Ask the majority of the UK population about bankers bonus payments and they will tell you that they are overpaid, have been bailed out by us and are parasites. But whats the truth? Are the bonus payments justified?
I’m not sure if the payments are justified for each individual, but in principle I belive huge bonus payments are earned.
It is in the interests of each bank to employ the very best. If a banker can make billions for the bank, then why is not worth a million or even 10 million in bonus. That makes sense for me. Its down to the management of the bank to make sure that the bonus matches the result.
Thats where the public lose faith. They somehow believe that making money for banks is easy. It is ‘just’ gambling, or ‘just’ charging huge amounts to us. The truth is much more complex, and they make money with incredibly complex deals and that requires skill.
Just because everyone thinks they could do it, does not make it a skill that everyone can do well. Everyone can run. Usain Bolt runs in an extraordinary way, and is clearly the best out of the 6 billion individuals on the planet. Not once, but every time. Right now he is clearly the best on the planet. More than that, the top ten are the same every week too. Out of 6 billion people 10 are better than everyone else. Always.
Is that just because its a physical thing? Is Usain better because he has a genetic advantage? Well maybe, but it’s not just about muscle and body shape it’s also about attitude, and the fact is that in EVERY human activity that can be measured someone comes rising from the 6 billion to the very top, and stays there.
We can all drive, but Lewis Hamilton is the best. I can not drive like him. I do not have his instinct. Yes, I can drive, but not like him, and never will. I can place trades if I had a desk at the bank, but will I be the best in the world, no.
Even in non physical activity, if it can be measured individuals rise up to be the best. It’s extraordinary, but take any activity and its the same. The Chess Grandmasters are better than everyone else, and it’s not a fluke. Every year the very best are the very best.
So, if every human activity can bring forward individuals with incredible talents that can do what we can all do but at a level that we can not comprehend, then it seems clear to me that there are individuals that just have a natural instinct for banking, trading and deal making. So, if I run a bank, even a publicly owned one, then I want those individuals working for me.
Some of the extraordinary are lucky that their skills are in a field that bring riches. Footballers get paid amazingly well if the are in the elite best in the world. Musicians too. businessmen can amass great riches. If a skill set of a banker can bring great riches for the bank, then why not pay those individuals a decent share of the income?
We like to think that we keep up to date with the latest trends in business management and keep abreast of new thinking. There are lots of ‘experts’ around right now preaching about looking after customers and improving business with existing customers. It is a model we ourselves have tried to follow, bringing in a 5 Star stockist program for our best customers.
But have British Gas been reading a new book? Have they developed a new model, that says abuse existing customers?
Our electricity deal is coming up to its end, and we received a letter that looked fairly bland, a bit like the normal junk mail you get from utilities. But this was different . In a very pleasant way. It advised us that the deal was coming up for end, and here were our new prices, and unless they hear from us within 4 weeks, then we would automatically be signed up for a new 2 year deal at these rates. These rates were 60% more than the existing deal.
A very quick check on line, and we found deals that were 20% less than our current deal, so we signed up, and left British Gas.
Then, after the 4 weeks and our cancelation, BG called up and offered even better prices than our new supplier. When I asked why they had not offered them first, they explained that it was common practice to roll customers on to uncompetitive deals, ’so we make more’, but much better rates were available.
Of course, we have honoured our new contract, and left British Gas, but why would they operate like this? It makes me distrust them, and feel unwanted. How much better would it be to offer an existing customer the BEST rates available simply because the cost of recruitment is zero? I would then feel valued and respected, and would grow to love them.
What was their plan? What is the logic? I simply can not understand how a massive organization with expert marketeers can allow such a policy. Or are we missing something? Because they do make a lot more money than us!
We know lots of local businesses here, and we have been keeping tabs on them during the recession. Most are doing very well indeed. Even those who are not doing so well, have put in place brilliant strategies for coping and in our opinion will come out of the recession well equipped to do even better in the upturn.
One company we know, and use, has been busy throughout the recession, and in fact the waiting list, or work pipeline has extended. This extension means they have been recruiting during the recession. Why? How have they done it?
A simple look at the work they are doing and the extra staff they are employing shows that is simply a matter of doing a good job. The new staff are specialist roofers, doing roof repairs and re-roofing jobs. The requirement for a specialist team comes from the loft conversions, and general extension work they have been doing, especially in older houses. Quite simply, doing a good job means more word of mouth contacts and a growing order book.
