Wealth management is under pressure in the UK. The sector is looking for potential new customers but falling short.
On the one hand, pension reforms have meant more people than ever before have full control of their own retirement savings. On the other, these potential customers typically have smaller sums to invest than other clients.
Where will the money come from that will help the wealth management sector thrive?
When it comes to valuing portfolios, wealth managers might look to plug gaps by encouraging customers to sell their businesses, but this risks undervaluing these assets, as Christiane Hutchinson, CEO of Biramis Management Partners, explains.
“For wealth managers to do the best for their customers, they must look first at optimising the value of the businesses they intend to sell.”
Why Building Value Makes Strategic Sense
“As an asset, a client’s business should work primarily as a wealth creation vehicle in its own right. Treating it as just another component in portfolio-building risks under-using it.”
However, to build this kind of value in a business, in preparation for selling it, requires a longer-term strategy.
“If you take someone on the cusp of retirement and only then look at selling their business to add to their assets, you’re probably leaving it too late to sell it at the best possible price.”
“What a business requires, before sale, is the kind of structure which will ensure it has a clear value that is independent of its current owner’s input, and the right kind of visibility in the marketplace”
However, these aspects of value-building do not, traditionally, come under the remit of wealth managers.
“Wealth managers can make excellent decisions on behalf of their clients based on understanding risk profiles and building a strategy around key assets. However, what will allow them to maximise the value of the clients’ portfolios is the creation of more value earlier on.”
In nature, what happens upstream can have a profound influence on what happens downstream. For example, upstream land management can work to prevent flooding downstream. What will support wealth management is the right kind of upstream activity
“To build stronger portfolios, this means optimising assets to create more inherent value in them”
There is a logical synergy in helping wealth managers build value for their clients’ businesses.
“To manage wealth you must first create it. In a climate of uncertainty, it is vital that wealth managers can put their clients in the most advantageous position. Where they have a business they wish to exit, there are ways of building its value through both its structure and its outward-facing marketability.”
“In effect, the processes involved in preparing a business for sale are the same as those for improving it outright,” Christiane concludes. “For a business to have value, it must be structurally sound and demonstrate that it has the right potential for future buyers and investors.”
If you are wealth manager that wants to discuss the options for strategically adding long term wealth for your clients, please contact Biramis Management Partners on 0161 817 8052 or visit biramis.com.
It is nearly a year since GDPR became a reality. The General Data Protection Regulations came into force in May 2018, amid a great deal of fevered preparation, and speculation, about their potential impact on UK businesses.
Forbes reported that British firms had put the equivalent of $1.1 billion into preparing for GDPR.
Since last year, there is a view that certain companies have capitalised on GDPR, using it as a means of leveraging business out of others who are worried about the implications of the new regulations.
“Many organisations may be overlooking reputation when they assess their GDPR risk. Fines may be unlikely, or relatively small, but the reputational fall-out could be far more damaging.”
TalkTalk’s data hack is a lesson in point. The fines the company faced were small in comparison with its revenue, but the reputational damage was measured in withering headlines and bad publicity that lingered a long time afterwards.
The company’s own CEO suggested the one-off costs resulting from it could be up to £35 million.
Reputational damage is not a stand-alone loss, in the way that financial fines or penalties can be.
“On one hand the reputational risk from non-compliance is elusive, because it depends on so many factors, but on the other, it can be long-reaching, and include lost customers and investment, and higher borrowing costs impeding future growth.”
What might determine this kind of reputational damage?
“GDPR regulations have data protection and privacy at their core so the repercussions of failing to honour them are likely to be very public”
There are key GDPR components to do with management of personal data, identifying a lawful basis for processing it, and the conditions of obtaining an individual’s consent to do this.
“Increasingly, those businesses or organisations failing to comply with GDPR will be in the public eye and face clear-up costs. This will affect existing customers, but also prospective ones.”
The biggest consequence of this kind of reputational damage will be the breakdown of trust.
What is Trust Worth?
“In a digital economy, trust plays a critical role. Trust helps retain customers, who otherwise are a click away from taking their business elsewhere. What will a GDPR breach in the public realm do to this trust?”
