardest to help” coming with the most money. Providers will then be free to deliver whatever is required to get these people into work. This could include confidence building etc along with direct work related activities. The government is clear that the idea is to get people into work and not a job i.e. as long as they are off the register that is fine and for instance they could become a temp moving from role to role rather than staying in one job. Providers will be paid on sustainable work so the claimant would have to be off the register for an agreed period e.g. 2/3 years.
This system means that providers need a strong capital base as payments could be 12 months+ down the line. By strong capital base the indication was “needing city help” i.e. £100m+. Companies will need scale and “rich” coalitions are encouraged with multiple disciplines aligned with good management, innovation and creativity. Changes will be made in days and weeks not months and we can expect to receive individual communication soon regarding what is happening to current provision and expect more details in 4-6 weeks on the new programme.
In answer to some questions:
- Is FND2 dropped? No decision today but preparation work will not be wasted
- What will be the geographical contracting areas? Not yet decided but hints as to FND1&2 areas. Not looking to shake up unnecessarily
- What is the role of the 3rd sector? Want to see 3rd sector involved at highest levels but capital may be a problem
- Will the risk be put down to the smaller players? It is the job of the prime contractor to fund the contract!!!
- What happens re the benefit trap? Claimants will be better off working with hints that 55% taper rate on benefits e.g. claimants will keep 55p of every £ earned.
- Is the government still committed to Work for Yourself? Yes!
All "good stuff" so far then and little to argue with. However as with any government programme the devil is in the detail and I do have some queries, concerns and questions which need to be answered. In particular:
- Safeguards that the small and medium sized members of the coalition will not be squeezed by the prime contractor - the "Tesco effect" - risk needs to be equally shared and not passed down to the end deliverer
- A maximum amount that prime contractors can "cream" from the contract
- Where contractors do not deliver then they cannot simply bid and win another contract without previous performance taken into account
- Weighting given to consortia including the third sector
- Work for Yourself kept as a separate contract as it is not about employment and needs a specialist approach
- Clarity over contract areas - not too big or local provision disappears and a lowest common denominator approach prevails
So we can all look forward to more detail coming soon and I am sure that we can expect some radical changes - I certainly hope so!
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