Do your staff-related anxieties betray a lack of ‘readiness’?

Ask a small business owner what worries them most in relation to staff or employment issues and one answer crops up again and again: how would I cope with the sudden loss of a key employee?

Isn’t this a great metaphor for the ‘growing up’ of a small business?  Perhaps the “key employee” concern is actually a symptom of deeper, underlying anxieties that owners experience as they nurture their business from infancy to maturity.  It begs the question: what does it actually take for your business to become bigger than any single person within it?

Indeed, there’s plenty to worry the owner/employer in a small, growing business.  From recruiting and retaining the right staff to staying on the right side of an ever growing number of legal requirements, accommodating progressive working practices in a small team, dealing with discipline, and facing up to tough decisions when tough decisions need to be made.  If you’re like me, you didn’t go into business to handle all this stuff.  Some of us are simply not equipped with the necessary diligence, patience and communication skills.  It took me a few years to realise that the most useful person in my business was the person who managed all these things for  me – but I never looked back.

Whether you’re a startup or an established niche brand, it’s likely you’ve built your own team – like all the best sports teams – around a backbone of key players with appropriate complementary skills.  Often they’ll be your co-founders, or your first “proper” employees – the ones you hired to bring-in the experience and expertise your business needed to maintain that forward momentum. Not surprisingly then, the loss of a key employee – part of the “backbone” of your team – can feel like having your legs kicked out from beneath you.

But hang on – surely “no one is indispensable”?

This slightly odious and over-used cliché perhaps ought to be reserved for use by football managers, politicians, and blood-thirsty sales managers.  Unpleasant as it is (one to avoid in the exit interview), I think it’s actually a useful litmus test for how “ready” your business is to cope with an unexpected disruption.  On one end of the scale, you’re utterly dependent on your key employee and it’s a case of “help, how will we manage?”.  At the other end of the scale, the business has moved on to a different place.  You’ll be sorry to see your valued colleague go, but it will be a hiccough rather than a disaster.  You can and will survive without her.

Let’s pursue this line of thinking further, examining the three stages of dependence on key employees, then identifying the traits of a small business that has matured sufficiently to efficiently handle the loss of a key employee.

Stage 1: RELIANCE

This is where it hurts most.  You’re working in an environment of perpetual change as the business evolves on an almost daily basis.  Decisions are taken on the hoof.  Your “backbone” team may be just one or two others, supplemented with some support staff.  There’s scant opportunity for documenting organisational processes or job specifications – there’s just no point as they’ll be out of date in no time.

Some businesses settle into this stage of development and are successful despite it.  For others, the nature of being a niche multi-channel retailer dictates that processes must be formalised if scalability is to be achieved.  If one of your key staff ends up on parental leave, emigrates to Canada, or falls long-term ill – you’ve got a serious challenge.  Whether on a personal level the circumstances elicit grief, commiseration, or congratulations – on a professional level you’ll be wishing your business was better prepared to ameliorate the significant and sudden impact of such an unforeseen departure.

Stage 2: VULNERABILITY

Your “backbone” of key players has strengthened and your team of support staff has grown – but you’re not out of the woods yet.  You’ve implemented company-wide systems and processes that are accessible and understood by all.  These include procedural manuals, up-to-date filing systems (both electronic and paper), properly administered software usernames and passwords, job descriptions, responsibilities and management authorities – all up-to-date and well documented.

Although no less likely to lose an employee, you’re already better placed to cope with the consequences – at least in terms of training a replacement should you be lucky enough to find one quickly.  And here lies the heart of your vulnerability: finding the right person can be nigh on impossible if you’re located ‘out of town’ (as many of us are), don’t have a big budget to splurge on a headhunter, and haven’t groomed an appropriate deputy from within your ranks.  Few small businesses are so risk averse that they invest in key person insurance.  It’s expensive (until you need it) – and doesn’t do anything to recruit new customers or increase order values.  However, depending on the policy wording and the circumstances, it could cover your recruitment costs as well as some hired help from a consultant or interim manager, giving you a little more time to reorganise internally.  It’s worth remembering too that consultants often have their ear to the ground and are sometimes able to recommend candidates who may not even be looking for a new job.