Trust comes from careful brand-building and nurturing of relationships. Non-compliance resulting in a GDPR breach can quickly erode all this hard work, putting a business’s long-term future at stake.
“GDPR prompts two key questions of any business or organisation:
Can people trust you with their data?
Do you have the right measures, processes and procedures in place to maintain that trust?
In the longer term, paying a fine will seem of far less a consequence than trying to restore a damaged reputation due to non-compliance of GDPR. This is something TalkTalk is still trying to achieve, many years on.
“Do you think that clients won’t know whether you are compliant? Your website’s Privacy Notice is, in effect, a public advertisement on how well you manage personal data”
Post-Brexit, all eyes will be on the UK economy, and how it can thrive in challenging times.
According to the Federation of Small Businesses (FSB) SMEs make up over 99% of all private sector business, and account for 60% of all private sector employment in the UK. Therefore, how the economy performs will be very much down to these small and medium sized businesses.
What financial support will they need to grow and help drive the economy, even if times get tough?
Rick Flay, director of Blue Bull Finance, discusses the issues around SME funding, and why alternative financing is set to play a key role in supporting SMEs, and therefore, the wider economy.
Are Businesses and Banks Too Risk Averse?
“When things start to look uncertain, people become more risk averse, and this applies both to businesses and banks. This caution is understandable, but it can also be fatal.”
For businesses to grow, they need investment, but many are wary of going to the bank to apply for a loan, or an overdraft.
At the same time, banks themselves can be rigid in their lending rules.
“SMEs can find that either the banks won’t lend to them, or will only lend with the sort of conditions attached that make the loan itself much less attractive”
Immediately following the financial crisis, banks were looking to shore up their capital and control their lending. Ostensibly, more recently they have worked at building trust and focused on building relationships with SMEs.
However, in practice, many businesses feel that banks are unlikely to lend, and therefore abandon investment plans, which in turn cuts off the potential for growth.
“The FSB Index has recorded a sharp fall in credit applications, and in a scenario where only one in 10 firms is applying for any kind of external finance, that means less cash flowing within the business community, so less investment, less growth and less jobs.”
Can Alternative Financing Rescue Business?
There is one potential cause for optimism however: the rise of alternative funding solutions.
“There are now far more alternative routes to securing funding. But it’s a question of raising awareness of them among SMEs.”
These alternatives include arrangements such as:
Lines of credit
Peer to peer lending, and many more
Furthermore, SMEs are not dependent on the big banks to apply for them.
“This represents a significant cultural shift in funding, and one which SMEs should be taking advantage of.”
If the UK’s SMEs begin to recognise these options, they can stand to benefit from them significantly. There is a whole range of alternative lenders, each suitable for different stages in a business’s development.
“It’s about marrying up the needs of the business with the form of funding, and the provider, best suited to it.”
“The lending environment for SMEs is a lot healthier than many of them realise and, in some ways, the growth of alternative funding solutions mirrors the agility, adaptability and innovation of many smaller businesses and should be the perfect fit”
Generally, uncertainty is in the air, for business in the UK. The property market, however, has come in for some fevered speculation.
Some post-Brexit predictions have suggested a countrywide fall in prices of domestic property around 30%. Meanwhile, as prices have fallen in the south, in parts of the North of England, they continue to rise.
Meanwhile, for many commercial property owners, the prognosis has been bleak, with major retailers demanding landlords drop their rents in response to a consumer spending slowdown.
“Just as properties and the areas they are in vary, so do the circumstances and needs of domestic and commercial property developers. For would-be developers, the answer to whether to invest lies in securing the right means to do so.”
Are You Making the Right Choice?
Not all areas of the UK are equal when it comes to property development potential.
“It’s important to gain good local knowledge before making a decision, so that you understand what kind of properties are most in demand. This applies to both commercial and domestic developments.”
Along with the necessary research, to thoroughly understand a potential development, there is the vital question of funding.
“You can structure the finance of development projects in different ways. It should be all about tailoring the finance to meet your requirements and how you want to manage payments”
For example, alongside commercial mortgages, there are also financing solutions such as: short-term bridging loans; development finance; HMO funding; pension-led borrowing; and refurbishment loans.
