Category: General

Just trying to make a difference

This article was written by Stuart Arderne, like me an Old Selbornian. There is something about the school and the philosophies it instilled in us for life because I associate with all the comments in this article.  I hardly knew Stuart at school, we were in different classes taking different subject and only really got to know about him through my brother when they were Articled Clerks together. However having re-acquainted at a school reunion in 2008 I wished I had got to know him a bit bitter when we were younger, because he is the person he portrays in this article.

The comments made about the general business world are generalisations, but sadly everything is becoming so generalised in life that individuality is dying out. Nothing is judged on its merits and benefit to society; they are judged on as Stuart writes intangible factors and effective greed. Its sad. The article is also two parts as the second part is effectively a business plan to stand out from the crowd of generalised business support. Its where I pitch myself, just not as a Financial Director but more broad commercial support. I wish Stuart well in this venture.

Have a read of this article its fascinating and depressing at the same time, because its true.

I was brought up with old school values, attended a traditional, old school that entrenched those and surround myself with friends that subscribe to a similar philosophy. I believe in respect and dignity, and that no person is better than someone else, because of their station in life or material possessions. Every person is fighting their own struggles and their own demons…. I believe we should go through life touching other people’s lives and making every attempt we can to enrich and make their lives just that little bit better than it was before they knew us, even if that is done by something as simple as eliciting a smile. These are valuable life lessons my father taught me, my school taught me, and a few key business people I have met through my life’s journey thus far.

Sadly, though, this does not appear to be a sentiment commonly share by the business community today. Don’t get me wrong, I intend this as a very broad generalisation –  there are any number of good honorable businessmen out there still, but I believe these principles are being pressured and reassessed on a daily basis in order to survive, and if at possible, to thrive. Business has become about operating in the grey areas, no longer about black and white, right or wrong. A reflection of societies overarching moral decay? It seems that there is almost an underlying unwritten maxim that in order to succeed one should screw one’s customers wherever possible, screw one’s staff as best you can with inane and unbelievable hard luck stories and screw your suppliers the hardest of all.

How did we get here? When did the values of common decency take a back seat to a quick buck? When did the compassion and caring for a small business owners ability to put food on his children’s table get superseded by the need for another luxury car, or third holiday home? When did we allow cold hard numbers to replace the founding tenet of business, which was developing a trusting and long term relationship? In fact, who really cares when it went wrong, should the better question not be what can we do to make things happen the right way again? To me it all revolves around a single word: respect.

As noted above, I have met some business leaders that have shaped my commercial leanings and philosophies over my career, some in a positive way, some as an example of how I’d prefer not to do things. One of the most positive anecdotes I regularly refer back to is a gentleman who is sadly no longer with us, Mr Ian Lloyd, a businessman from Port Alfred. We regularly had golf afternoons with local businessmen while I was at Fish River Sun, and at one such event, I was teamed up with Ian, a good golfer and for some time a very senior leader of the Royal Port Alfred Golf Club. We got to talking about precisely this business ethics topic, as I had observed him invest substantial money in a venture based on a handshake agreement with our general manager, Melville Vogel, and me. My question went something along the lines of “This is a truly rare thing to observe, in today’s world, no one takes things on face value anymore, are you sure you want to invest all this money without a signed contract?”

His answer has stayed with me for almost 20 years. He said “My boy, listen to an old man. There are two ways to do business in this world. The first way is you screw over everyone in your path, step on one back to get to the next one. Make no mistake, you’ll make a lot of money, and quite quickly too. But it will be lonely, and you will stand to lose everything you’ve got, just as fast as you got it. The second way takes a lot more time. You develop relationships, you treat people with respect and trust, choose who you associate yourself with, and you’ll be just as successful, if not more. The difference is no one will begrudge you your success and you will keep it forever. I have chosen to do business with Melville and you because you are gentlemen, men of honor and integrity. I believe I can trust you, so a handshake is all I need.” I hope that message is as powerful for you, the reader, as it always has been for me.

The second observation I wanted to note came from the same era. At the time, the observation stung and I strongly disagreed, but in hindsight, it is wholly accurate, and the sum of my experiences has shown me over and over again that it is both a valid and frighteningly regular occurrence! At a financial review, our Regional General Manager, Mr. Graham Vass, once remarked that the best way to completely f… up a business was to let the accountants run it. As a newly qualified, 25 year old chartered accountant, this was a rather painful slight that I took very personally. But…. Having now spent a good 21 years in various senior financial positions across a vast bouquet of industries, owned and run by local shareholders as well as international corporates, I must accede that he was absolutely right! And I think that this is where the things going wrong I alluded to at the beginning of this diatribe started to occur.

