Opening the Chamber of opportunities….

I am writing this from a meeting room overlooking the lake of Zürich. Last night I enjoyed an aperitif from a 5^th floor restaurant overlooking this picturesque Swiss city, enjoying some splendid views before listening to a quality speech from former EU trade commissioner Lord Brittan, somebody who clearly knows what he is talking about when it comes to international business. It’s a tough life.

It actually could have been a really tough life. Trying something new is always a leap of faith. It involves an element of risk and moving out of your comfort zone. Without forethought and planning it may be a disaster. Even with planning and help there is no certainty of success. For me, as a naturally cautious accountant, trying to promote our outsourced FD/CFO offering in a new market was potentially a daunting task.

Fortunately I had some excellent help from the British Swiss Chamber of Commerce (BSCC) and the team based in Zürich. Aside from organising a great event, they furnished me with contacts and introductions, and allowed me to use their office to work in when I had some spare time. Their encouragement to visit Zürich for the AGM, at which Lord Brittan was the keynote speaker, was a real spur to get me to move my Swiss project forward.

The whole experience brought to mind another recent meeting at Canary Wharf (again with panoramic view – if I was a photographer this would be a great job) as part of my involvement in the London Local Chambers initiative. This is aimed at publicising the existence of the 20 plus locally based chambers of commerce within greater London, chambers that have a real feel for local business opportunities, and which offer good local contacts as well as engagement with local government on business issues.

People often see chambers of commerce as networking organisations, there purely to provide sales opportunities. However their real value is more than being a good way of building contacts and relationships that may develop into opportunities in the future. They can also provide an opportunity to contribute to a wider movement dedicated to increasing business and trading opportunities for everybody, particularly on the international side. This mixture of international and local knowledge and presence is a major reason why well run chambers continue to be the first port of call for organisations looking to develop new markets.

Was it worth the visit? Ah that would be telling, but there is a clue in the fact that I am really glad that I took the opportunity of visiting Switzerland for the BSCC AGM. You have to take a chance if you want to develop something new. However moving out of your comfort zone does not mean you have to take silly risks. There is a lot of help available and existing networks to work with. These are clearly no guarantee of success, but they make it a lot more fun trying, and who knows where it will lead to one day.

Growth through Dividends……

Dividends are the forgotten element of successful investing. Like the proverbial Aunt Sally, they are often derided as unimportant. Capital gains are much sexier, the stuff that creates the wealth of dreams. They of course enable investors to ride off into the sunset to enjoy their remaining years, or not, as the case may be.

And yet surely some cash in the hand has to carry some value? There are so many tales of the destruction of the share price by ambitious “highly incentivised” executives that a promise of jam tomorrow should be treated with a healthy degree of scepticism. Certainly equity income funds are quite popular in some quarters at present. However I leave it to my Enterprise Britain colleagues John Greengrass and Jon Levinson to comment on how dividends affect investor sentiment in the wider economy and markets.

My own focus is dividends in smaller, primarily owner managed, businesses. Even here there is an element of misunderstanding as to the real value of dividends. They are either dismissed in entrepreneurial circles as starving the business of investment cash or they are promoted by accountants as being a tax effective way to extract income from the business, always assuming that distributable profits are available to cover such income.

(A brief word of warning here. It is amazing how often businesses that pay regular dividends in lieu of salary forget this basic principal and end up paying them illegally. If you have been advised to take out regular dividends make sure you prepare some management accounts to ensure you are making enough post tax profit to justify your dividend.)

And yet regular dividend payments from sustainable business revenues are normally a good sign of a healthy business. A genuine dividend payment requires profits and cash. Old fashioned concepts I know, particularly in a world where business social networking site LinkedIn can be valued at 25 times its sales revenues (that is sales not profits). However as a route to future growth and wealth they are concepts that are hard to beat.