“Different companies will have varying appetites for lending, so it’s vital that you find the right one that can offer you the options best suited to your project. Match your funding needs with the right product and, critically, a provider you can trust.”
Does Uncertainty Mean Opportunity?
While uncertainty has meant a degree of turmoil entering the property market, it can also mean opportunities for those developers who find the right route in.
“Interest rates remain low, which means that developers should be able to secure low-cost financing, providing they choose a suitable funding solution”
China is going to become a far more important market for UK businesses post-Brexit. It is seen by many as the natural alternative to the benefits of the EU.
Could the fact that the Chinese Government and public want a trade agreement completed with the UK as soon possible be a sign of potential opportunities to come?
As Domenica Di Lieto, CEO of Chinese marketing consultancy, Emerging Communications, suggests, “Despite the strong affiliations the UK has with China through the popularity of British history and culture, fashion and design, and the massive following of Premiership football, fundamentals need to change if China is to become the trading opportunity it promises.”
The Journey to Business in China
“At the moment more is exported from the UK to Ireland than China. Equally, UK flagship British companies ranging from Tesco, M&S, Asos, Top Shop, to Pret A Mange have set up shop to great fanfare in China only to leave shortly after with substantial loss of face and investment to show for their efforts.”
“The reasons why the UK businesses underperform in Chinese markets is simple: they fail to fully understand markets and buyers”
“In some instances, marketing is done on the cheap and badly.”
Overall, these are unheard of practices when it comes to domestic markets, and elsewhere.
“There is a common belief that Chinese consumers and business buyers live in a simpler world. Reality could not be more different.”
“Chinese B2B and consumer markets are the most sophisticated in the world. Marketing intertwined with mobile payment systems are years ahead of elsewhere.”
China is the only country to have introduced voice payment – and consumers instantly identify lack of understanding and marketing commitment when they see it. And they see it a lot from UK companies.
However, export success is achievable when commitment is applied. Clarks Shoes is a good example:
Research identified an opportunity to promote its products as mid-priced good quality British shoes
The British labelling was important because it carries connotations of reliability
The company called itself Clarks English.
The brand positioning, and accompanying marketing has led to huge sales success
It is the type of homework and applied insight by Clarks that is essential.
“If UK companies aim to successfully benefit from doing business in China then the principles of learning about audience, and communicating effectively need to be applied,” concludes Domenica. “There is no substitute. Just ask Tesco, M&S, Asos, Top Shop, Pret A Manger, or Clarks.”
To discover your options for achieving success with business in China, please call Emerging Communications on 020 3011 0088 or visit emergingcomms.com.
What does it mean to take things to the brink? Politically, history has notable examples where negotiations appear to teeter on the edge. What, though, does brinkmanship mean for business? Can you succeed by being unreasonable, and if so, what are the implications if you are on the receiving end of it?
Mark Cushway, entrepreneur and motivational speaker, talks about taking things to the brink.
“This is a negotiation strategy where one side is pushing the other to agree to a set of conditions, or lose the deal entirely. It is a high risk strategy, and it can harm goodwill and end up with negotiations breaking down.”
Rationalising the Unreasonable
“For those initiating brinkmanship, they may feel they are being totally reasonable. This dresses it up as gamesmanship, or even portrays it as a normal element in negotiation. A critical factor here, however, is emotional bias.”
In the same way that leadership can distort if it fails to include empathy, so negotiation can end up with parties failing to see another’s perspective.
“In many negotiations, there is a strong element of persuasion. By choosing to take this route, businesses can achieve a degree of stability in their relationships as it also involves a degree of compromise along the way in pursuit of the main objectives”
“The problems arise where the process of negotiation becomes far more competitive. Often, this is where compromise and empathy are missing, because each side assumes the other to be stubborn and unreasonable.”
Can brinkmanship achieve success?
“With a good understanding of your opponent’s characteristic behaviour, you may be able to go in hard and convince them that either they stand to lose if they don’t agree to your conditions, or that there are no more favourable conditions out there”
However, there are clear risks attached to it as a negotiating tactic.
