LadyEllen
Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline
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Hi All
This is the second of my “diary entries”, following up on my post of a couple of weeks ago on the continuing story of the, (to put it romantically), valiant struggle of a UK small business for survival against a tide of economic adversity. Less romantically, a description of the latest few bucketfuls of shit bailed out from a sinking boat which is half way up a creek in a hurricane, absent its means of mobility.
When our Prime Minister promised that VAT (sales tax) liabilities could be spread over three months, rather than having to be paid (a quarter at a time), all in one go, this came as something of a relief for us. Whilst we were and remain solvent, cash flow (the means of being of the small business) has slowed down, making things difficult. Spreading that particular bill is a huge help – possibly the only thing we have seen in the well-announced package of “strong action” that has been of any benefit to us.
So imagine our surprise (to put it politely) to receive a letter today, telling us that we are in line to receive a penalty for not paying our VAT liability on time. Such penalties being often accompanied by full VAT audits (at our expense of course) which totally disrupt everything, my reaction was doubly colourful. So I called the helpline, to be told after a prolonged delay in getting through, that this was an automatically dispatched letter and that they couldn’t do anything to stop them going out and that we shouldn’t worry about it. The prolonged delay in getting through to someone was apparently due to thousands of other companies receiving the same sort of letter and those business owners and directors that had not suffered a heart attack or similar, then jamming the phone lines. “Joined up government” must be a phrase I imagined rather than it having been said by anyone at Westminster.
Meanwhile, our bank continues as helpful as ever. One would think that having withdrawn sponsorship of numerous sports (which as everyone knows is a core banking activity) they might have some money with which to help us out, but of course no. Instead of helping out, they instead called us to tell us that they’d be withdrawing what support we have retained, unless we pay it back quicker, and oh by the way your rate has gone up regardless of the contractual agreement we have about so much above base rate and all that. Given that they’ve had all the tax I ever paid and will ever pay, as well as my kids’ and possibly grand kids’ taxes as well, one might have thought they might take a different tack. Silly me.
More positively, by means of all manner of wheeling and dealing, I managed to meet around 75% of the bills for the month, including those bills still hanging over from 2008; quite why some suppliers are allowing us so much time to pay – mainly by simply not asking us to pay as no one has asked for extra time, is a mystery, but we’re happy to go with it. It doesn’t sound too great, not meeting all your liabilities on time, but 75% is pretty damned good in the circumstances, and the rest we should get round to by mid March; sooner if we can get our capital injection in soon. It would seem that customers believe we have now started a bank from which they can acquire long term credit funding – but then we’re guilty in turn of the same thing in relation to our suppliers – one has no choice, cant pay out if there’s nothing left to pay out. Maybe we should go down that route and charge credit card rates on late debt…….just make the minimum payment m’dear, and we’ll be rich – rich as bankers, in no time.
And there’s another thing. Thanks to anti-laundering rules from the FSA – you know, those wise and illustrious monitors of the financial sector that did a great job with the banks et al – we’re having hellish problems trying to get our capital injection sorted out. Apparently, the money we’re putting in must be the proceeds of drug dealing, arms trading, counterfeiting or something of that ilk and its not that they have to prove it to be so, but that we have to prove that its not – an interesting problem, proving a negative. It’s a shame the FSA don’t do such a good job on all this as they did with controlling bankers – it would make life so much easier, and what with the above nefarious activities likely representing the only areas of economic growth for the coming decade it seems counter intuitive to continue with such controls.
On the supplier front, things have improved no end for us. In my previous missive, we were having problems retaining supply – no more. It would seem that the situation in eastern Europe is even worse than here. Suppliers that had told us in no uncertain terms that they could no longer supply us, have been on the phone asking to supply us again, and even more than that offering prices reduced by 20% from what they were in November. Some of that reduced cost will represent extra margin for us, but most of it will go into price reductions to customers in order to retain their business as competitors do likewise. As an opening for negotiation, “we are having big economic problems in Hungary” as said to me by one supplier, is likely not a good position to adopt, but by this stage its fairly pointless for anyone to pretend things are other than grim and work in reality not aspiration.
We shall see how things develop – having spent three years making the company a premium quality provider its not easy to chase the market but we have to, to some extent. With automotive companies opening and closing factories on an ad hoc basis and that representing a lot of our business, we have to adapt. And adapt we shall.
And a big part of that adaptation is happening on 9th March, when we open a new business specialising in discount provision, catering to the lower end of the market as was and the main part of the market as things are becoming. Aside from giving us the ability to chase the market without affecting our main company in the process, potentially doubling the amount of business we do and giving us two chances at every enquiry, one high and one low, this has other potential benefits, some of which we have seen already in that this new company with no trading history has a better credit report than our five year old company; no information is apparently better than a good record.
But the main benefit is that we shall be able to secure finance for this new company in a way that has proven impossible to acquire for the other company. Notably, finance for our Euro transactions which now represent half our sales ledger since the Pound has tanked, will be possible to acquire, easing cash-flow all round for the “group”. Our current bank won’t provide this but this new company opens up all manner of new avenues to resolve that without their involvement.
And of course, if the old company goes down, we have a new boat, equipped with paddles and still in the calm and quiet estuary, into which we can evacuate. This would naturally leave suppliers in the lurch, unpaid and in trouble. That isn’t something I take lightly and isn’t something I want to do at all. But what this experience to date has shown me is that ultimately there is only one person you have to look out for, and that’s yourself - and that no one looks out for number one quite like you do yourself. And on top of that, as my soon to be fellow director has always maintained, “do unto others as they do unto you; just make sure you do it to them first”.
Harsh times, harsh thoughts; but in the final analysis all philanthropy fails and I’m afraid me and mine come first – mainly mine rather than me but I’m key to the fate of mine - even if that is at the expense of others. By adopting such attitudes now, I can hopefully avoid the day when that final analysis becomes present reality.
I have a feeling that by the end of all this, very many will have changed their philosophies on life greatly, one way or another.
E
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In a test against the leading brand, 9 out of 10 participants couldnt tell the difference. Dumbasses.
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chapter 2; struggling against the tide - 
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