Stage 3:  MATURITY

Sensible enough not to rely on chance, by now you’ll have take steps to ensure that your business is underpinned by robust general health and sound organisational practice, coupled with a specific plan for replacing key personnel.  Your team may not be any bigger than it was at stage 2, but the momentum of your business will be more consistent, your growth will be more manageable, and you’ll be ready to handle the unexpected in ways that you previously never imagined.

A great example of this would be the rehearsal of certain situations – and we’re not talking about the fire drill (although that’s useful too).  Such rehearsals are particularly important if you’re likely to recruit a replacement from within your business, or merely re-organise responsibilities in order to best match the potential of your existing team.  Build a culture of shared responsibilities within teams by rotating duties, shadowing managers, and using holidays as an opportunity for support staff to practice an increased level of responsibility.  By encouraging a culture of nurturing and mentoring, junior staff members will enjoy a head start should they be required to step up and take on additional responsibilities.

Another example of ‘readiness’ is the business owner who has worked at developing and maintaining their professional network, paying particular attention to individuals they imagine could slot nicely into the business.  If you can name your reserve “backbone” of key staff, even it’s just a mental wish list, you’re more than one step ahead of the game.

There’s no magic vaccine that will immunise your business against the disruption of key employee loss.  It may not happen to you, or if it does, you might be lucky and find a queue of fantastic replacements forming miraculously outside your door.   If the queue doesn’t materialise, the greater the ‘state of readiness’ in your business, the more chance you have of mitigating any adverse impact and unnecessary delays.  Who knows, you might be smart enough to turn this number one challenge into an unexptected opportunity to propel your business forward to the next level.

So here’s a parting thought for you, and one that depends on your personal aspirations for the business:

At what point do you throw yourself into the equation? What if that key employee is you? Wouldn’t it be a testimony to your success if the business could dust itself down and move forward without you?

Article licensed for publication with Creative Commons “Attribution” terms.

First published in Catalogue & e-Business Magazine, April 2010

How to cut through geek-speak to unmask a supplier’s viability.

Ask the right question and a prospective technology supplier will reveal wonderfully useful information to help you in your evaluation. While merchant’s can feel intimidated by acronyms and jargon, you *can* talk tech about the product you’re thinking about buying. The secret is to ask qualitative questions, then follow the scent of evasion and pride. That’s because it’s often not just about the technology.

Most importantly, reflect on the fact that the more critical the supplier’s role in your operations, the greater the scrutiny you need to apply to the supplier itself -  the actual company. Products matter, software features matter, technology “stacks” sort of matter — but they evolve at a pace few of us are likely to totally understand. Trust your supplier to *really* understand. Through evaluating its technology, you can lead your supplier to demonstrate whether the company itself deserves your trust and investment.

Here’s an example:
A multi-channel merchant in search of a new ecommerce platform asked our evaluation of the search engine friendliness of a supplier’s URL’s or links. “They end in .asp. Is that OK?” Our question in reply, having nothing to do with SEO, sought to reveal the product’s technology foundations: “Why not end URL’s with .aspx?”  The intent of asking this is not to make a value judgement on the technology per se, but to give us an opening to explore the product’s evolution and infer the company’s health.

(We also answered the SEO question, too: Yes, .asp URL’s can assist your SEO efforts providing they resemble an English sentence, containing relevant keywords separated by hyphens, and in a “readable” style.

Let’s explore this example further: If a supplier’s product still relies on Microsoft’s old-style Active Server Pages, which a .asp file extension implies, then its notable that the product isn’t yet upgraded to the .NET framework. That matters because .NET is integral to Microsoft’s technology strategy — released circa 2002.

Seven years ago? Ah, so there’s a legacy flavor to this supplier’s product! There may be a perfectly good explanation for the supplier holding back. Ask for it. Maybe they’re not profitable enough to make the necessary investment. Or don’t think they have to bother given past success and present busyness. Or they won’t explain either way, being evasive. And maybe that’s because the founding partners split, and the remaining partner lacks expertise in managing technical operations and so he outsources its “maintenance” to India, and the software hardly evolves anymore.