Gone are the days of total understanding of a business, how it works and fits together as an integrated organism, both in its own right as a system unto itself, as well as how it feeds into and feeds off the environment and macro world it operates and interacts with. Gone are the days when an entrepreneur went to the bank with an idea, a passion and a dream and a relentless thirst for success, but nary two bronze coins to rub together, and the bank manager granted a start-up loan or overdraft because he believed success was a real possibility.

These days the private equity investor expects the profits to be at x value by year five so the exit strategy can be executed through sale or IPO, and heaven help management if this isn’t achieved. So management cuts the bottom out of costs, burns out the staff, ruins relationships with suppliers to make these targets – yes, they succeed, they earn big bonuses on that achievement, and exit the business, leaving a shell of its former self, with very little sustainability without fundamental and massive re-engineering and restructuring required. Direct link to the Generation Y and Millennial life philosophy of instant gratification……

These days no bank will even engage in a discussion for funding if the credit score doesn’t come out above predefined sub minimums. And that’s when the quest for numerical proof of value of the idea only begins! So, the reality that prevails is that I need money to create something, I approach a bank for assistance and they won’t loan me the required funding because I don’t have enough money. Logical? And then we wonder why our GDP growth is stagnant and unemployment is rife… The truth is that business is risky, as is life. By all means manage risk, but don’t seek to eliminate it or you will also eliminate entrepreneurial drive.

Everything is done solely on a number, what is finite, what is numerically quantifiable and very little else. Business and the underlying human relationship element has substantially died. It’s lost its soul. I find it really sad.

Which brings me to the primary reason of why I embarked on penning this piece.

The world is full of people who complain about what is wrong, but not enough people who try to make it right. My entire outlook on life, be it personal, business, self, is of positivity. I don’t know how to hate someone or something, I don’t hold grudges, I am exceedingly understanding of situations and always will do my very best to provide a balanced, rational and thought through perspective to things. I believe in honor, fairness and integrity, both in myself and in my way of dealing with others, and this premise does not change whether I stand to gain anything out of my interaction with that person or not. However, life is not fair, so I don’t always experience the same treatment in return. So be it, I will not allow it to jade who I am.

This poses an interesting dilemma…. How does a chartered accountant, a person who is driven by numbers at his very core of training, reconcile with the personal values noted above? A truly dichotomous conflict? For me, it’s a lot simpler than one would think. I have never considered myself to be a true “accountant” personality, I have a diversity of interests and ways of thinking, I have a creative side, having studied art and music, offsetting the logical side from my accounting training, I love the interactions and engagements with people that the hospitality industry afforded me, I have played sport as both a team member and as an individual athlete. And I have a wicked and downright irreverent sense of humour that allows me to engage with people of all walks of life very easily. I believe that I have fundamental flaws as do all of us, but I recognize and accept my downfalls and limitations, and work around these, never afraid to acknowledge that which I don’t know and ask for help.

Through thinking all of this through, I decided to try to make a difference, to try to be different. I want to create an environment of old school business values, and try to associate myself with those of a similar ilk. I have spent time dealing with recruiters trying to secure a new permanent corporate role and came to the realization that even an industry like that, one that has at its very heart and essence the most base of human existence viz. people, relationships and their career aspirations. Even this has fundamentally lost its most important tool of trade: talking to the people that drive their livelihood. Again, that’s a generalisation, as there are a few good people out there that still do things the “right” way, but they don’t get the high volumes of engagements that the bigger, faceless entities do, because the numbers are needed for group deals. Goes back to the premise noted above, if the numbers aren’t right, the small guy suffers, the guy that actually does things right.

And this is where my new venture arises, Integrated Advantage Management Services. The premise and business model of this is simple – I have a wealth of experience across a range of industries, and without in any way intending to appear conceited, I am very good at what I do. I’d like to offer that insight, cross functional knowledge and very different way of thinking to small and medium businesses to help them expand and grow to the next level. Basically offer the knowledge and experience of a corporate level financial director or chief financial officer on a specific engagement, contract or needs basis, rather than having to carry exorbitant costs disproportionate to the size of the business. If there is a need for a retainer type arrangement this is also available, and may allow for me to expand my vision and employ additional staff to assist me.

