For those of you that have appealed against your bank charging you an excessive amount for bank charges for going overdrawn might soon be receiving a cheque in the post.

Today the Court of Appeal ruled that the Office of Fair Trading (OFT) had the power to rule on bank charges and to investigate the charges levied by banks. However, this ruling is not final, as it looks like the eight banks that are fighting against the High Court ruling are going to take the case to the House of Lords. This appeal is despite Sir Anthony Clarke (Master of the Rolls) dismissing the banks’ appeal and has told the eight banks concerned that they should allow the OFT to decide whether their charges were fair or not, and as a consequence refund those customers where the charges are deemed unfair!

The British Bankers’ Association (BBA) commented that its members are still disputing the courts’ (both the High Court and Court of Appeal) decision.

The banks could be facing huge pay-outs to customers as a result of this decision which comes at a time when banks are already suffering badly due to the present economic crisis! In the end it looks like these payments will be funded by our own money anyway, that is taxpayer’s money.

The business has just made the biggest loss in UK history of £24.1 billion is the headline!

On top of making such a spectacular loss it has £325 billion of toxic assets, but all is not lost as the Government has just bailed the business out to the tune of £13 billion of taxpayer’s money, having already paid in £20 billion last year.

The great news about the toxic assets is that the business is only responsible for £19.5 billion of the total £325 billion, and that the business has been trading for some 282 years, so it is a well established company!

The business is looking to restructure, sell off parts and make up to 20,000 redundancies over the coming year to reduce costs by around £2.5 billion per annum.

The company trades as the Royal Bank of Scotland or (RBS) and also owns another large UK bank National Westminster Bank and recently purchased ABN Amro an American bank.

Obviously this post has been done with a bit of “Tongue and Cheek”, but it just goes to show the extent to which the UK Government is having to go in order to avert a bigger banking crisis than we already have.

I have also written it in this format to help demonstrate how obviously absurd it is that a business is able to make things go so spectacularly wrong and yet be allowed to survive in what is supposed to be a “Capitalist” economy!

No more “Boom and Bust” Gordon Brown said, what a joker. This Government needs to take stock and needs to call an election sooner rather than later.

Not only is it the bank chairman’s, like in this case Sir Philip Hampton, that should have their heads on the block, so too should the Government. The Government should accept their part of the problem and take responsibility for what has happened and stop passing on blame to the US.

This week it was reported that UK retail sales rose by 0.7% in January 2009 over December 2008 and by 3.6% compared to January last year.

It seems that shoppers are taking advantage of the big price cuts made by stores across the UK and people have a bit more money in the pocket after a number of base-rate cuts. This is reported in the same week that it was reported UK inflation has fallen again to 3% in January 2009, whilst it has risen slightly in the US by 0.3%.

How do you fancy another £20 billion pumped into the economy in the way of a freeze on stamp duty and a £1,000 tax credit to home buyers. In comparison to some of the billions of Pounds banded about across the world, this would seem like a drop in ocean. Richard Branson has spoken out over bail-out cash for industries other than the banks saying that he thinks “companies need to stand on their own two feet, and the weak ones need to go to the wall”.

Germany has approved a 50 billion (£44.4 billion) stimulus package which tax relief and infrastructure investments and money for families with children. This package also includes a 2,500 bonus to people who give up their cars to buy new ones, which is a different approach to pumping bail-out cash directly into the motor trade.

End of the week saw:
Stock exchanges:
FTSE 100: 3,889
DOW: 7,366
S&P: 770.05
Nikkei: 7,416

Currencies
UK Sterling £ to US Dollar $ 1.43884
UK Sterling £ to Euro € 1.12572
UK Sterling £ to Japanese Yen 134.372
UK Sterling £ to Aus $ 2.23815
US Dollar $ to Euro € 0.781869
US Dollar $ to Japanese Yen 93.3920

Commodities
Nymex Crude oil – $39.80
Gold – $994.40

There are many of us that go to the gym to give our bodies a work-out, but how many of you give you mind a work-out too?