All very interesting. But what, if you don’t know the difference between .asp and .aspx! How would you ever spot a vulnerability like that?

Even if tech acronyms are like Greek to you; still you can learn from this exchange. Ask leading questions, appealing to the supplier’s aspirations for its own product. People love to talk about their ‘babies’. Ask for qualitative descriptions. Prompt the supplier to describe what they’re proud of; they do have something to be proud of, yes? Pride’s important.

Suppliers also know what’s old and crusty about their product; give them a chance to describe all the great improvements they have planned. Ask why it matters to them. Sniff for evasion. Then read between the lines. Listen. Sometimes say nothing. Grunt and nod a bit.

Regardless of your comfort level with technology, remember that any question you ask will be more useful if it can’t be answered with a yes or a no. Your most effective questions will be those that can’t be answered with a definitive, factual response. Factual questions are less useful because we’re assuming you don’t know enough to evaluate the technical decision-making that drives a product’s evolution. “What’s the technology behind your product?” might serve to open the conversation, but does it mean anything to you if the answer is .php or .asp or .jsp?

Probably not. But you can learn to follow a scent. What sounds evasive? When do you hear pride? Explore this with multiple points of contact within the supplier’s company. Trust where it leads you, and keep asking why. In the end, you’ll be better informed when it comes to the biggest decision:  can you trust the company?

Cheat Sheet

Qualitative, leading questions you can ask a prospective supplier about its technology product without speaking geek:

1. Why is that important?
2. How does that help you serve me better?
3. What’s exciting about that to you?
4. Which part of it are you proud of?
5. How would you improve / upgrade that if you could?
6. Why haven’t you done it already?
9. When did you last do something like that?
7. What part draws the most support questions?
8. Why do you think that is?
10. What else?

About the authors:

Patrick Pitman, CEO of E-business Coach,
implemented his first ecommerce site in 1996.

Murray Kenneth has been a multi-channel merchant since 1998 and currently offers advice and
investment to growing merchants.

Article licensed for publication with Creative Commons “Attribution” terms.

First published in Catalogue & e-Business, June 2009

Image by mcsandstrom

“Your team is your greatest asset, and its overall value to your business is much greater than the cumulative value of the individuals within it.”

The sentiment behind this well-worn maxim is one that is impossible to resist, and many owner-operators of growing catalogue businesses yearn for that “dream team” of sparky, committed and hard-working devotees that will propel their enterprise forward towards success.  But in the cruel light of a frantic Monday morning spent fire-fighting the latest unforeseen challenge, your “dream team” of multi-channel superstars can feel more like a distant pipe-dream than a realistic goal.

Just how does an under-funded, under-resourced and over-stretched catalogue entrepreneur maximise the opportunity to build the best team his business can afford? Salary and recruitment costs can be significant barriers when you’re mindful of ensuring that overheads don’t grow faster than turnover.  In a buoyant sector such as ours, suitably qualified and experienced individuals can be hard to find – particularly if you are based in the provinces.  On top of all this, the time required to plan, recruit and train a new member of your team is often very substantial indeed.  Mistakes can be costly!

Here are some practical, common sense considerations to take into account when considering an increase to the headcount in your business:

Plan for your needs
Business planning and budgeting exist for good reason.  A proper annual strategic review provides direction and prioritisation, giving you plenty of time to plan for the team you need to drive growth.  If you’ve tried to recruit in a tearing hurry, you’ll appreciate the huge benefits of such planning.

Stay focussed on what you need and what you can afford – rather than what you would simply “like” to have.  A good reality-check is to share your plans with someone outside the day-to-day running of the business.  Use a trusted consultant or accountant.  If you have a board, use their knowledge and experience.  In the past I’ve created small “advisory groups” of shareholders, willing to contribute at a high level, three or four times a year, and free-of-charge too!  Such feedback and strategic input can provide tremendous comfort and encouragement for an owner-operator in what can often feel like a very isolated position at the helm of the business.

Consider all your options
My personal view is that small, growing, owner-managed businesses invariably need more good soldiers rather than more good generals.  We are engaged in a heavily process-driven working environment where the complex machinery of an effective multi-channel business needs to be well oiled and efficiently operated.  Achieve this, and you’ll have created more time for you to plan the route your business is going to take, and retain close control over operations and costs.

