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LadyEllen -> a letter from the world of small business (and a personal update) (2/15/2009 8:52:06 AM)
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Hi All
As some have noticed, I haven’t been posting of late – and I suspect I wont be able to for some time aside from now – a sleepy Sunday afternoon. Business is tough – my efforts have to be directed and focussed on survival and keeping the people we have in their jobs. We already had to let two people go in the last few months and personally I never want to have to do that again.
But for the first time in some months, I have a positive feeling about our chances of surviving through what has progressively become, according to our glorious leaders, a banking crisis, economic downturn, recession and just last week the worst depression in a hundred years.
Compared to the picture as it was at the start of February, this is a major change; back then we had found ourselves stymied in our plans by the general situation.
Main suppliers had withdrawn or curtailed supplies to us following the revocation or significant amendment to longstanding agreements they had with credit insurers on the credit they were extending to us – the banks wouldn’t provide insurance, and this seemingly became quite common for many of our competitors too. Whereas our business plan for 2009 involved the continuous supply of 25 vehicles from a half dozen suppliers, we found ourselves at the end of January with less than 10, from two suppliers. And this regardless of the fact that we had worked for five years with these suppliers, and never missed a payment due to them.
And then there was our own bank – one that had seen fit to give Bernie Madoff £600 million with what must have been no due diligence whatsoever given the scam he was operating, that could not be persuaded in any way whatever to provide as little as £20k to a longstanding customer, nor indeed to extend our, (also longstanding), invoice finance arrangements to cover the increasing number of Euro transactions that we have following the decline of Sterling as a result of their mishandling of the financial services upon which the government has since the early 1980s pledged the fortunes of the nation – and this considering that unlike with Mr Madoff, they knew aforehand the precise ins and outs of our accounts (never overdrawn) and our invoice finance handling (always balanced, never a problem).
And in addition of course a cashflow problem – no doubt arising from problems for our customers alike in nature and origin to the problems we were otherwise experiencing – ie, banks and other financial institutions withdrawing, denying and amending facilities that had functioned or could be assumed would function based on prior experience, without issue.
The only help we have had from outside sources has been the ability to pay our VAT (sales tax) bill over three months rather than all at once, despite the fine words from our Prime Minister about “strong action” and the “tough measures” mentioned by our Chancellor, on having the financial services sector use the huge taxpayer investments given to them to repair their bankrupt companies and promote the restoration of normal finance to business. Like everyone else I speak to, such finance is not happening for us; the government announce this scheme or that scheme – but when one looks into it the theme is always the same – one still has to deal with banks that have effectively shut down as regards providing finance to anyone that needs it even if they have a good business plan and prior record.
The whole problem could be summed up as a crisis of confidence – arising not from our conduct and practices, but from the conduct and practices of the UK financial sector – leading to a general lack of confidence in UK plc and the companies based here that rely on that confidence. The real kicker being that those who provoked this crisis are now compounding their contribution with a demonstration of lack of confidence in us, their customers.
So, what has occurred that might improve this dire situation such that I have more positive feelings about our prospects?
It boils down to this; that if the business fails, I lose everything. As an arthritic transsexual I stand no chance whatever of securing any other form of employment outside of my own business, still less of securing a form of employment whereby I might meet my personal obligations for mortgages and all that what with not having one of those oh so valuable university degrees that indicates the sort of ability required to hold a responsible office (such as running a multinational company for several years for instance) that pays over subsistence wage.
So, its “shit or bust” for me, and as it happens some of my employees feel the same in the current climate and short to medium outlook. As a result, we have each decided to put everything we have, into the business. A business with a strong brand, good business plan and excellent service that we all believe in and which we feel should be a survivor of the storm. Whilst the monetary investment that our people have committed is vital, what is just as valuable is the incredible degree of confidence in and commitment to the company that they have demonstrated.
It’s a gamble for all of us of course – but if we don’t gamble then we’re likely to lose out eventually anyway in the unemployment lines and small claims courts of the UK. By gambling, we at least have a reasonable chance of getting through and when the recovery comes, of achieving a return on our risk.
Consequent to this, we have secured the additional finance we need from within our own resources – our people. Absolutely zero assistance from banks and their ilk and none from our fine government regardless of their pledges of such, apart from spreading our VAT payments.
From this additional finance, we hope and trust to restore confidence in us on the part of our main suppliers and their credit insurers – and also, because there aren’t that many UK buyers of their services with such an established capital base as we shall have, to secure substantial discounts and more favourable terms with them as compared to others and to our previous arrangements. We also resolve our cashflow problems and show the banks that actually, their disinterest in meeting the obligations laid out to them by government on their receipt of taxpayer funds is fairly inconsequential to us – and from that, as was once common with banks and now seems to be the case again, to receive their interest in helping us - since we don’t actually need their help.
For me this means giving up 100% ownership of the company I founded five years ago – but it also means following a principle I have preached here on several occasions, that cooperatives are the way to go for business in these less than promising times and indeed into the future; cooperatives whereby, whether as partnerships or limited liability companies, the employees themselves own the business and are therefore committed to it, so eliminating industrial strife as a by product and so the need for unions and a confrontational approach in its personnel affairs. And in a lesson perhaps for our executive bankers, it also means replacing bonus schemes with dividends that pay out for success, rather than regardless of it.
And it also means making reference in many ways to lessons that I had ignored, these being that self-reliance, courage, perseverance, trust and friendship with one’s fellows as well as trust in oneself and their worth, are values that endure in their own right and help us to endure too. These are virtues made unpopular over the last three decades, and in executing this new plan I feel happy to have recalled and implemented them. And with these, alongside the discipline, industriousness and commitment to honourable conduct that have coloured our progress to date – and it must be said marked us out as unusual against a backdrop of taking the easy way on the low road, I trust that we shall prosper - and that should we be overwhelmed by circumstances not of our own making, that we shall have at least done our very best.
In the meantime, our customer list – one which for a small company is quite amazingly excellent – is very secure and varied, and the envy of many of our competitors large and small. Whilst automotives are down on the one hand, other customers are prospering on the other, having been contracted to renovate the facilities of leading retailers and factories during the downturn. Whilst the UK is suffering, our presence in other places in Europe means we don’t have to rely purely on traffic to and from our home base. Whilst others are exposed to a customer list of less reliable clientele that might lead to many bad debts, our customers are reliable and well established.
But things are still tough, and will remain tough for at least another year – probably longer. We will still have to be careful and pay attention to what we do and whom we do it for. However we have secured much better prospects and we move forward on a sound footing and with a positive outlook for the first time in many months that should we trust ensure our survival in the medium term and our success and prosperity into the future.
And as a result, I look forward to being able to resume my residency here at some time soon!
E
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