I would hazard a guess that not many people give their brain a physical work-out; there are those of you that have bought the “Nintendo Brain Tease“, which is said to help our brains and our memory. However, this is not many people that even do this and what I have in mind is to change your thinking to a positive mode of thinking, so here goes my idea for a brain work out:

1. Each day you wake up make sure you “Think in a positive way”. Begin your day with a big smile and take your mind off to a lovely place, a special place you would love to be. This could be a Caribbean Island or by your favourite lake, it does not matter, all that matters is that when you think about this place it makes you feel really good. You must get a warm feeling and even better that when you think about this place it brings a smile to your face. Spend a while (the amount of time is up to you, the longer the better though) thinking about this place and relish in the wonderful thoughts and feelings that this brings to you.
2. If during the day if you get a negative thought; stop what you are doing and “reframe that negative thought into something positive”. Imagine your special place again and “wash-out” that negative though with some positive feelings and energy. Replace the negative though with something positive, so if for example you thought “My business is failing” change this to, how can I make my business successful. The brain likes questions and normally wants to go in search of answers. Keep giving your brain questions in the positive and it will find the answers for you.

3. Spend at least once a day thinking about what it is you want to achieve that day and then spend a few minutes writing this down. As the day goes ahead, cross off the tasks you achieve and “Pat yourself on the back” metaphorically speaking and smile. I defy you to smile (and I mean a proper smile) and think negatively, it’s impossible. This is your “daily positive task list”.
4. At the beginning of each week think about what you would like to achieve over the forth-coming week. Spend a few minutes writing this down and then as the week goes by cross off the tasks. As before, pat yourself on the back for achieving each of your tasks. This is called your “weekly positive tasks list”. Also smile and be happy!
5. At the beginning of each month think positively about what you want to achieve over the next month and over the coming months. This can be to spend more time with your family, make more money (be specific on this one*), book a holiday, start to write that book you have always been meaning to write, call a friend you have not spoken to in a while etc. Take a few minutes to write these tasks down and then as the months progress cross the tasks off your list. Again as before, pat yourself on the back for achieving these long-term goals. This is your “longer-term positive task list”. Don’t forget to smile.
6. If you hear a news program come on the TV that is talking about negativity, switch the channel or turn the TV off.
7. Stop buying the newspaper and stop reading negative news. Buy some good positive thinking books there are loads out there. Or listen to some positive thinking tapes or CDs.
8. Remind yourself about the importance of how “We become what we think about most of the time”, in other words, if you constantly think in the positive and keep your mind in a “positive goal oriented mode” then that is exactly what will happen to you. Your mind and your imagination are much more powerful than you probably even realise and your imaginative subconscious will always win the day over your conscious logical mind! So spend time imagining wonderful things and life will be wonderful!

9. Either print this page and put it up in your bedroom so you can read it each morning as a reminder or visit this page every day until this becomes your routine. You need to be disciplined in this, it is all too easy to read this page and think yes that sounds great and to go away and forget. Put this page into your favourites or even better, add it as your default web page when you open up Windows Explorer or Firefox or what ever web browser you use.

Please try this for a few days, a few weeks or even a few months and come back and comment here to let me know how this is going…I look forward to your comments.

* When you write down a task about “Making more money” don’t just write “I want to make more money” as this is not specific enough for your brain. You need to say things like “This week I will aim to sign up xx new clients to my business” This is a specific task, which in itself does not mention money, but relates ultimately to money in your pocket and is a specific task that is achievable.

Microsoft plans an expansion into retail chains at a time when other retailers are struggling.

They plan to sell computers with their new Windows 7 operating system and other software in a similar way to the present apple stores. Microsoft plans to have their stores in high-profile places around the world and the new retail division of the company will be headed up by David Porter the ex-Wal-Mart executive.

Good news on the high street as an ex-manager of the Adams children’s wear chain has purchased the remaining 120 stores and brand from administrators PricewaterhouseCoopers. This take over will save the remaining in 1,900 jobs at the business, after PricewaterhouseCoopers closed some 147 of the shops and made 1,100 people redundant.

Good news in the US as Congress approve a $787 billion (£554 billion) rescue package. Barack Obama has hailed this bail-out package as an important milestone in moving the economic situation in America forward and that it should create 3.5 million new jobs. The bail-out package is to be split between tax cuts and spending with 64% to be used on social spending and the balance on tax cuts.

In contrast to this huge package in the US the Australia’s Senate have approved an AUD$42 billion (£19 billion) bail-out package. The vote to approve the plan with 30 for and 28 against, but the Prime Minister Kevin Rudd has said that this package is vital for the Australian economy.

Leading nations must push to avoid protectionism during this economic slow-down, which is what has happened in previous major slow-downs. This week at a meeting in Italy G7 leaders have pledged to prevent countries from putting up trade barriers which only lead to prolonging the economic crisis.