A simple skills audit of your existing team will help you think more creatively about the options available to you.  It’s quite likely that your planning will have identified a rather hybrid job spec, so some lateral thinking may be appropriate.  Internal re-organisation is often a great way to meet the changing needs of the business while at the same time enabling members of your team to progress their careers and broaden their personal skills set.  Furthermore, it will often mean that you can recruit for “safer” positions where you have retained experience (and training potential) within the organisation.  This is a great way to help build a “backbone” of key individuals who have broad experience across your organisation as well as a desire to progress their own careers in parallel with the success of the business.

Don’t forget to look externally too, particularly if you have identified a requirement for some specialised input.  Consultants can be great value for money when used effectively, bringing experience from other businesses and a quality of input that you are probably unable to afford on a full time basis.  For me, effective use of a consultant means regular but sparing input within the constraints of a tight remit.  Not only will you be filling a skill requirement on a short-term basis, but you will be adding value to the business by broadening your own knowledge and experience in the process.

Prepare for recruitment
When you’ve decided what you’re looking for, prepare a detailed written job specification in a format that clearly differentiates between the scope and responsibilities of the role, the skills or experience sought, and the personal characteristics of the ideal candidate.  Use your marketing skills to write a great job advert (making sure you don’t fall foul of any relevant legislation) and plan the interview process making sure you consider whether any practical testing is required.

The next challenge for the business on a budget is to find the most economical and effective means of reaching potential candidates.  This will, of course, depend on the type and level of position you are recruiting for but the traditional options include the local press, recruitment agencies, or generic online recruitment sites like fish4jobs.  Of course, our venerable trade publications, both offline and online, are likely to get your vacancy in front of suitable candidates who may not even be actively looking for a new role.  Many vacancies are taking advantage of social networking sites like LinkedIn and Facebook to promote their vacancy.  One enterprising business owner recently offered a “bounty” for a referral that led to a high level appointment in his business!  It’s worth remembering to create a “situations vacant” page on your website or even send a speculative email to customers within a certain radius of your base.  After all, a candidate who already knows your brand is at an immediate advantage!

Interview effectively
OK – we all tend to get on a roll when we start talking about our business so it’s important to plan the interview well and stick to the schedule.  A first interview should probably take around 40-60 minutes – plenty of time for you to present a brief overview of the business and the role your seeking to fill, then ask lot’s of open, leading questions that will explore the candidates relevant skills and experience.  Ever since I interviewed a prospective buyer who didn’t know how to calculate a gross margin, I’ve always liked to ask a few technical questions relevant to the role in question.  Take notes or use a pre-prepared “score sheet” with spaces for certain comments – it makes it much easier to compare candidates later.  I like to take a photo (not always a popular move!) and interview with a colleague so that between us we can make sure nothing is missed and we remember later who we are talking about.

Make it a good induction
Once the decision is made, allow the time to make a really good plan of how your precious employee will spend their first days in your business.  It’s amazing how quickly a new member of the team can contribute in a positive way given the proper guidance.  Ensure you team makes them feel welcome and that they get the opportunity to spend some time in every department.  Be prompt to provide a contract and a company handbook, and spend time agreeing objectives and how progress against them will be measured.  Show them you care – careful nurturing and support will pay dividends in the long run!

Be prepared to take a risk
It’s all very well having a fantastic plan and an efficient, systematic process but any true entrepreneur should be prepared to rip it up and throw it out the window at the sniff of a good opportunity.  I’ve heard some of the great leaders in this business express their regrets at not hiring the right calibre of person sooner, but I’ve never heard anyone lament the fact that they employed a really good person too soon!  Recruiting someone with contrasting style, better earning power, and quite simply superior skills or experience to yourself can be a daunting prospect – but the sooner you come to terms with it the better for the long term future of your business!  Similarly, you wouldn’t want to miss out on the maverick candidate if he could bring some X-Factor to the business, or the rough diamond that just needs a little polishing in order to shine at the heart of your business for years to come.  You’ll never know until you try.

