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The Independent Business Organisation

Small Business in a Cold Climate. MARK FIELDING Chief Executive ISME. The Independent Business Organisation. TRUISMS. Left to themselves, costs always rise and selling prices always fall. Competitors are always active Clients / Customers always want lower prices.

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The Independent Business Organisation

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  1. Small Business in a Cold Climate MARK FIELDING Chief Executive ISME. The Independent Business Organisation

  2. TRUISMS • Left to themselves, costs always rise and selling prices always fall. • Competitors are always active • Clients / Customers always want lower prices. The Independent Business Organisation

  3. RESOLUTIONS ARE NOT JUST FOR THE NEW YEAR. • I will prepare for the worst and not hope for the best. • I will improve my cashflow. • I will examine my costs/suppliers. • I will look at my business plans. • I will prepare for interest rate rises. The Independent Business Organisation

  4. Stocks Debtors Creditors Payroll Insurance Self Directed Trusts Pre Feb 2001 Pension contributions Deposit Int. Mortgage Int. Cheque to eBanking Overheads Telephone Fuel Stationery Postage Audit Rates Energy Waste SAVINGS The Independent Business Organisation

  5. STOCKS • Reduce order quantity • Increase frequency • Get rid of obsolete / slow moving stock • Use local stockists. • No ordering extra "just in case“ Save €20 in every €100 of Stock reduction. The Independent Business Organisation

  6. STATISTICS ARE SCARY 1 IN 4 COMPANIES GO TO WALL BECAUSE OF LATE PAYMENTS POOR PAYMENT PRACTICES COSTING MILLIONS The Independent Business Organisation

  7. Well known JOKES Of course I’ll respect you in the morning. The cheque is in the post. I’m with the Government and I’m here to help you. THERE’S ANOTHER ONE……. The Independent Business Organisation

  8. Joke Number 4. Late Payment in Commercial Transactions Legislation 7TH August 2002. The Independent Business Organisation

  9. The Independent Business Organisation

  10. The Independent Business Organisation

  11. THE EFFECT OF GOVERNMENT INTERVENTION WAITING LONGER AUTUMN ‘02 29% AUTUMN ‘08 38%

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

  13. Example of the affect on SMEs. The Independent Business Organisation

  14. URGENT REVIEW NEEDED The Independent Business Organisation

  15. 30 days for everyone The Independent Business Organisation

  16. DEBTORS • Measure in days outstanding e.g. Debtors divided by average sales over previous three months multiplied by 30. • Set a target based on what is feasible in your Industry. • Take annual cost as 15%. (Bank Int 8% +”Chasing costs” 7%) The Independent Business Organisation

  17. DEBTORS • Debtors 60k • Average monthly sales (prev. 3 Mths) 15k (60 / 15) x 30 = 120 Days • Encourage debtors to pay you by Credit Transfer, Direct Debit. • Print your account number, NSC, IBAN, BIC on your statements and invoices • Use eBanking. • Invoice by email. Save €15 in every €100 debtor reduction. The Independent Business Organisation

  18. CREDITORS • Measure credit in days e.g. Creditors divided by average purchases over previous three months multiplied by 30. • Set a target based on what is feasible in your Industry. • Negotiate longer credit terms. • Look for discount for early payment. The Independent Business Organisation

  19. TIPS ON THINGS TO DOBANK PAYMENTS • Review end-to-end payments in your business • If these have not been recently reviewed, you will find efficiencies • Review cheques written • Number and purpose SAVE OVER €1 ON EVERY CHEQUE YOU PAY OUT. The Independent Business Organisation

  20. Writing 100 Cheques • 100 x .50 cent = 50.00 (Bank) • 100 x .15 cent = 15.00 (Stamp) • 100 x Postage = 55.00 (.55c) • 100 x Envelope = 5.00 • 100 x Chq Print = 2.00 • 100 x Reconciliation = 9.00 • TOTAL = €136 To make 100 payments electronically COSTS €24 Save 112 euro The Independent Business Organisation