Maybe people are turning to drink in this economic down turn as the French group Pernod Ricard has reported a 13% rise in sales and a 5% rise in profits for the 6-month period to December 2008. This is in the same week as the biggest world drinks maker Diageo reported a 3.2% rise in half-year profits.

End of the week saw:
Stock exchanges:
FTSE 100: 4,189.60
DOW: 7,850.40
S&P: 826.84
Nikkei: 7,779.4

Currencies
UK Sterling £ to US Dollar $ 1.42091
UK Sterling £ to Euro € 1.11015
UK Sterling £ to Japanese Yen 130.249
UK Sterling £ to Aus $ 2.17845
US Dollar $ to Euro € 0.781069
US Dollar $ to Japanese Yen 91.6639

Commodities
Nymex Crude oil – $38.01
Gold – $941.35

Top of the news this week is a new all time low UK base-rate of 1%

As the UK economy continues to stagnate and struggle the Bank of England has reduced the interest rates yet again. However, there was some good news on the home front as the Halifax reported a rise in house prices of 1.9% in January 2009.

Also in the UK we are seeing some major arguments erupting between the Government and those banks where the Government owns a major stake. The Royal Bank of Scotland (RBS), for example, is talking about paying £1 billion in bonuses. There is outrage because these employees would not have jobs right now if it were not for the Government bail-out investment, so they should not be receiving any bonus. Gordon Brown is pushing to make sure that the banks only pay bonuses based upon long-term future success. THE RBS is 70%owned by the UK Government.

Adding to this row is the Lloyds Banking Group, in which the Government owns 43%. The Board are preparing to pay bonuses, but they are prepared to accept share-based rewards for the last financial year instead of cash. This same period, for which this bonus will be based, has seen Lloyds share price fall by 75%! The Lloyds Bank bonuses are to be determined by the bank’s chairman of their remuneration committee, Wolfgang Berndt.

Eric Daniels, the Lloyds chief executive, is entitled to a maximum bonus of 225% of his basic salary of £960,000, whereas his fellow directors have an entitlement of up to 200% of their salaries.

There are continuing reports of job losses this week as we Sharp, the Electronics giant of Japan announce 1,500 job cuts and the US “out of jobs” per cent increased to 7.6% in January 2009, up slightly from 7.2% in December 2008. Growing unemployment in the US might help the new US President Barack Obama defend his economic stimulus plan of $900 billion (£608 billion), as he urges US Congress to approve this package quickly.

End of the week saw:
Stock exchanges:
FTSE 100: 4,292
DOW: 8,281
S&P: 868.60
Nikkei: 8,077

Currencies
UK Sterling £ to US Dollar $ 1.47899
UK Sterling £ to Euro € 1.14018
UK Sterling £ to Japanese Yen 135.816
UK Sterling £ to Aus $ 2.19312
US Dollar $ to Euro € 0.771545
US Dollar $ to Japanese Yen 91.7797

Commodities
Nymex Crude oil – $40.17
Gold – $914.30

The Bank of England have slashed another third off the interest rates in the UK!

Interest rates were cut in January to an all time low of just 1.5%, but this record has just been beaten with the rate being cut today to just 1%.

Problems in the economy with retailers struggling and with an ailing housing market have pushed the Bank of England to take further action on interest rate. There were discussions that the rates could be cut even more than this with business leaders expecting a lower than 1% rate like in America, but this did not happen and we wait to see what might happen in March 2009.

Cash flow forecast software the bear essentials.

In preparing a good cash flow forecast for a bank or and investor you need to know what the forecasts should include. I have therefore put together a list of what you should include, as follows:

- The cash flow projection should realistically be for a period of not less than 36 months ahead. And for each of the three years these should be presented on a month-by-month basis.

- The forecasts should distinguish between the business cash flow and the business profit and loss figures. Cash flow of a business relates to the timing money is received by the company and paid out of the company and would include VAT in the UK and Europe and Sales Tax in America. Whereas your profit flows should include your income/expenditure figures net of VAT or Sales Tax and will be shown in the month invoiced/incurred irrespective of the month in which they are either received or paid. For example, if you invoiced your client in October and they took 30 days to pay you, your profit and loss would include the amount in October and your cash flows would include the same amount (inclusive of VAT or Sales Tax) in November.