We asked the MD, what ‘a good job’ meant, and interestingly he started with the very first enquiry rather than the actual job. It is taken for granted in his company that the job is done well, cleanly and on time, but they take as much care with prospects too. They explained that many builders in the locality take on work, build an order book, and then become hard to deal with for new prospects. Even if the order book is 6 or 8 months long, they still do proper quotes, turn up on time for appointments and give a professional quoting service. What they then do is give a realistic estimate of when the work can be completed, even if it is 9 months hence. This is often a shock to customers, but it is a kind of endorsement of the quality that the order book is full.
At this point they do lose some work, but they believe that the point is made with customers and often the job or the next one comes around again later. And the constant monitoring of the pipeline means that they are confident in employing a new roofing team right now, despite the downturn in the building trade.
We have not been able to apply a similar strategy in our business yet, but we were impressed by their sales strategy in turning a negative in to a positive.
I was watching an old Dragons Den the other night on Dave, and Theo berated someone for suggesting that the company was a good investment because the gross margin was high. Theo told him that high margins were a myth and they always get eroded.
And its true. they do. It’s the basic building block of the system. If someones margin is too high, there is an incentive to get involved and an easy point of difference, you can be cheaper. So competition in the end ensures that margins always revert to a mean average.
The other reason though is internal. How many times have companies given the margin away themselves, without real competition, because the margin is an embarrassment? when the margin is there, someone in the organization will invent a way to give it away. It’s dangerous, and happens often. Have you done it?
So, I suggest you measure the margins, and put in place systems to protect them. first try and build true sustainable competitive advantage of course. But, secondly, create procedures that do not allow margin to be given away, and build a real sense of pride around the margin, and the fact that it generate an extra amount. Let people understand that it’s the high margin products that actually pay the wages and the bonuses. Make them proud of them.
Interestingly, over time the average net margins earned by companies in the US is around 8.5% , and when it grows, it soon reverts to the mean 8.5%. this suggest to me that productivity improvements, and technological change can improve margins the short term, but in the end, it is always given away, and reverts back to the mean.
There was a seemingly never-ending series of high-profile business failures at the end of 2008 and the start of 2009. We documented these in detail from the retail sector back in January: http://trampolineman.wordpress.com/2009/01/16/213/ .
With the news that Wine Rack and Threshers have now failed it reminds me of something I discovered when researching previous recessions.
Business Failures will be as high when we exit recession as they were when it started!
Shocking, and at first glance odd, but it is true, and we should be ready for a new burst of high-profile failures after Christmas.
the reasons are complex, but at the first sign of a downturn the very weak fail. they are put out of their misery quite quickly. After that, businesses cut back and slash costs. For some businesses this is the reverse of the cash flow problems caused by growth. As they shrink, cash is freed up from the debtor book, and most importantly stock. As they shrink, this cash can hide and cover real trading losses.
When the upturn starts, the process of releasing working capital is over, and trading losses can not be covered, at the same time as borrowing is harder as the banks tighten up. Hence, they do not make it past the first few months of the upturn.
For others, exuberance gets the better of them. they get excited about the upturn, build stock and cost too fast, and trip themselves up.
So, if you still have trading losses, fix that first, before you think about growth. Trying to trade your way through losses is the most dangerous way, and the soon to come long list of failures will be proof.
Dont be surprised when it happens, it is the normal sign that the end of the recession is really here.
I was very surprised by the GDP figures last week. Honestly it feels to us as if things are fairly buoyant. So, I have taken some time to try and work out what GDP actually means, and how it is calculated.
Especially after I got this update on Sterling vs the Euro from the Royal Bank of Canada:
“Last week, GBP maintained the upward projectary seen in the previous week until the first estimate of UK Q3 GDP was released on Friday which sent GBP crashing and wiped out the week’s gains. The consensus expected the UK to register growth of 0.2%q/q Q3 after five consecutive quarters of contraction, instead, the UK remained in recession for a sixth consecutive month as the economy shrunk 0.4%q/q. However, the preliminary estimate of U K GDP should be taken with a pinch of salt. This print contains only around 40% of the data that makes it into the final GDP print, and the correlation between the first and final estimate is very low. It is highly likely this print will eventually be revised into positive territory.”
Seems that the first estimate is designed to be very fast, the fastest in fact of all the G7 countries, but with that comes some issues. Around two thirds of GDP(0) , the first estimate is data from the service industries, and it is based on output sources and estimates only. For a very detailed analysis of the data and the meaning of the first estimate see:
It does seem that it is quite possible in the most volatile of periods for the first estimate to be wrong. the treasury does give a target, that the estimate should not be revised by more than 0.2% in more than one quarter each year. So, the chances of it being positive are slim it seems. But, even the ‘final estimate’ is not final and is subject to revision later. In 1994 Q3 a +0.7% was amended to +1.4%.
