The Independent Business Organisation

The Independent Business Organisation

Small Business in

a Cold Climate

MARK FIELDINGChief Executive

ISME.


TRUISMSTRUISMS Left to themselves, costs always Left to themselves, costs always

rise and selling prices always fall.rise and selling prices always fall.

Competitors are always activeCompetitors are always active

Clients / Customers always want Clients / Customers always want lower prices.lower prices.


RESOLUTIONS ARE NOT JUST FOR THE NEW YEAR.

1. I will prepare for the worst and not hope for the best.

2. I will improve my cashflow.

3. I will examine my costs/suppliers.

4. I will look at my business plans.

5. I will prepare for interest rate rises.


SAVINGSSAVINGS StocksStocks DebtorsDebtors CreditorsCreditors PayrollPayroll InsuranceInsurance Self Directed Self Directed

TrustsTrusts Pre Feb 2001 Pre Feb 2001

Pension Pension contributionscontributions

Deposit Int.Deposit Int. Mortgage Int.Mortgage Int. Cheque to Cheque to

eBankingeBanking OverheadsOverheads

TelephoneTelephoneFuelFuelStationeryStationeryPostagePostageAuditAuditRates Rates EnergyEnergyWasteWaste


STOCKSSTOCKS Reduce order quantityReduce order quantity Increase frequencyIncrease frequency Get rid of obsolete / slow moving stockGet rid of obsolete / slow moving stock Use local stockists.Use local stockists.

No ordering extra No ordering extra "just in case“"just in case“

Save €20 in every €100 of Stock Save €20 in every €100 of Stock reduction.reduction.


STATISTICS ARE SCARYSTATISTICS ARE SCARY

1 IN 4 COMPANIES GO TO 1 IN 4 COMPANIES GO TO WALL BECAUSE OF LATE WALL BECAUSE OF LATE PAYMENTSPAYMENTS

POOR PAYMENT PRACTICES POOR PAYMENT PRACTICES COSTING MILLIONSCOSTING MILLIONS


Well known JOKESWell known JOKES

1.1. Of course I’ll respect you in the Of course I’ll respect you in the morning.morning.

2.2. The cheque is in the post.The cheque is in the post.3.3. I’m with the Government and I’m here to I’m with the Government and I’m here to

help you.help you.

THERE’S ANOTHER ONE…….THERE’S ANOTHER ONE…….


Late Payment in Commercial Transactions

Legislation7TH August 2002.

Joke Number 4.


06/06 09/06 12/06 03/07 06/07 09/07 12/07 03/08 06/08 09/08

61

64

62

61

61

60

62

63

67

65

56

58

60

62

64

66

68

SME DEBTOR DAYS OUTSTANDING


LONGER WAITING TIME

15% 15%

9%

15%

26% 26%23%

32%

38%

40%

16%17%19%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

THE EFFECT OF THE EFFECT OF GOVERNMENT GOVERNMENT INTERVENTIONINTERVENTION

WAITING LONGERWAITING LONGER

AUTUMN ‘02AUTUMN ‘02 29%29%

AUTUMN ‘08AUTUMN ‘08 38%38%


“Unless you're gonna send someone out to break my legs, my bookie gets paid first.”


Example of the affect on SMEs.


URGENT URGENT REVIEW REVIEW NEEDEDNEEDED


30 days for 30 days for everyoneeveryone


DEBTORSDEBTORS

Measure in days outstanding e.g. Measure in days outstanding e.g. Debtors divided by average sales over Debtors divided by average sales over previous three months multiplied by 30.previous three months multiplied by 30.

Set a target based on what is feasible in Set a target based on what is feasible in your Industry.your Industry.

Take annual cost as 15%.Take annual cost as 15%.

(Bank Int 8% +”Chasing costs” 7%)(Bank Int 8% +”Chasing costs” 7%)


DEBTORSDEBTORS DebtorsDebtors 60k60k

Average monthly salesAverage monthly sales (prev. 3 Mths)(prev. 3 Mths) 15k15k

(60 / 15) x 30(60 / 15) x 30 == 120 Days120 Days

Encourage debtors to pay you by Credit Transfer, Encourage debtors to pay you by Credit Transfer, Direct Debit.Direct Debit.– Print Print youryour account number, NSC, IBAN, BIC on account number, NSC, IBAN, BIC on youryour statements statements

and invoicesand invoices Use eBanking.Use eBanking. Invoice by email.Invoice by email.