- A balance sheet should be presented at the end of each period end, so in a 36-month forecast this would mean you would have three balance sheets. This is essential, not only to show to your investors or the bank what your balance sheet will look like, but also this is a good way to prove that your figures work or balance. Producing a balance sheet will make your cash flow forecasts look very professional.

- A good cash flow forecast will demonstrate the businesses breakeven point, which banks especially like to see if they are lending, so that they will be able to see the level at which your sales can drop to before your business reaches its break even point. They will then be able to see how sensitive your business is to falls in sales should your predicted sales forecast not work out.

- You should disclose within the cash flow part of your forecasts the receipts you get from business bank loans, proprietor or shareholder loans and any director loan advances.

- If your business is not a start-up business your forecasts should include an opening balance sheet position.

– Your cash flows should present within the forecasts the timing of payments for VAT or Sales Tax, whether this be on a monthly, quarterly or annual payment basis.

- Your cash flows need to take account of company tax payments within the cash forecast reports.

- Purchases and sales of fixed assets should be included and shown as a separate line on the cash flows where appropriate and any depreciation charge on these fixed assets should be disclosed within the profit and loss section of the reports.

– The reports should include the company name and of course the period to which the report relates.

There is no doubt that the recession is hitting everyone and as a result there are not many businesses that have not been affected so far. This is the time for the “Survival of the Fittest” and if you want to survive the recession you need to take action.

Most businesses are stuck with the idea that the only way to increase profits is to increase prices and some think that the only other way is to increase their customer numbers. Both of these two actions will increase your business profits if they are done in the right way, however, they are by no means the only ways in which to grow your business. In fact I have listed that there are actually 7 Ways to Grow Your Business.

When I have spoken to most business owners they usually say “We can’t possibly increase our prices!” “We will lose our customers!”. So this is out of the question as a way to improve cash flow and business profitability. Also, in the present climate businesses might be finding it difficult to obtain banking finance or business loans to help with cash flow, not only because of the banks reluctance to lend, but also the rates are not that favourable right now, despite the lowest bank base rate the country has ever seen!

Some businesses are put into a ‘Catch-22′ situation whereby they feel they cannot increase their prices for fear of losing their clients and they lack the funds to pay for the advertising necessary to get more customers. In a recession though, it is even more important to continue to advertise your services and products. However, to increase your sales and your profits, advertising is not the only way to do this…more of that later. What all businesses must do and in particular in a recession, is to make sure the advertising they are doing is working.

Is your advertising working?

So what do I mean by this? What you can measure you can manage, so for example, if you take out an advert in your local news paper, you need to train your staff to ask when enquiries come in, where the enquirer got your company details from. If your new advert is not working (as confirmed from the data gathered from your incoming phone calls), this could mean one of two things; either that the advertising medium is the wrong one for your type of business; or that the advert copy needs to be changed. If however, you are not monitoring your telephone calls, how will you know whether your advertising spend is working or not?

Let me take this opportunity to tell you about three of the 7 Ways to Grow Your Business and to introduce you to Profit Increase Software. Profit Increase Software has been designed on the basis that there are seven ways to grow your business – these seven ways do include price increases and increased customers. However, what is worth noting here is that some of the 7 Ways to Grow Your Business do not have to cost the earth to do – three of these seven ways are:

1. Increase the number of customers of the type you want to have – This is quite an obvious statement and it is not rocket science. We all know that the more customers we serve the more money we make, subject to those customers being profitable customers. “Customers of the type you want to have” means that we don’t have to take on all customers, as no business wants to deal with troublesome people or people that cost more in time than in what they spend at your business.

Well let me explain to you that increasing client numbers is not always the only way to increase profitability and in a well thought out change you can actually achieve higher profits in your business with fewer clients.

2. Increase the prices charged on your products – not always a good thing to do and especially not good in the middle of a recession. We see so many companies and mostly retailers having to apply heavy discounts to their products just to stay alive. I am not therefore suggesting at this point that you should necessarily increase your prices, however, it is worth reading my article about how I tripled my prices and made my business more profitable.

3. Increase the number of times customers come back – A must for all businesses is to capitalise on your greatest asset – “Your existing customers!”. If you maintain a customer database you can use this database to your advantage, by writing to your customers on a regular basis to entice them back to buy from you. you can use this client contact to tell them about any special offers or new products or services you have. Most business owners forget about their existing customers and try to attract more and more new ones. Let me tell you it is many times more expensive to market to potential customers than it is to people that have already purchased from you and are already a customer, assuming that their experience with your business was a good one.