With almost half of the data in the first estimate as real estimates rather than actual data, it does seem that in periods of great change, it is very possible to get it very wrong, but given the history, unlikely to turn a negative in to a positive. I can see no evidence that it has ever before been changed from negative to positive, and given the political implications, I am sure extra care would have been taken with these estimates, but lets wait and see if RBC are correct.
Ok, I predicted a rise and we got another fall. On the positive side, in January I did predict then it would be Q4 before we get growth, and I am now reforecasting that the first quarter of growth will be Quarter 4 2009.
It’s a big blow though, not just because my confident prediction was wrong but the economy is built on confidence and this will undermine it. I really thought that a positive figure today would be the springboard to a much more positive 2010.
Still let me cheer you up anyway, with my theory on why 2010 will be good.
first there is the issue of the election. Everyone wants to feel better, and the politicians MUST make us believe that with them it WILL be better. So with an election likely in May, we have February, March and April with Brown and Cameron out doing themselves to show us how it will be so much better in the next few months.
So, 3 months of talking up the economy should be good for confidence. Straight after that we get a Cameron win most likely, and everyone feels, ok go on then, make it better. with the election comes a 3-6 month honeymoon where we all feels good, but give him some slack.
But the really positive time is a month-long festival of football, starting just after the election, and ending in July with an England win. England win the World Cup. How good will that be for confidence.
Sorry Scotland and Wales, but and England win would massively boost the positive feeling that we all need to feel good again.
If we get it, then expect the economy to grow by 2%+ next year.
Since the collapse of the banks and the start of the recession, its become a hobby to study previous recessions and downturns, and I feel like an amateur economist now.
So, this week I predict that on Friday the Quarter 3 GDP figures will show a growth of 0.2%, officially ending the recession.
For well over a year now we have been worrying about the economy and researching previous recessions to try and predict the end of the recession. Alistair Darling long ado predicted Q4 as the first quarter of growth and the so-called experts laughed. We too have been predicting Q4 as the first growth quarter for over a year:
In February we predicted that this would be no worse than previous downturns and would end by the end of the year. Our justification for our optimism was that we felt that we could see the impact on real sales and activity before the experts started talking about it.
Now, we are seeing real evidence of Growth. July was excellent. August good, and September superb. We have been too cautious to get too excited, and have waited to near the end of September, but now, very confidently we predict that Quarter 3 will be a GROWTH quarter, thus ending the recession officially.
Just remember who told you first.
We have been running a poll since February, and the results show most people thought Q4 2009. We think its come a few months early. Just wait and see when the official stats come out, we will say – we told you first!
Outdoor Play is my passion. Recently, government both local and national, despite all their current distractions have become converted to the value of childrens play. Many news reports have been announcing that tens, if not, hundreds of millions of pounds is to be spent on creating and improving outdoor play areas. Great News.
For Example, news from Stockton:
CHILDREN across Stockton Borough have got a million reasons to celebrate thanks to a £1.1m boost to their play areas.
Stockton Council is planning to improve, extend or create between 20 and 25 play areas thanks to a successful bid for the Department for Children, Schools and Families’ Playbuilder programme.
The authority is now looking for ideas from groups and individuals of what play spaces they would like to see improved or extended over the next three years.
Councillor Mary Womphrey, Stockton Council’s Cabinet member for arts, leisure and culture, said: “The funding is a marvellous opportunity to develop and improve play areas across the borough, bringing challenging and fun outdoor play to our children.
“We all want to see children and young people out, enjoying our parks and open spaces, running about and keeping fit and healthy.”
Ideas need to be submitted to the council by November 14 and could include proposals for a particular park or green space, or just general ideas about what is needed in a local area.
The council would also like to hear from organisations prepared to deliver projects from start to finish using the available funding.
Wherever possible, proposals should focus on existing play areas or spaces.
Children and young people would be expected to be actively involved in the development of all the projects. These will initially be considered by a ‘Playbuilder Panel’ with representatives of the community and the council.
Always on the lookout for new fitness crazes, the americans have identified the Trampoline as the next aid to better health.
According to Zach Lewis, a journalist, its the new big thing:
‘But now that I’ve tried “Jump-o- Lean,” a workout rou tine involving both activi ties, I may have to dig out the old rope and rethink my list.