“The danger is assuming that because you see the advantage you have, your competitor will see it also, and therefore will blink first. But if they don’t they may call your bluff and catch you with your defences down.”
On the Receiving End
The other side to brinkmanship in business negotiations is being on the receiving end of it.
“Brinkmanship can make you feel very vulnerable, because this form of negotiation tends to target your specific areas of vulnerability.”
For example, there might be a situation where you are dependent on a particular supplier or service, which can lead them to exploit your pain-point.
“What if this dependency means your supplier can shut down your business if they don’t get what they want in negotiation? It’s about who really holds the power in the relationship.”
“The best defence against brinkmanship is not putting yourself in a vulnerable position in the first place”
Many mainstream UK bank branches used to employ relationship managers. For large numbers of SMEs, the relationship they have with their bank is not a good one, to the point where many business owners have no one to talk to on the high street.
The main issues are a lack of flexibility, a too-narrow range of loan solutions and a general failure on the part of the banks to communicate effectively.
Rick Flay, director of Blue Bull Finance, points out, that, “SMEs could be forgiven for thinking that the big banks don’t want to lend to them. There have been signs that the relationship between retail banks and SMEs is weakening.”
If this is the case, what alternatives can SMEs turn to for funding?
A 2018 House of Commons Treasury Committee report on SME Finance states that:
The dark clouds of past misconduct still hang heavy over the SME finance market, undoubtedly weighing down on SMEs’ trust in the financial institutions that serve them.
At the same time, it notes that SMEs form an important part of the UK economy, accounting for 99.9% of all private sector businesses, and 60% of all employment in this sector.
“SMEs are the bedrock of the economy, and they need and deserve support to grow and thrive.”
“Despite many banks focusing on developing relationships with business customers, there is a persistent perception among SMEs that they are unlikely to get external finance should they apply for it”
“The report states that many businesses have an expectation that they would be turned down, and so don’t apply in the first place.”
“While there is a need to challenge this mindset, there is also evidence that banks are continuing to fail them, when it comes to funding.”
“Banks will often offer loans, but with enough strings attached to make it difficult for SMEs to carry their plans through. Since the financial crisis, banks have tried to cut costs and improve their balance sheets, but this can come into direct conflict with the concept of them putting relationships first.”
Exploring the Alternatives
The UK market for financing options for SMEs is, in fact, a strong one, with a wide range of funding solutions available.
“The issue is one of raising awareness among SMEs, so they don’t simply think the only solution is an overdraft or loan, and if they can’t get that through their bank, then they abandon their plans.”
The Treasury Committee report notes that this lack of understanding is especially prevalent with companies that are at a very early stage in their development.
Making Alternatives Accessible
SMEs may not have the time or resources to research their funding options, and even if they did, they may still not be clear which options would best suit them.
“When you start your business, leadership may not be something you consider, especially if you start out as a sole trader, or a partner. But if your business expands, and you want it to continue to thrive, then there are aspects of leadership you must then consider.”
One of these aspects is delegation.
“Successful business people discover that they cannot do everything themselves and that it is advantageous and strategically sound to learn to delegate responsibilities”
The classic example of when this is absent is in a business where the owner cannot risk taking a holiday because only they know how the business runs.
“Good business leadership is about knowing when to relinquish strictly control, and to build something that will run without your intimate, hands-on involvement.
For a business to plan for growth, it must be structurally scaleable. If all the vital knowledge is concentrated in one key person, this will not be the case.
“Sustainable success comes from putting processes in place and, vitally, sharing them.”
Instructions not Impulses
If delegation is one part of the equation for long-term business success, the other part is instruction.
“Processes are integral to progress in business. They are the essential structure on which you build your success, and they make delegation straightforward.”
How a business accomplishes and carries out key tasks should be a matter of clear, documented record, providing absolute clarity to all involved.
“There’s a danger that business owners simply do things their way, but don’t share what they know with people they can rely on, meaning that there are gaps in people’s knowledge, which can lead to problems sooner or later”
To a great extent, a business’s reputation rests on its administration, and its administration will only work effectively and efficiently if it has clear processes to follow.