I am certainly not advocating that dividends should be paid regardless of the cash needs of the business. However I do think that when businesses are planning for future growth, either for their existing owner managers, or to attract new investors, a little thought as to how much of the return will come from regular cash dividends could pay ..er.. dividends.

Falling on one’s sword……

An interesting poser for Nick Clegg after last week’s election debacle. At what stage does he chuck it all in? Not only has he presided over the biggest electoral defeat in the modern history of the Liberal Democrats, and suffered a severe blow to his reputation and credibility, but he has also probably seen the issue that is most dear to his supporters’ hearts, electoral reform, kicked into touch for the foreseeable future. On this basis there could be a strong argument for him standing down and letting someone else take over.

Of course politics is not like the real world. Or is it? There is much discussion in business and in politics about doing the decent thing and resigning over poor performance. People must be held accountable. Barely a week goes by without somebody calling for the head of this business or that or organisation, or, more commonly, the minister for a poorly performing department.

Accountability may sound good in theory but is very difficult in practice. At one extreme you have football managers for whom a run of bad results will probably result in the sack even if it is the fault of the players or the board. At the other end of the scale you have time serving civil servants who will probably never be dismissed however poor their performance or disastrous their decision making. In between there are varying degrees of culpability and a sufficient number of grey areas to make a “should they stay or should they go” decision extremely difficult to make.

And where does that leave the average business owner in Enterprise Britain? Ok were they to make mistakes of the magnitude of their bigger rivals they would probably not be in business anyway. But if they do survive, well, what then? Resigning is clearly not a viable way out as it is likely that that the business would fold anyway. They often have to plough on best they can, putting it all behind them and making the most of what they can salvage from their situation.

Failure is still a cultural issue in UK society. We are not allowed to admit to it. We are expected to take responsibility for it. We are very rarely permitted to learn from it. Is it any surprise that in many cases people chose to cover it up or deny that it even happened?
And yet failure is often a precursor to success. It is only by trying things out and making mistakes that we often stumble upon what works. As long as it is not the result of recklessness or incompetence failure can be a valuable lesson that is then used to create something really successful.

There is no easy answer as to whether failure should result in instant dismissal or a second chance. It is often down to whether there is another option, whether the lessons have been learned or whether the individual concerned is capable of turning the situation around. In the case of Nick Clegg, dear reader, I’ll leave it to you to decide….

The real value of time….

Back to work after yet another holiday weekend. Actually what am I saying? There is no back to work about it as I had to do some work over the holiday weekend. Well that’s what happens when you have your own business and you don’t get paid holidays. You have to make the most of the days that the rest of the country is working to get your billable days in.

April has been a month where maximising income has had to be squeezed into the reduced number of working days within the month. Admin, marketing, business development, CPD etc. has had to be done outside of these days. Such is my life, although please don’t shed any tears for me, as this is what I have chosen to do in order to be able to provide the best value service to clients and the best lifestyle for my family.

It is an ongoing challenge for all time based businesses to maximise income and yet still allow time for the work that needs to be done on the business. Many do have to use “spare time” to catch up. If you are an owner or a partner this effectively means your own time, or more frequently you family’s time.

It can be argued that maximising income does sometimes come at a personal cost. However professional services organisations often fall into the trap of seeing cost in their own terms and not their client’s. They are sometimes so focussed on maximising billings that they forget that this is a cost to their clients, a cost for which the client expects to receive value.

It is therefore important to put yourself in your client’s shoes. How does the work you have been doing look in their eyes? Yes you may have done the time but have you created the value? It is an approach that has served me well and keeps me on my toes when carrying out assignments.

Of course the logical extension of this is employees, especially senior executives, should also start to think in terms of the value that they add rather than the salary and benefits they receive. So many executives negotiate high packages because they believe they are worth it. They are very rarely called to account in the same way external consultants can be over the value they create.

The value mindset is critical for a successful professional, particularly in these challenging times. Regardless of how many hours are worked or billed clients have to be happy with the end result. Something to keep in mind when the next bank holiday comes around perhaps?