Currently, “Jump-o-Lean” exists in this area as a class being offered temporarily at Urban Active in Lyndhurst. Honestly, though, the equipment and principles involved are simple enough that anyone could easily practice it at home, independently and indefinitely.
Besides a jump-rope, a timer and a good pair of shoes, you’ll need some form of trampoline. Ideally, you want an “Urban Rebounder” (no relation to Urban Active), a miniature trampoline with tight springs, available on the Internet for around $100.
Short of that, anything that lets you execute low, rapid bounces will suffice. What you don’t want is to go flying high with every jump or to sink too deeply when you land.
To use the trampoline, climb on and stand in a semisquatted position with your knees bent, feet planted shoulder-width apart and your hands squeezed together. Then all you do is bob up and down.
But rather than trying to build vertical momentum, like a gymnast, focus instead on creating a downward force. Think of stomping grapes or pushing into the ground, and remember you’re going for speed, not elegance.
Once you feel comfortable bouncing this way, mix it up a little. Work in other movements, such as kicks, punches, sprints. If it helps, play some upbeat music to establish a rhythm.
After about two minutes of this, hop off and immediately begin jumping rope for two minutes. The floor should feel strangely flat, your legs leaden, but try to maintain a pace that’s brisk but not draining. The point is to recover your breath.
Assuming you haven’t exhausted yourself, the goal now is to jump back on the rebounder and repeat the pattern several more times. ‘
So just wait until your Gym is offering Trampoline based exercise classes.
Can anyone explain simply what is going on with the world economy?
I understand so called ‘Toxic Debt’. I understand a mortgage problem where people can not pay. I do not understand the total panic that seems to have destroyed the worldwide economy. Or has it?
As far as we are concerned, we are still doing business each day. We sell Trampolines, Pool Tables and other outdoor toys every day. Business is down a little, but not massively. Why are the stock markets collapsing so fast? Or am I just naive? Am I too simple to understand?
Even the bank situation does not add up to me. Apparently the problem is mostly in the USA. there are 160m households there, where 70% own their homes. If 10% of those can not pay the mortgage, then thats only 11.2 million, (i know its a lot to say only!). If that 11.2m can not pay say $100,000, then the total ‘toxic debt’ is 1.12 trillion.
And thats being generous with the numbers, so it seems to me that around $1 trillion dollars could buy all the houses from those who can not pay. Why then has it cost the USA $1 trillion, and the UK also around $1 trillion. On top of that there is Germany, Japan, Belgium, Iceland also paying hudreds of billions? Where has all the money gone?
Maybe i should stop worrying about it, and go back to selling trampolines to people who have also stopped worrying about it. Maybe there will enough normal, practical people to make the world carry on. Maybe!
Back from a weeks holiday today, and decided to make this Blog more about running the business, than just my random thoughts on anything. That’s why there is a week gap.
So the business – We manufacture and sell Trampolines, Table Tennis Tables, Outdoor Toys, so we are massively seasonal. That’s one of the issues I am sure I will keep coming back to, because it defines so many of the issues we have from Stock Control, Cash flow, Staff Planning etc. Over the next few months, I hope you will build up a picture of the real issues we have, and the plans going forward.
As it says in the title, I feel very chilled right now, alive with holiday feeling. the problems of running an off-season outdoor toy business do really seem far away. I highly recommend holidays!
Let me get back to work, check my emails, and then lets see what thoughts I have. Speak to you again soon.
Last week, someone asked me ‘how is business in the luxury consumer goods world?’. I had not really thought of it that way but its true, we sell luxuries, that anyone can really do without. In fact in the meeting I was in, when I looked around the table, my business was probably the one I would have least wanted to run in a recession.
The fact is though, we are holding up. True, we are grafting. We are launching new innovative products. Last month we launched a piece of software that allows consumers to design their own climbing frames for instance. Next month we launch an amazing new climbing frame, not seen before, and I will tell you about that then.
We have also invested in staff. We have two new designers, working on new products. Our plan is to ‘go on the offensive’, that’s our motto for this downturn. We hope to end the recession stronger than when it started.
Toruble is, how deep will it be, and how low will things go. In previous recessions, I have been protected. Although in business, I was working for big corporates, and the attitude was different, so I do not have too much experience of running a firm like this in a downturn.
We have several plans, from very aggressive, and back up plans for what we do if it is much worse than we expect, but really, what level of market decline can we expect? We are working on a market decline of -30%. how many of you think it will be worse than that? Remember we do sell outdoor toys – not really an essential product. But we think parents will still want to buy their children the right play items.