Save €15 in every €100 debtor reduction.Save €15 in every €100 debtor reduction.


CREDITORSCREDITORS

Measure credit in daysMeasure credit in days

e.g. Creditors divided by average e.g. Creditors divided by average purchases over previous three months purchases over previous three months multiplied by 30.multiplied by 30.

Set a target based on what is feasible in Set a target based on what is feasible in your Industry.your Industry.

Negotiate longer credit terms.Negotiate longer credit terms. Look for discount for early payment.Look for discount for early payment.


TIPS ON THINGS TO DOTIPS ON THINGS TO DOBANK PAYMENTSBANK PAYMENTS

Review end-to-end payments in your Review end-to-end payments in your businessbusiness

If these have not been recently reviewed, If these have not been recently reviewed, you will find efficienciesyou will find efficiencies

Review cheques writtenReview cheques writtenNumber and purposeNumber and purpose

SAVE OVER €1 ON EVERY CHEQUE YOU PAY OUT.


Writing 100 Cheques Writing 100 Cheques

100 x .50 cent 100 x .50 cent = 50.00 (Bank)= 50.00 (Bank) 100 x .15 cent 100 x .15 cent = 15.00 (Stamp)= 15.00 (Stamp) 100 x Postage 100 x Postage = 55.00 (.55c)= 55.00 (.55c) 100 x Envelope 100 x Envelope = 5.00= 5.00 100 x Chq Print100 x Chq Print = 2.00= 2.00 100 x Reconciliation100 x Reconciliation = 9.00= 9.00

TOTALTOTAL = €136 = €136

To make 100 payments electronically COSTS €24To make 100 payments electronically COSTS €24

Save 112 euro Save 112 euro


PAYROLLPAYROLL

Reduce overtime hours through better Reduce overtime hours through better scheduling, tighter control, more scheduling, tighter control, more people, part time people – only after 40 people, part time people – only after 40 hours!hours!

Reduce average rate through changing Reduce average rate through changing mix of people, apprentice, trainees, etc. mix of people, apprentice, trainees, etc.

Control absenteeism. Record and review Control absenteeism. Record and review with persistent absentees.with persistent absentees.

Hold ‘back to work’ interviews; this can Hold ‘back to work’ interviews; this can reduce uncertified absences by as much reduce uncertified absences by as much as 60%as 60%

Time Clock. (wasted hours)Time Clock. (wasted hours)


PAYROLLPAYROLL

Family members–use of Family members–use of allowances & bands.allowances & bands.

Pension payment as part of Pension payment as part of wage negotiationwage negotiation

Bus/train ticket exempt from Bus/train ticket exempt from BIK and PRSI.BIK and PRSI.


INSURANCEINSURANCETIPS ON THINGS TO DOTIPS ON THINGS TO DO

Don’t treat your Don’t treat your general insurance general insurance renewal as a JIT. Use renewal as a JIT. Use ‘Three Month Rule’.‘Three Month Rule’.

Explore switching to Explore switching to Fee only, or Fee Fee only, or Fee Offset, and Offset, and Commissions Commissions Rebates.Rebates.

Don’t treat your Don’t treat your general insurance general insurance renewal as a JIT. Use renewal as a JIT. Use ‘Three Month Rule’.‘Three Month Rule’.

Explore switching to Explore switching to Fee only, or Fee Fee only, or Fee Offset, and Offset, and Commissions Commissions Rebates.Rebates.

Involve & Reward Involve & Reward Employees.Employees.

Insist on written Insist on written commission and commission and charges disclosure.charges disclosure.


ISMEISME COST REDUCTION COST REDUCTION TelephoneTelephone Potential 34% savingsPotential 34% savings Motor Cost CardMotor Cost Card Potential 20% savings Potential 20% savings StationeryStationery Potential 20% savingsPotential 20% savings PostagePostage Potential 42% savings Potential 42% savings

- 55c up to 95c- 55c up to 95c AuditAudit Exemption €7.3m (€317k, 1.5m)Exemption €7.3m (€317k, 1.5m) Rates RevaluationRates Revaluation Open to negotiation.Open to negotiation. EnergyEnergy CFL bulbs €58 saving CFL bulbs €58 saving

over life of bulb. over life of bulb. Turn off all appliances. Turn off all appliances.


