Know What You Are

It is a common mistake in business. Having a quite different idea of what your business is, to that held by the most important people you deal with: your customers.

Borders failed because they neglected the core reason people walked through their doors: books.

Railtrack lost its way because it thought it was a property company and outsourced what should have been its core competence: managing the rail network to ensure safety and efficiency.

Eurostar has fallen on its face in public because it sees its core purpose as running trains back and forth. Its unhappy customers see it as a way of safely and quickly getting from A to B in comfort.

Over the past few days they would have settled for being put on a coach and then a ferry and conveyed not so quickly from A to B smothered with apologies and information but at least in moderate comfort.

Wouldn't have been so hard to organise were the top brass no so single mindedly obsessed with the damn tricky technical science stuff which is apparently more important that customer service and reputation!

If In Doubt, Act Like A Receiver

The recent demise of Borders UK brought back memories of February 2003 when our once parent Plc. went under and on the morning of Feb 6th a car rolled up the drive and out stepped "The Receiver".

Within a few hours many colleagues were heading in the opposite direction for the last time. The Receiver doesn't mess about.

He gets on with his job. No sentiment. No procrastination. No "well Janis has been with us a long time..." or "we need to get this low margin delivery out on time they are a long standing customer". It is black and white to The Receiver. He deals in quantum and maths.

The clue is in the name. He does not come to give but to receive.

In a time of crisis, turnaround and survival it is worth remembering his role and doing his work before he has to come and do it for you.

Every piece of resource that is not focused 100% on turning inventory and debtors into cash is resource you don't need in a crisis. Harsh but true.

OK. He has the advantage that all contracts are broken so he has more freedom of movement than you but my point is the principle. Stop giving. Stop spending. Focus on generating and receiving cash.

Everything on your premises is inventory. Anything not in current use can be sold. Even things that are in use can be sold. We sold two production lines within 9 months of acquiring what is now Severn Delta. Both had residual levels of business on them. Both unprofitable. Both we exited in a jiffy because the cash win from selling the asset was greater than the cash generation from crewing and running the lines.

Slash all discretionary spending. Stop cash flowing out. And of course get on the phone and hound every pound until it is paid on time or early.

We had one year where we pulled in several hundred thousand pounds early at our year end. Only took one person focusing on it.

This is not just a lesson for hard times. We have had a pretty good 2009 but a focus on cash is to the fore because we are investing in new manufacturing capacity and we want to be sure this does not exert unnecessary pressure on cash flow.

But if times are tough and your business is struggling my message is act like the receiver before once is appointed to do it for you.