If things get tough, for some it could be really tough, for most though, things are harder, but not impossible. Those people we expect to want to look inwards and look after the family life. Making sure the kids have the right play equipment could pull through. Let me know what you think we should plan for.
Whilst on the subject of whats happening in the world of economics and finance, I turn now to exchange rates. We buy from China, in US dollars and Europe in Euros, so the Sterling exchange rate is critical to forward planning.
My view is that I am not a currency dealer, and nor are any of our competitors. So we buy Spot rates. My simplistic view is that if it all goes the wrong way, then the competition will have the same problem at the same time so we all put up prices. The alternative is to buy forward, running the risk of getting it wrong and being out of line with the competition.
Anyone with better plans let me know.
What is interesting is the expert view. We use 3 different currency dealers. they all send me regular updates on rates and forward projections. They are always broadly the same. But have they ever looked backwards? Compare the rates now to what the projected 2 or 3 months ago and they are miles out. Look at any months forecast, then move forward 3 months and the projections are useless.
Despite this they always claim ‘the market has moved as I predicted’, because if they do enough predictions they are bound to be able to claim that.
Anyone have better planning systems for the small businessman?
Jonathan Ross has been stupid. It was not funny. A childish, ridiculous, talking nonsense episode that got transmitted. Should not have done it and should have apologised. I guarantee he is pretty ashamed now, and regrets everything. But….. who has never done something stupid.
Learn the lesson Jonathan, grow up, and be funny not childish. But the scandal, and constant news headlines are out of proportion to the offence. Apologise to Sachs, who if he is honest will also think, ‘I have been stupid in the past’ and its all over.
But instead the BBC spends ages investigating, and working out who should be sacked, and how to position their response. The BBC response is weak and shows signs of a scared organisation.
I think if they have an investigation to run – investigate Robert Peston. Last night he had a program on the credit crunch. In it he talked about how he broke the news that HBOS were in talks with Lloyds. He said ‘After I broke the story, they only had hours to conclude the deal’. He revelled in his role in bringing down the bank. And this after it was his disclosure of the Northern Rock loans that caused the run on that bank and the chaos after.
Does he not learn that just because he knows something, it is not always in the public interest to make it public?
One family hurt by Ross and Brand. How many families hurt by the Peston rush to be first with the news?
Have some regard to the results of publishing stories. Take account of reaction, and sometimes act with care for the people who could get hurt. Keep Peston’s obvious talent for getting hold of inside information on a leash. Just because he knows something, it does not make it news.
Its our new year. first working day of the new financial year. How does that make you feel normally? Full of energy, its a new year, anything possible? Or first day of a long slog, starting at zero?
There is a buzz here today. Its full of excitement. the Christmas bounce has started already, and everyone is focused on getting ready for the next summer. We have new products to be launched, new ideas to implement, and a whole range of new processes to work on to build efficiency for the season.
Trampolines and Outdoor Toys do have a Christmas uplift, which is what gets us through the winter. Money made at Christmas can cover the losses in the other 4 winter months.
What we spend most time on though in the winter is new activity for the summer season. That’s what creates the buzz. Right now, everyone is working on something for the future. Something that will make us better next year than last. something that will make a difference to the business. Its not busy with orders, or with thousands of customers calling, but it is busy, and frankly its a fun place to work.
What about the budget though? How should the small business be planning for 2009? Is the worst over, so next year will be buoyant? Or is next year going to be much worse than this year? Problem is, plan for a disaster and that’s the best you can do. If you don’t commit to stock, then you cant sell anything when the sun shines. Quite a dilemma.
Our planning, I think has steered a sensible course through, balancing risks on both sides, and fingers crossed we should do OK next year. Sales could well be down on this year, but we have balanced this with some efficiencies, and new activity.
I suppose that’s whats fun about a new year. anything could happen. Keep in touch, and I will let you know what does happen.
Also let me know what your plans are for 2009. Planning to be up or down? How are you balancing risk?
Or even how do you handle budgets? As a small business how do you manage planning?
I try and publish things that are in my mind, or interesting me, or that I think other small business people would be interested in. With that in mind, i would like to comment on our experience of employing placement students.
We are half way through our second placement, both having worked out superbly. We currently have a product design student. She is superb, a great attitude, brilliant skills and a pleasure to work with.
She brings a fresh, interested outlook, lots of ideas and new ways of working, and helps to re-energise the whole team. We have to put in a minimal amount of extra work, to make sure she is trained and exposed to enough activities to have a rounded experience, but its not really any more work than we would put in with any new employee.