The obvious question that begs to be answered is how this is different to the plethora of other part time FD or contract accountant or business advisory offerings out there?

My differentiator, my USP if you will is that it’s all in the relationships and my network…. In my 21 years of management experience, I have developed numerous business contacts who I can proudly call friends, a lot of whom are small businessmen themselves. They have years and years of experience across a wide range of business arenas: IT specialists, programmers, insurers, human resources, industrial relations, health and safety, media and branding, accountants, attorneys, security experts, business analysts, cost control specialists, etc

My concept is to provide the best possible financial management and business advice to my clients, and, where there is a need for assistance outside of my area of specialization, referral to one of these business owners. In return, they will refer their clients to me for any advice required outside of their specific areas of expertise. A form of loose syndication…

The benefit is that these contacts are spread all around the country, so it offers a national coverage or referral network. A small business in Port Elizabeth, for example, would have easy access to not only financial and business management advice from a Johannesburg level CFO but also a national level industrial relations specialist. Furthermore, as a grouping we assist small and medium businesses to prosper and grow, while supporting other smaller business owners to do the same. We have all known for some time that the future of the country’s economy is in the SMME area, yet most small businesses have been focused on stealing business from one another, or setting up outsourcing rather than organically growing their own businesses. This doesn’t add any jobs, all it does is reduce corporate cost bases and bleed already struggling entry level and unskilled workers more. This is the real reason behind #feesmustfall, #outsourcingmustfall and related protests – our youth are frustrated because there simply aren’t opportunities out there, even if they have a university degree. So they spend three years at university, build up massive student debt, and then can’t find a job in order to be able to pay this back. By focusing on our model, we, as a grouping, can make very real contribution towards reducing unemployment by not only offering additional roles, but by engendering a way of thinking that may kickstart future entrepreneurs.

Who knows how successful it may be? Maybe it will remain an after hours dream, maybe it will become a multinational. But if we don’t do anything, we know absolutely nothing will happen.

The business proposition document detailing services will be completed shortly, the website and Facebook pages are currently being designed so watch this space. I would love to hear your comments or view on these thoughts, please note on the article or send me a message. For any of my contacts who would like to be part of this syndication, please contact me and let’s make something special happen.

Sport, Business & Politics

The United Kingdom (UK) and the world (as it is so small and interconnected now) saw a once in a lifetime (if that) event on Monday, 2nd May 2016. A team of footballers from all over the world with their lynchpin a local boy by the name of Jamie Vardy; managed by an Italian known as the “Tinkerman” or “Nearly Man of Football” winning the highest league in England. The last comparible event in the football world was Nottingham Forest being promoted and winning the old Division 1 in their first season under Brian Clough in 1978.

By some ironic twist of fate the League Championship trophy should be received at Chelsea, a team that sacked Claudio Ranieri because, in their owners view he did not have what it took to win the league. This was in all probability because he was not a “Big Name.” How wrong that analysis has proved, and at huge financial cost for the financial settlements paid to all those that have followed the Roman at Stamford Bridge. These payments alone are worth more than the collective paper value of the Leicester City squad. 11 footballers who have won the biggest prize in English sport worth less collectively than a bunch of effective losers who only got employed because they were a “Big Name” with a reputation.

This asks the question are there lessons to be learned from this remarkable achievement, after all in reality football is a business that exists to kick a ball around for 90 minutes, 38 times a season (in the Premier League) and take part in other joint venture enterprises, such as the European Cup and FA Cup.

The UK is a confused and disjointed nation, all self-inflicted as it tries to live in denial of the past. Historians are generally people who try to tell us what happened in the past, usually without any actual factual knowledge to back up the tripe they write and viewed retrospectively when the consequence has played out. We can all chose winning lottery numbers after the draw has taken place. There is only one thing that we can safely generalise about historians; they would never have made the history if they were there at the time. In pub language Tristram Hunt may be very close to that what rhymes with his surname, he is certainly no Churchill.

The clear historical fact that Britain controlled over 25% of the world is looked upon in the same vein as having assisted paedophile Jimmy Saville in his charity quests. Yet colonialism happened, it shaped Britain in many ways and could never have been all negative in the countries that were colonies, such as the railway network in India. The reason for the railway being build may not be something to be proud of, as it was to help British trade, but the railway is still there in a sovereign, independent India to drive India’s economy. Where I do agree with historical views is where it is said “we civilised these places.” The truth is they had their own civilisations that had evolved and worked long before we turned up. What colonialism did was hasten their decline to be replaced by so called Western civilisation, Mr Ghandi’s comment on that being a good idea was quite apt. While these social structures would inevitable have changed, that is indeed a dark legacy of the colonial period.