“This covers essentials such as processing orders, paying invoices and dealing with customers. If, for example, a key supplier isn’t paid on time simply because the boss is off sick, what does this say about a business and its overall readiness to step up to meet new challenges, never mind existing ones?”
Yes, businesses need to be agile and adaptable to survive, but they need a firm grounding for their processes to anchor them, so that they have a core stability.
“Your business shouldn’t be an ego thing. It’s not about you, but about your customers or clients, and about growing something that will take on a life of its own.
To discover how you can share knowledge and develop clear, documented processes, to strengthen your businesses growth, please call APD Resolutions on 07530 262855 or visit apdresolutions.com.
While competing in a digitally connected global marketplace is easier than it has ever been, one barrier remains: language.
The global language of business is English, and any global business owner or entrepreneur wishing to expand into overseas markets must master it, or risk not keeping up with the competition.
Hywel Griffiths, of APD Resolutions, is an experienced business coach, and, as he explains, he sees English language learning as an essential strategic component for many international businesses.
“Multinationals are making English their preferred language, and although in many local areas around the globe, English is not the main language for business, on an international level it is. Therefore, if you have global ambitions for your business, you must learn to use English effectively.”
Should You Develop a Language Strategy?
“In any business, a strategic plan is essential. For entrepreneurs and business owners whose first language isn’t English however, they must consider learning it as part of their strategy, and essential in achieving their objectives.”
To support businesses in meeting these strategic requirements, Hywel has expanded his services to include Teaching English as a Foreign Language (TFEL).
“APD Resolutions already specialises in business coaching, but we’re now also including English language teaching, because clearly it is an important aspect of global business”
Hywel’s teaching programme will be available through his own, unique digital platform, APD GOLD, with GOLD standing for Global Online Language Development.
“This modular programme is fully accessible online, and it provides full supporting material plus regular webinars. It’s designed to cover listening, grammar, writing and reading, with a more advanced level covering Business English specifically.”
Tutoring is RSA certified, and the courses are tailored to help students wishing to take the Cambridge English tests.
The Global Language Challenge to Business
“There are around 1.2 billion Mandarin speakers out there, and China is very much a prominent player on the world economic stage. But English is the established business language worldwide.”
Technology can break down many national and geographical barriers, enabling more and more people to trade on a global scale, but language is still a key facet of communication.
“If you want to do business internationally, whether you’re looking at the UK or further afield, then you must be proficient in English”
Even in non-English speaking countries, multinational companies such as Siemens and Nissan are making English their language of first-use.
“Attracting investors, attending key meetings and negotiating deals all require a clear understanding of English at an international level. If you’re serious about international trade, then you need to be serious about learning a globally-accepted language,” Hywel concludes. “That’s where we can help.”
To discover how APD GOLD could strengthen your international business communication and opportunities, please call APD Resolutions on 07530 262855 or visit apdresolutions.com.
One of the key ways of ensuring your business infrastructure is covering all the necessary bases is by having an operations manual.
As Hywel Griffiths of APD Resolutions points out, an operations manual provides a solid backbone to a company’s infrastructure, and helps ensure things run smoothly.
“When it comes to the day to day running of your business, you don’t want to be constantly distracted by firefighting administrative and other tasks when you could be focusing on growth. An operations manual is a significant step towards making these things run smoothly, if not automatically.”
What is Your Operations Manual For?
The operations manual is usually in the form of a binder or book, and will contain a company’s standard operating procedures.
“The temptation in a digital age is to see printed matter as somehow inessential, but having a printed record of your processes is a vital means of reinforcing them.”
The operations manual should include:
The hierarchy of the business, indicating who is responsible for what, and who they report to
Everything a given individual’s job entails
“Just as you’d expect to have a manual to consult if you got a new car, so the same applies to your business.”
“Being some sort of visionary is a great help in igniting that initial spark that gets things going, that launches then drives an enterprise in its early stages, but in the long-term, a sustainable business model needs clear procedures to be truly effective”