I will let you know about the projects she has worked on as they get launched, but the first is Action 3D, a piece of software that lets customers design their own climbing frames. It took a lot of work from a whole team of designers and technicians, but she was a critical member of the team, and takes this back to college as her own work.
Other projects are in the pipeline, and I will publish those in the future.
All I can say is we have had two great experiences, and are definitely up for more students in the future. Teaching them is fun, and I feel we gain in giving them experience, but we doubly gain in the energy and skills they bring.
In these recessionary times, truth is sales are hard to get. We are grafting to win orders, and most product fields are hugely down on last year. But one area which is bucking the trend is Air Hockey Tables. Why?
Other table games such as pool tables are showing declines, but Air Hockey is booming? Anyone know the secret? What can we learn about this range that we can apply to rest of our markets? Our range is similar to last year, the exposure the same. No special activity, but sales are twice last years level. Amazing!
Time to ask, after a week: ‘What will Obama do for me?’
The reason I ask is I saw a woman on the TV news last week crying about his election and saying, ‘At last someone in the White House like me. Now he will help people like us.’
It made me think that he has got elected on a promise of change. The majority would like so many things to change, but what can he deliver?
The lady on the news was black. But it seems to me that her problems are not being black but being poor. Obama is not like her. And even if he wanted to help her, many others in the White House and Number 10 have tried, but failed to significantly help. The problem is there are simply too many poor people, and relatively there always will be.
So my conclusion was that ultimately Obama will disappoint this lady, but what will he do? Who Knows? His hands will be tied by lack of funds, but new energy, new ideas and momentum can achieve much, so good luck.
What will he do for me? I say that as a UK, small businessman. Seems that one of the big problems around right now is confidence, and he may well be able to fix that. A feeling of ‘come January everything will be better’ could hold back the recession. Some fast action in the first days could create a feeling of positiveness that could just be enough to turn around the whole world economy. Get weaving Obama. Come up with some new, innovative strategies to announce in January, and lets see everything turn positive early next year.
My end conclusion is that Obama may well do something for me, by injecting confidence in to the world. Ultimately that will help the lady on the news, because things could be getting worse, but in the end I felt for her. Right now she is poor. At some point in the future she will still be poor, but will also be disillusioned.
A report on the recession in today’s FT has this classic quote:
Ian Foster, business owner: ●Think positive. Things will get better. There is work out there. If a small business can just hang on in there and give it six to 12 months, it could be on the way back up again.
Thats our plan. To quote one person here ‘We are going on the offensive’. Not with massive spends, but carefully targeted new products, new ways of working and massive effort.
Sales are down. the market is down, but we are extremely cost conscious, we have made every pound work very hard to get spent, and we are spending down time working on the activities that will make us leaner, fitter and more efficient next summer.
Stay positive that’s our motto. We plan to be stronger coming out of the recession than going in to it. I will let you know how it works out. What are your plans?
The Bank of England last week issued their forecast of the recession. Why we should believe them when they did not see it coming, I’m not sure? But they seem to be the best experts around, so:
Bank of England Growth Projection
Looks like 2009 is going to be bad. As a summer seasonal business, looks like we miss the summer, but I have some questions:
1. They look at macro trends. How are products like ours going to perform? We sell fun, luxury goods. when can we expect an upturn?
2. What about the immigrant effect? Are the Poles going to go home, meaning GDP can go down, but individual spending power is less impacted?
3. What sectors are the first to come out? what should we look for?
4. There is an election due May 2010. They will need to be well out a long time before then, so they will do anything to get out by Q3 next year.
With all the concern about the recession and the effect on business, jobs and lives, I have a simple question:
Are the Poles going home?
We have had two Polish men working here this year. Great workers, great people, and fun to be with. They came over in the great, well commented rush to join the UK economy. They have been good for us. Now, with the recession on and a firm realisation that the UK is expensive to live in, they are both going home. Going home in fact to start up a business.
Good Luck to them, and thanks for the efforts this year.
But it makes me think. Is this common? Are the supposed 500,000 polish here all going home? If so how does that change the impact of the recession. GDP figures are for the whole economy. 500,000 polish would be around 1.65 % of the total UK workforce. If they all return home, then there an extra 500,000 jobs around, enough to absorb the bulk of the recession unemployment.
Sure GDP would still go down, but that measures the countries output. What is important to an individual is the individuals output. Does this mean the output nationally can go down, but we all feel as rich as before?