There are in fact, four other ways to grow your business and these can be discovered in the manual that accompanies the Profit Increase Software. This software is easy to use and it has been written using Microsoft Excel. You will therefore require Microsoft Excel to run the software, but you only need a very basic knowledge of Excel to work it.

This software has been designed so that you can quite quickly and easily discover what you can do to increase your business profits. As an example, this software was used in a meeting with a client who was adamant that he could not extract any more profits from his business, but after three hours of
pouring over figures, using this software and brain storming ideas – we added £50,000 to his bottom line! Well, the software helped us to target where the extra profit was, which led the client on to think about how to achieve that extra profit. To date this same client is still operating the idea and making the extra profit, so his pay-back is probably in the region of £350,000, as this exercise was done back in 2002!

What is even more impressive about this profit increase is that it cost the business absolutely nothing to implement the change (well it cost them my fees) and did not involve any costly advertising or marketing. The idea was sitting right under the client’s nose, it took using this software to find it and to force the thought process required to realise that there was a very simple and straight forward way to increase profits.

As another example, this system was once used for a bakery which was having cash flow problems and they had gone to the bank for a loan to alleviate the problem. However, before they went to the bank they approached their accountant – who had luckily just purchased this system. The company was asking for help in putting business plans and cash flow forecasts together. However, the accountant spent a few hours with the client pawing over figures from the business and utilising this program. Within a short space of time worked out that they could quite easily remove the cash flow problem without the aid of a bank loan.

When the accountant and their client first played with the figures on the worksheets, they were looking at additional profits of around £80,000. However, when they set to work, the actual profits in the first year were under this amount and somewhere around £50,000. But the company did not need a loan and the cash flow problem was solved and the client was more than happy with his accountant! The bank might not have been happy though!

So if you would like to buy the Profit Increase Software click this link and get to work on surviving the recession - their might well be some extra profits sitting right under your nose too. If however, you would like to purchase some of my time to help you in this process then email me at info@in-business.org. My consulting charges are not cheap, and start at £1,495, plus VAT for the day, but if you look at the results that can be achieved here, these soon pale into insignificance when those extra profits start to role in!

See also – Are there any businesses that are recession-proof?

and: What’s the price of a new customer?

and: Cash flow is king!

Most business owners think that the only way to make more profit is to increase client numbers!

Well let me explain to you that this is not always the case and in a well thought out change you can actually achieve higher profits in your business with fewer clients. With fewer clients you can make your business more efficient too and if you go through this process you can then re-think about expanding your business in a different way. Look at this as resetting the foundation of your business in order to rebuild and grow it in the right direction. As with anything, a solid foundation is essential for a strong and stable structure.

A few years back in one of my businesses I made the decision to triple (yes that’s right triple) my prices on one of my services. At the same time I modified and improved the service for the clients. I took a gamble on the basis that not all of my clients using this service would leave. I calculated that if I lost around 20-30% of these clients I would be left with a lower number of clients paying me more money and have a business being more profitable.

Let me tell you that this gambled paid off, yes of course some clients complained bitterly and some clients left, but not as many as you would think nor as many as I thought would leave, in fact around 10% of clients left in the end. What is interesting to note is that in those clients that decided to leave were the ones that were the less profitable ones and the ones that gave us more hassle.

The great thing is, as a result of my actions I was making more money, on this side of my business, for less work and less hassle! So a win, win situation!

A lower number of clients require less work and also less administration and therefore less staff to deal with the underlying process. The impact of this is that you make more money from the product or service line itself and the business has lower overheads, leading to yet more increases in profits.

If you decide to do something like this in your business, and especially in the present economic climate, be careful and think it through very carefully. In my business I had a few service lines so this helped to spread the risk. I don’t think I would have done this to all my services at once, as this would quite clearly be too risky. So if your business has more than one product or service line, and you want to try something like this, I suggest that you try it with one product or service at a time.

Also, if you do try this out, make sure that you are giving a very good customer service and that the product or service you are selling is an excellent product or service. I would also add that where there is high competition in the market you serve then this is less likely to work and would present a higher risk.

As noted above, once you have trimmed your business and made it more efficient and profitable, you can then look at attracting more clients and growing it by attracting more clients of the type you want.