Get creative when growing your team:
•    Plan very well
•    Look hard within the business
•    Recruit creatively
•    Use external expertise to save cost
•    Build a solid backbone for your business

Recruit staff as cleverly as you recruit customers:
•    Use word of mouth
•    Work all the channels
•    Offer incentives for recommendations
•    Be targeted with advertising
•    Make your retention good

© Murray Kenneth 2009
First published in Catalogue & e-Business

Image courtesy of atomicshed

I don’t think I was the first naïve owner of a fledgling multi-channel brand to think that fulfilment was not a core part of my business.  Surely it was the clever creative, the inspired range selection and the hard-nosed marketing that would make or break my company – rather than a straightforward commodity service like fulfilment?

Of course it’s blindingly obvious now, with the benefit of 20:20 hindsight and a career strewn with the wreckage of lessons learned the hard way.  Fulfilment is as fundamental as your product range.  Get it wrong at your peril.  At worst, your hard-won customers will haemorrhage away at a rate at which you’d give your eye-teeth to recruit them.  At best, your inefficiencies will erode your bottom line leaving you scratching your head and contemplating how you are ever going to make a decent profit.

So if fulfillment is so critical, why do we afford it so little management time and strategic input?  Few MD’s park their desks in the distribution centre, and most would admit to spending less time there than they know they should.  After all, it can be cold, a bit dusty, and the tea invariably leaves a nasty tannin aftertaste! Perhaps this all contributes to what the process analysts would call “paradigm blindness” – a self-assured view that “the way we do it here is the best way because we’re unique and it’s the way we have always done it”.  How many times do you hear people say that “if it ain’t broke – don’t fix it”?  It’s not generally a good answer – and too much laissez-faire can result in too little savoir-faire at the top of your organisation.

This same “paradigm blindness” is quite possibly the impetus that the business analysts needed to invent the notion of benchmarking back in the early 1990’s.  Benchmarking is a business tool that is at once a common understanding of performance and a stimulus to change existing practices or adopt new ones in order to improve that performance.  In simple terms, it’s the creation of standards (KPI’s) against which performance can be measured.  Extend the notion to collaborative benchmarking and you might attain a measure of a specific competitor’s performance or even industry-wide performance – against which you can measure the relative performance of your own company.  More on collaborative benchmarking later!

At this point it’s worth reiterating the position from which I write this.  My experience is not that of a business analyst or a logistics expert, but merely that of the generalist owner-manager of a B2C multi-channel SME: if you like a Jack-of-all-trades who is focused merely on the daily challenge of planning and prioritising the efforts of the business.  My focus is on the internal benchmarking of performance to assist with this business planning and prioritisation.

So who else can benefit from performance benchmarking in the distribution centre?  The rest of my team will have varying priorities which all need to be considered as part of the benchmarking process.  For example, the Marketing Director will be concerned with measuring performance against the service claims he liberally dispenses in an effort to win and keep those precious customers.  How quickly do we deliver?  How accurately do we pick orders?  How well do we package a parcel and how long do we take to process a return?

On the other hand, the Finance Director will be pre-occupied with ensuring costs are constrained with predetermined budgets, identifying opportunities to increase efficiency, and generating enough empirical evidence to support his budget for next year.  The Fulfilment Manager will be interested in measuring the cost and efficiency of his team, and planning properly for the peaks and troughs in his workflow.  The Contact Centre need to accurately set customers’ expectations in terms of delivery and returns processing, and take comfort in a downward trend in those little mistakes that can cause big customer service headaches.

In a large business, the infrastructure and systems is likely to already exist to provide the business data required to benchmark your fulfilment operation.  However, if you’re a fast-growing SME like so many of the niche businesses in the multi-channel sector, you’ve probably had to make it up on the hoof, or rely on your 3rd party provider to crunch the numbers in a reliable and consistent manner.  And this consistency really is crucial when it comes to the measurement of your KPI’s.  In my view, if you can’t define exactly how a KPI is measured, you shouldn’t be taking it at face value.  Furthermore, if your distribution centre KPI’s take more than 30 minutes a week to produce, they’re either too complicated for your business, or you need to invest in some means of easily producing the data.