Likewise those in the political classes seem to think that as victors in the World War II, this cannot be trumpeted about. Yet the truth is the United States of America (USA), UK and its allies saved millions from needless death and only subjected half of Europe to the tyranny of Communism rather than all of Europe to the tyranny of National Socialism. This victory generally brought about the freedoms that we have today, including a Germany that is part of the world as an equal partner. But we cannot say that in case we upset some defeated nations sense of pride which was dented by a military defeat.

Its brought us to where we are today that soon another once in a lifetime event, the referendum on membership of the European Union.(EU) The EU is a typical political organisation, it is bureaucratic, unwieldy, unaccountable, staffed by the unemployable in any other field. Yet, these people who we never get to meet, who never put themselves up for election by popular vote, control our lives. They have a propaganda department that would have made Josef Goebbels blush. We see the signs “Funded by the EU” everywhere. Yet the reality is it’s funded by taxpayers. In the case of the UK, Britain is a nett contributor, in other countries we are funding building of roads etc. No different to the railway in India example, but with no tangible benefit to Britain. In other words we get less than we put in back. If we vote to leave we could still have the signs but they could say “Funded by British Taxpayers.”

How many people know that the EU accounts have not been signed off for over a decade? In layman terms their auditors do not believe what they are told and where people have used the whistle blowing provisions to highlight systemic fraud, they have been silenced.  Like I say Goebbels would be proud.

Now weighing in on the argument we have the worst President in American history, whose sole interest in the referendum is to ensure the signing of an EU/USA trade deal which is so one-sided its embarrassing and a scandal. Its known as the Transatlantic Trade and Investment Partnership (TTIP). You can read more on TTIP here, http://www.bbc.co.uk/news/uk-politics-30493297

If not having that deal foisted on British business means we are at the back of the queue, that’s the best place to be. After all if Britain votes to leave the EU, we will not lose all our significant technology advantage in new technology, where we are a leading nation. In fact perhaps then state aid would be allowed meaning that instead of the first social media phenomena, Friends Reunited not having withered and died, it could have been what Facebook is today. Our goods and services will still be needed and that will move us up the trade queue.

Also making a late surge to be heard is a former US President whose claim to fame is using a cigar for a rather unorthodox activity and one who has at least set the boundary on what is a sexual encounter.

We have the disgraceful sight of two posh boys who don’t know the value of anything talking down Britain and saying in effect, we cannot cope in the real world without the protection of the “nanny-staters” in Brussels and linking it to trade, where in reality trade is a by-product of the EU. It is first and foremost a political institution.

On the political front, it’s time to do a Leicester City and not believe all the rubbish that is written and spoken by those who cannot see past the big organisation and with an eye on where they can go and continue their ride on the gravy train long after we have kicked them out. It’s time to show that we may be a small Island, but we punch well above our weight and as a real sovereign state able to shape its own future without interference can punch even harder.

When the UK was last given the opportunity to vote in a referendum of this magnitude, we were the sick man of Europe, an economic basket case that had to be bailed out during the last days of the Callaghan led Labour government. The 1979 general election which saw the election of Margaret Thatcher was fought over who governs Britain; the elected government on behalf of the people (well notionally anyway) or the trade unions.

While no expert on the intricacies of “Thatcherism” from an economic stand, the Iron Lady effectively believed that you could be what you wanted to be as long as you worked hard. The state was there to assist when you stumbled, not there to live your life for you.

From a business perspective probably the key policies of this new empowerment was “Right to Buy” and “Privatisation.

Of course like all governments over time a good idea, such as the initial Privatisations of utilities, British Airways and de-regulation of buses etc have now led to the point where they think everything can be improved by the market, like education and the provision of heath services. When you know the value of nothing and have a worthless degree from a great University how can you understand this.

The reality is that Privatisation ran its course over 20 years ago, but it allows the government to generate revenue by selling assets that the taxpayer has paid for on the cheap, with no tangible benefit. Royal Mail was a classic example. In education Independent Schools are the market driven improver, but that’s not possible for everyone, so we have the usual half way house which seeks to exclude those who need access to good education even more.