RESOLUTIONS ARE NOT JUST FOR THE NEW YEAR. (More)

1. I will secure my business against crime

2. I will seek advice on my legal compliance

3. I will keep my staff safe

4. I will look at whether waste can be reduced

5. I will take time out to relax - for the good of my health, and my business


TECHNOLOGY ADVANCE & TECHNOLOGY ADVANCE & ECONOMIC GROWTHECONOMIC GROWTH

Scientific Discovery & InventionScientific Discovery & Invention

Innovation : Commercial application of Innovation : Commercial application of InventionsInventions

Technology Diffusion : Trickle down change Technology Diffusion : Trickle down change from Technology Leaders to other Industriesfrom Technology Leaders to other Industries


TECHNOLOGY ADVANCESTECHNOLOGY ADVANCES

Ireland’s investment in modern Ireland’s investment in modern technologies, particularly IT is relatively low.technologies, particularly IT is relatively low.

Adaptation of School Students to ICT is Adaptation of School Students to ICT is insufficientinsufficient


FORGET INVENTION

THINK ABSORPTION

THEN THINK INNOVATION


THINK ABSORPTION

Importance of External knowledgeImportance of External knowledge Employ qualified engineersEmploy qualified engineers Modernise managementModernise management Increase external linkagesIncrease external linkages Form networksForm networks Develop a Learning Process within Develop a Learning Process within

companycompany


Social PartnershipSocial PartnershipTripartite ModelTripartite Model

The unionsThe unions – in public sector 95% of employees – in public sector 95% of employees are union members compared to aprox 28% in are union members compared to aprox 28% in private sector.(<9% in SMEs)private sector.(<9% in SMEs)

Employers Employers – big business that can afford the – big business that can afford the wage increases as well as the many wage increases as well as the many commitments under the social arm of the talks. commitments under the social arm of the talks.

The GovernmentThe Government – who as one of the largest – who as one of the largest employers should be ardent advocates of pay employers should be ardent advocates of pay restraint yet seem incapable of imposing any restraint yet seem incapable of imposing any restraint on demands and continue to act as if restraint on demands and continue to act as if they are simply facilitators in the talks! they are simply facilitators in the talks!


CONCERNSCONCERNS

The structure is outdated. The structure is outdated. Different economic environment now. Different economic environment now. Agreement viewed by the SME Agreement viewed by the SME

Community as being a closed shop Community as being a closed shop dominated by big business and the unions. dominated by big business and the unions.

Little room for local bargaining for Little room for local bargaining for increased productivity for wage increases.increased productivity for wage increases.

No consideration is given to the labour-No consideration is given to the labour-intensive sectors. intensive sectors.


Advocacy - SMEAdvocacy - SME

98% of all business is SME business98% of all business is SME business

55% of all employees are in SMEs.55% of all employees are in SMEs.

SMEs are distinguished neither by virtue SMEs are distinguished neither by virtue of the numbers they employ nor of the numbers they employ nor turnover but rather by the personal risk-turnover but rather by the personal risk-taking of the Proprietor in the business taking of the Proprietor in the business venture.venture.


SMEs V Big BusinessSMEs V Big Business

SMEs are driven, managed, and directed SMEs are driven, managed, and directed by human motivation. by human motivation.

Conversely, large businesses and Conversely, large businesses and commercial semi-states are employee commercial semi-states are employee professionally managed and driven by professionally managed and driven by the needs of capitalthe needs of capital..


NEVER NEVER FEEL FEEL ALONE IN ALONE IN BUSINESSBUSINESS

www.isme.ie

01 6622755

http://www.isme.ie/


THANK YOU

FROM

ISMEISME

THE INDEPENDENT BUSINESS ORGANISATION & VOICE OF

THE SMALL & MEDIUM BUSINESS OWNER.


ISME

The Independent business organisation

Visit our WEB Site

WWW.ISME.IE


ISMEISME17 KILDARE STREET,17 KILDARE STREET,

DUBLIN 2.DUBLIN 2.

IRELAND.IRELAND.

TEL: TEL: 00353 1 662275500353 1 6622755

FAX: FAX: 00353 1 661215700353 1 6612157

EMAIL: EMAIL: [email protected]@ISME.IE

WEB:WEB: ISME.IEISME.IE

mailto:[email protected]

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