Should someone be talking about this? Isn’t this one of the benefits of flexibility in the EU workforce? Are we saved after all? Politicians should be looking for the positives and talking us up.
Its new and its different, its the new sized Oval Jumppod, and its coming to the UK. Due to be in the country from next week, its the latest version of the Jumppod, the trampoline which has taken the UK trampoline market on. Its an oval shaped trampoline with a built in enclosure. Quite simply it looks great. It fits well in to smaller gardens and those long thin gardens that find it difficult to fit in a round trampoline. From Jumpking, its a great new trampoline.
Its the answer to difficult shaped gardens, and smaller and more compact than the Oval Jumppod launched last year. This version is only 11.5ft by 8ft.
Its very safe, and good looking but the real unique benefit is the shape.
There are limited numbers coming in to the country and the number of retailers is strictly limited, so we are happy to have them available, but for our first batch, we have only 25, so we expect them to be all gone by Christmas.
Should be a great seller, for the smaller garden family who still want a big trampoline.
I think I should enter my thoughts on the Vat changes expected today in the mini budget. First, why have a big showpiece announcement at 3pm, if we already know what he will say? Whats the logic in leaking the big ideas first? There must be a reason, or is it a bluff, and the Vat rates wont change after all – it could be more dramatic.
But if it is a 2.5% reduction then what does that mean? It does not mean an automatic reduction in consumer prices. Contrary to the media hype, we don’t price our trampolines and above ground pools based on cost plus. We take in to account competitive pricing, the demand (for example the weather), and our own stock position and requirement for sales. What this means is that we price based on what the consumer will pay. So if Vat comes down, there is no need to change the consumer price. The media will say this is ‘profiteering’, but making a profit is what we are supposed to be doing.
If, in time the competition do drop prices, then maybe we will have to react and also reduce, but on many products, for example Pool tables, we are already the cheapest in the market, and by more than 2.5%, so I expect no changes to Pool Table or Table Tennis Table pricing.
So, in the short term, the Vat change will boost profits, a much needed boost, but not a boost to consumer spending. But, if it has the effect of improving confidence, with people feeling much less like they may be losing their jobs, then great, spending could start again.
Good luck Alistair, I hope the media report VERY positively.
So Darling did it. Reduced Vat by 2.5%. As i said earlier – Good Luck. What we need is confidence. If people believe then they will come. Start thinking things will get better then they will, so I hope the opposition and the media go easy, and stay positive.
It may be enough, but for me – WHY THE DELAY? Whats the thinking behind making it happen next week. We sell big ticket items: Climbing Frames for £1500, Pool Tables at £150+, Table Tennis Tables at over £200, Trampolinesat £100 – £600. The Vat reduction makes a significant impact on the total retail price, so I now expect everyone to wait until next Monday to buy for Christmas. Why? Its hard enough.
The market is massively down. Everyone in the industry is complaining. Selling Outdoor Toys in the winter is hard in a normal season. It takes its toll on the weak every year. This year is brutal, and the last thing we need is a week with no sales. Especially this week. There are two key weeks in the Christmas season, this week and next. We didn’t need a collapse on already low sales in a crucial week.
Looking on the bright side, at least we do have capacity to handle double sales next week!
Our plan is to preempt the vat cut, and reduce all prices until Monday by 2.5%, (even though the real impact is only 2.1%, since no-one would understand), with a big banner stating ‘Why Wait – Vat Reduced Prices Now’.
There is a political convention that means the opposition parties don’t criticise on matters of national security.
Is not the current economic crisis significant enough for the same convention to apply. What we need is confidence. The government are taking big steps, and bold actions. What we need is people to believe this will be enough and we will be on the road to getting back out of it.
What we dont need is Conservatives telling us ‘It wont work’ ‘ Its not enough’ ‘Its the wrong action’. we should beilieve in it.
Whilst on the subject, the Liberals are just as bad, and the media commentators worse. Take some responsibility. Don’t be negative to be contrary, understand you have a responsibility to the wider population to take a UK wide position, not just looking after your own narrow interests.
If only people could see the upside in things and laugh, the world would be easier to live in. Without dreams, and positiveness, I don’t see how you can get through the day.
It made me feel good. Can’t wait for the fair to come. Can’t wait for my next holiday. Lets do something – book a holiday today.
Alistair Darling spent a fortune this week, all designed to make us confident enough to start spending again. Will it work? Lets all hope so, but what did not help was the opposition complaining that it was not enough and would never work.