So what really matters?  You can ask a roomful of multi-channel experts and you’ll almost certainly get a handful of common answers as well as a clutch of interesting ideas that stem from different businesses having different needs.  Here’s a short selection of favourites from various sources:

1.    Total fulfilment costs as a % of invoiced sales.
It’s about as basic a measure of fulfilment efficiency as you can get – but could you say what’s included in your calculation (returns, fixed costs, management costs?) and are you measuring consistently?

2.    Returns processing time.
For me this is a great indicator of an efficient operation.  Measure the average time in days that it takes to process a return.  If your organisation prides itself on service, you won’t find a heap of returns hidden in a dark corner of the warehouse awaiting processing.

3.    Average cost to pick, pack and despatch an order.
A fundamental measure that everyone in your team should be aware of – and a number that highlights painfully the horrible impact on the bottom line of backorders.

4.    Average delivery cost per despatch.
It’s the number that tells you whether you’re using the right combination of delivery options, and how much your free delivery promotions are costing the company.

5.    Average time to pick an order.
This is really about where you keep your fastest moving items and how good you are at monitoring it.  It’s common for 80% of orders to be picked from 20% of locations – and incredibly, your team can spend up to 50% of their time travelling to and from picking locations.  That can add up to a lot of time.

6.    Orders awaiting despatch.
It’s simple, easy to measure consistently, and an invaluable reflection on your demand forecasting and resource planning.  It’s also interesting to express this measure as a % of total orders and aggregate it over a week.

7.    Employee turnover
Some studies have indicated that 40% of employees are considering changing job and many would do so for only a marginal increase in their hourly rate.  Recruitment costs money and it can take months to bring a new team member up to full speed.  There’s certainly more than a little truth in the saying that “employees don’t leave bad companies, they leave bad managers”.

There are some obvious measures that I’ve not mentioned such as Fill Rate, Backorder Rate, Despatches per Order and so on.  There’s not doubt that they are also crucial metrics but I’ve not included them in this shortlist as they do not solely reflect on the performance of the distribution centre.

Internal benchmarking of your fulfilment operation can provide universally understood measurements of performance and indicate important trends that enable your team to identify areas and opportunities for saving money, adding value, planning resources or evaluating 3rd party outsourcing options.  Don’t underestimate the importance of anecdotal evidence too, but the numbers don’t lie providing the methodology is understood and the measurement is consistent.

Finally, I mentioned that I would return to the notion of collaborative benchmarking and here’s a gauntlet I’d like to throw down for the Catalogue Exchange.  The multi-channel retail sector is an unusually co-operative place to work and we are fortunate enough to finally have a truly representative trade association that is committed to sharing information and supporting new and growing businesses.  How about some true collaborative benchmarking across the sector, not solely restricted to fulfilment but across the board, supported and managed by the Catalogue Exchange?  Such data would provide a priceless resource that would not only help new businesses focus on developing in the right direction, but perhaps save a few of the many casualties our sector seems to suffer.

© Murray Kenneth 2009
First published in Catalogue & e-Business

Hard-working entrepreneur WLTM generous, sharing M or F banker for LTR – deep pockets & GSOH essential. Box 3428.

Is our dream bank manager really out there?  Someone who’ll always be there to support us when the going gets tough, encourage and nurture us, share our risks as well as our profits?

It’s a touching notion, but one that’s probably an anathema to many business managers as they struggle with their “virtual” banking relationship and an attitude to the sharing of risk that’s based on the philosophy of “me first”.  It’s no wonder that two thirds of us are apparently dissatisfied with our banks, especially given the stream of news stories featuring record profits, sub-prime jitters, and Northern Rock.  Merchant bankers, eh?  Is that just Cockney-rhyming slang?

Frivolity aside, our bank is a usually a key stakeholder in our business – and successful stakeholder relationships often pay dividends at the end of the day.  So what’s the secret?  How do we extract the best from the relationship?  How do we become more than just an account number to our bank manager, and what is there to gain from making the effort?