  21. PAYROLL • Reduce overtime hours through better scheduling, tighter control, more people, part time people – only after 40 hours! • Reduce average rate through changing mix of people, apprentice, trainees, etc. • Control absenteeism. Record and review with persistent absentees. • Hold ‘back to work’ interviews; this can reduce uncertified absences by as much as 60% • Time Clock. (wasted hours) The Independent Business Organisation

  22. PAYROLL • Family members–use of allowances & bands. • Pension payment as part of wage negotiation • Bus/train ticket exempt from BIK and PRSI. The Independent Business Organisation

  23. Don’t treat your general insurance renewal as a JIT. Use ‘Three Month Rule’. Explore switching to Fee only, or Fee Offset, and Commissions Rebates. Involve & Reward Employees. Insist on written commission and charges disclosure. INSURANCETIPS ON THINGS TO DO The Independent Business Organisation

  24. ISME COST REDUCTION • Telephone Potential 34% savings • Motor Cost Card Potential 20% savings • Stationery Potential 20% savings • Postage Potential 42% savings - 55c up to 95c • Audit Exemption €7.3m (€317k, 1.5m) • Rates Revaluation Open to negotiation. • Energy CFL bulbs €58 saving over life of bulb. Turn off all appliances. The Independent Business Organisation

  25. RESOLUTIONS ARE NOT JUST FOR THE NEW YEAR. (More) • I will secure my business against crime • I will seek advice on my legal compliance • I will keep my staff safe • I will look at whether waste can be reduced • I will take time out to relax - for the good of my health, and my business The Independent Business Organisation

  26. TECHNOLOGY ADVANCE & ECONOMIC GROWTH • Scientific Discovery & Invention • Innovation : Commercial application of Inventions • Technology Diffusion : Trickle down change from Technology Leaders to other Industries The Independent Business Organisation

  27. TECHNOLOGY ADVANCES • Ireland’s investment in modern technologies, particularly IT is relatively low. • Adaptation of School Students to ICT is insufficient The Independent Business Organisation

  28. FORGET INVENTION THINK ABSORPTION THEN THINK INNOVATION The Independent Business Organisation

  29. THINK ABSORPTION • Importance of External knowledge • Employ qualified engineers • Modernise management • Increase external linkages • Form networks • Develop a Learning Process within company The Independent Business Organisation

  30. Social Partnership Tripartite Model The unions – in public sector 95% of employees are union members compared to aprox 28% in private sector.(<9% in SMEs) Employers – big business that can afford the wage increases as well as the many commitments under the social arm of the talks. The Government – who as one of the largest employers should be ardent advocates of pay restraint yet seem incapable of imposing any restraint on demands and continue to act as if they are simply facilitators in the talks! The Independent Business Organisation

  31. CONCERNS • The structure is outdated. • Different economic environment now. • Agreement viewed by the SME Community as being a closed shop dominated by big business and the unions. • Little room for local bargaining for increased productivity for wage increases. • No consideration is given to the labour-intensive sectors. The Independent Business Organisation

  32. Advocacy - SME • 98% of all business is SME business • 55% of all employees are in SMEs. • SMEs are distinguished neither by virtue of the numbers they employ nor turnover but rather by the personal risk-taking of the Proprietor in the business venture. The Independent Business Organisation

  33. SMEs V Big Business • SMEs are driven, managed, and directed by human motivation. • Conversely, large businesses and commercial semi-states are employee professionally managed and driven by the needs of capital. The Independent Business Organisation

  34. NEVER FEEL ALONE IN BUSINESS www.isme.ie 01 6622755 The Independent Business Organisation

  35. THANK YOU FROM ISME THE INDEPENDENT BUSINESS ORGANISATION & VOICE OF THE SMALL & MEDIUMBUSINESS OWNER. The Independent Business Organisation

  36. ISME The Independent business organisation Visit our WEB SiteWWW.ISME.IE The Independent Business Organisation

  37. ISME 17 KILDARE STREET, DUBLIN 2. IRELAND. TEL: 00353 1 6622755 FAX: 00353 1 6612157 EMAIL: INFO@ISME.IE WEB: ISME.IE The Independent Business Organisation

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