How long will be be before the railway operator, Network Rail (NR) ends up back in the private sector. Last time it ended in bankruptcy for Railtrack PLC. Why will it be any different this time?

Yet the real driver of any Privitisation of NR will actually be to mask the massive debt that Gordon “No more boom and bust, just bust” Brown allowed when NR was a government company that was Limited by Guarantee. In other words the debts were guaranteed by the Exchequor, but the debt was not shown as government debt. Its effectively an Enron scam, which was declared illegal. The consequence is NR’s debt is now shown as national debt, as it should be.

Companies started up under the early Privatisations, such as transport giant, Stagecoach. A company started up with redundancy monies and an idea.

Does this happen now?

No the beneficiaries now are the already huge, in some case offshore based or foreign owned companies getting first take at these assets and government services, such as all tax offices being sold to a company in a tax haven and then some leased back.

Are they run well, such as Southern Railways?

No, they are a disgraceful service and the roll call of failed government projects that have never delivered, other than revenue to the contract holder grows all the time, Fujitsu with the NHS and then the companies to train people for work such as A4E, which have produced no real employment. However we continue to be giving more and more government contracts to effectively not deliver.

Business has us conditioned to believe that only the largest companies, (remember why Ranieri got sacked at Chelsea? See the parallel?) usually riven with inefficiencies and waste can deliver and this is driving up costs, particularly in the public sector.

A positive impact of “Right to Buy” was making people property owners, yet the Labour government of Tony Blair, another confirmed “Remain” cheerleader sold off government buildings, paid for by generations of taxpayers to become tenants. Insance or wht?

A negative of “Right to Buy” was that the Exchequer receipts of these sales were never used to build future affordable and social housing through public works. Now we in a position where new developments are bound by law to have a social rented and affordable element component to a development, but built by property developers who exist to make a profit. It’s about as compatible as private companies improving education for less money than the state can deliver it. It is done by cutting services, aka quality.

Why then when government contracts are handed out is there no entrepreneurial incentive that means only Micro (where appropriate) and Small Medium Enterprises (SME) are allowed to bid and win. These would need to be bona fide SME’s and not just arms-length companies of course. That would drive a new kind of entrepreneurship, a new kind of ownership and a culture of calculated risk taking for financial success, much like how Stagecoach came about. Those who take the chance will be winners, but so will staff who are like minded and the country benefits too as tax receipts are kept at home to be spent here.

If we look at transport infrastructure for example, Crossrail in London has been the exclusive domain of the multinational engineering companies, yet the actual contracts were broken up sufficiently to allow those that were in the supply chain to be used as first tier contractors. High Speed 2 (which we all know will happen, it’s a typical vanity project with no tangible long term economic benefit in a digital age) will be the same. In the rail sector there is a huge push on electrification, yet the contracts are again being let to the multinationals in Framework type contracts. These companies have neither the resources nor capability to deliver without using the supply chain and just adding fee on fee generally. So why not use the smaller leaner supply chain as Tier 1? They have everything required from a compliance perspective generally.

The real issue is fear because managers are riven by fear of doing anything different because the “Big Companies don’t let you down” mentality holds sway. Yet the reality is they let all of us down (because the taxpayer is the ultimate client) all the time. The Great Western Electrification Scheme in Wales is a text book example. Over budget, late and with an insane Private Finance initiative (PFI) for the supply of the rolling stock which will mean that they taxpayer pays from a set date in huge financial penalties, even though the trains will not be able to run because the infrastructure upgrade is so far behind programme.

Yet the reality as Leicester City Football Club have proved in a highly complicated business, with a number of stakeholders all with different expectations that biggest is not best. They have a history of over 130 years, yet Manchester United Football Club (MUFC) have spent more in transfer fees in the last two years than Leicester have in their entire history. Under both Louis van Gaal and David Moyes, MUFC have epitomised everything wrong with business in Britain today, a proper don’t care attitude by the staff. It’s almost like they have a “Timesheet Mentality” where you don’t focus on what has to be done but just making sure you get paid. Sadly there are many businesses in the country that have the same or worse psyche as an unwritten philosophy.

The events of Monday, 2nd May 2016 on a bit of grass in west London should send out shock waves to the leaders of this country in all avenues of life that if we believe in ourselves the opportunities are endless.

At the risk of polarising, that would make us all “Thatcher’s Children.” After all she was the lady who said Britain can be Great again, and set about building the foundations. We still thrive as a nation because in 1979 the people decided trade unions don’t run the country.