The benefits of a good relationship

1.    Save on costs

Benefit from low or even free rates for standard banking services such as monthly fees, transaction costs and overdraft charges.

2.    Borrow better

Enjoy preferential borrowing rates, gain access to loan products that may not be generally available, and the minimise corporate and personal security you may need to put up.

3.    Stay informed

Get the heads-up on new products and services that can help you save money or streamline your business processes.

4.    Be prepared

A manager that knows and understands your business is better prepared to act quickly for your benefit in times of opportunity or crisis.

All these benefits are real, tangible and translate directly to the bottom line.  In certain cases, they can make the difference between the success and failure of your business.

Fostering a productive relationship

In order to foster a positive relationship with our bank, the first thing we need is a bank manager.  If yours disappeared into the ether to join your Royal Mail account manager, if you never had one in the first place, or if your existing manager is not a business specialist – then now’s the time get a new one!  If your bank can’t provide you with a commercial relationship manager, you’re probably with the wrong bank.

It’s so important that we meet our bank manager in person, and meet him regularly – especially if we are intending to cultivate a long term and mutually beneficial relationship.  It may seem like a chore when there’s little to report, but consider it an investment in time – we never know when we’ll need him.  Get to know him (or her) a little bit: find out a bit about him and see what common ground you have on a personal level.  Not only does it strengthen the relationship, but it makes business that much more interesting when you’re dealing with “real” people!

Next, it’s down to business.  Make sure your manager understands your business – not necessarily every intricacy, but the basic principles of your industry, your sector, its cash-flow dynamics and its risks.  Provide a copy of your latest business plan and highlight any important changes.  Bring along some catalogues or other marketing collateral to bring the business to life.  Finally, and most importantly, provide enough in the way of basic financial reporting to satisfy your bank manager that your business has effective and efficient financial control arrangements in place and remains financially viable.  Ask for guidance on what your manager would like to see, and solicit general feedback on your plans and performance, and the ways in which the bank can assist you.

Banks don’t tend to like nasty surprises.  If the business is experiencing difficulties it’s important that you forewarn your bank manager in advance of any likely ramifications for your obligations to the bank, or the general health of your balance sheet.  Come clean by explaining the cause of the problem, and detail the plans that are in place for getting the business back on track.  As in all relationships, poor communication can often cause frustrations and exacerbate your difficulties.  Understand your bank manager’s situation and avoid putting him in a difficult situation.

Many of us place great value on the longevity of a business relationship, particularly in a constantly changing commercial environment that seems designed to encourage anything but.  It’s certainly possible to build a good rapport with your bank manager in a short space of time, but add in some longevity and you will establish a powerful relationship that may prove invaluable to the success of your business.

It may not last forever!

As your business evolves, don’t forget to keep on top of the relationship.  Periodically review the products and services you use, and in particular keep an eye on their terms and conditions – it’s quite possible that they will need some adapting as you grow.

It’s often the case that as circumstances change, compelling reasons may arise for changing your banking arrangements – however good your relationship may be with your bank manager.  In such situations, remember to make a proper evaluation of the whole package of products and services on offer.  Will the service justify the cost?  Will you have access to the most suitable and best value funding?  Will you have a bank manager who is able and has the time to understand your business?  Will you be providing a fair level of security on your borrowing?

Of course, it’s always possible to mix and match your banking products and services from more than one provider – but there will be a trade off in terms of your value to each provider and the lack of single point of contact.

In this age of the internet, it’s as easy to make a superficial comparison of banking products and charges as it is to, well…, as it is to scan the Lonely Hearts ads.  Make sure that someone in your financial team is shopping around for the best deals so that you have the ammunition to capitalise on the strength of your relationship with the bank manager and squeeze out the very best deals possible from your existing bank without having to up sticks and leave.

Banking comparison websites
Compare charges and offers at the British Bankers Association website:
Or the Simply Business website.

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Managing your bank manager – takeaway tips
•    Understand the benefits of a good relationship – it could make or break your business
•    Put the effort in – meet regularly, share information, get to know him
•    Keep on top – know what it costs, understand your options, use the strength of your relationship to put profit on the bottom line

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© Murray Kenneth 2009
First published in Catalogue & e-Business