The news programs were full of eager politicians keen to tell everyone how it would never work, and things will get worse, and its all Labours fault. Well that doesn’t help one bit.
I think Brown and Darling should have met Cameron and Osbourne on Sunday. They should have explained the plan, and demanded that the Conservatives support it. In fact ask them to go further, not just support the plan but announce to the world that they think its right and will certainly work.
If everyone in power were working together, the public may well believe. Without that, the constant griping and then the force of the constant bad news reinforces the desire for everyone to cut back.
Of course right now, Cameron is loving it, blaming Brown and hoping to land enough punches to make sure Labour can never win the next election, so why would he want to help out? Because its right!
Brown would have had to give him something in return. Announce that the plan is a joint plan. Tell the world that the crisis is so serious, that he created a Crisis Committee of the best brains, cross-party, to work out solutions that everyone believed in and supported and that’s the plan that should have been announced on Monday.
Cameron would have got an enhanced reputation as a man that Brown respects, and trusts. Brown would maybe have got a way out of the worst economic crisis for 60 years, and respect for putting the country before the party.
Extraordinary times need extraordinary actions. Take the boldest steps ever. The media would have been amazed, and maybe even they would have been positive.
Google have described today as Black Friday, the busiest day of the year. They think (and they should know) that Christmas starts today with millions of people searching for ideas and presents. They are expecting their servers to be under pressure and maybe even struggle for speed.
If millions are searching today and this weekend, then we would normally expect to convert masses of orders this weekend. Our conversion rate doubles at Christmas, because people have to buy.
But…. this weekend we are not expecting the normal uplift. Because of the Vat change we are expecting huge proportion of buyers to wait until Monday, to see if prices change.
So…we are ready for the rush. Bring on Monday. Maybe it will go down in company folklore as the busiest day ever!
Looking for skills, enthusiasm and energy then I recommend a Placement Student. We are on the second student from Bournemouth University, and both students have been superb.
We find the students to be energetic and skillful and so keen to prove themselves, that they become a injection of buzz in to the office.
We have recently completed a very complex design project on a new Trampoline product and several new climbing frame products, which frankly we did not have the skills in-house to complete. Our designer, on placement from Bournemouth has been superb, completing the project and also giving our in-house team new skills.
We also have an obligation to teach them, so we make sure they are totally involved in the total business, looking at strategy and results, and we find the coaching we give them rewarding.
Looking for cost effective new skills, then look at a placement student. I can not praise highly enough the two we have had.
Marketing is very simple. Its not a black art, or something only experts can understand. Its common sense. Its something you can do. Its not something you need to pay someone else to do, in fact you are best qualified to do it, since you care the most.
A friend of mine started a building business. He is a great builder, and two years on is very successful indeed. He is permanently busy, wins 65% of business he quotes on and is taking on new people. Not bad in these times, but I remember some difficulties he had when he started getting his thoughts straight on what he planned to do.
When we first disccused the business, I asked him some simple questions:
Who would buy from him?
Answer: Anyone
What services would you offer?
Answer: Anything they want doing
I understood what he meant, he wanted to be a general builder. Ask him to quote on any job and he would tell you if he could do it and how much. Any type of job. he did not understand my questions, and when I told him he needed to specialise, he got scared and thought he was limiting his market. He did not know enough about the market to feel comfortable specialising.
But, he began to understand when I got him to think like a buyer. Imagine you are a householder wanting a loft conversion. You look on Google for Builders in Abingdon, and get a list of 10. You ring the first 3, they all agree to come and look and give you quotes, you choose the best, or cheapest and the job gets done. Fine he said, all I need to do is be the best known, and top the google rankings and have the best ad in yellow pages. Yes I said, but not easy and you wont be well known for years, and still would not work.
Why? Well imagine when you are looking for that builder for your loft conversion, you come across an ad, or the number 10 or 20 website that says ‘Specialists in Loft Conversions in Abingdon’. In fact you find three of them. What do you do? Of course you would ring them, they do exactly what you need. They would be better than a general builder, they are specialists.
So specialise. Become an expert in one thing, or a collection of things, but be the specialist. Choose a niche large enough and dominate it.
Instead of painting the van, with a ‘general builder’ message, he itemised specific services:
Loft Conversions
Roofing
Extensions…….
He also played his localness, he is from Abingdon, and based in Abingdon.
It is so simple, now answer the questions again:
Who would buy from him?
Answer: Anyone from Abingdon, looking for a loft conversion
What services would you offer?
Answer: Quick, accurate, expert loft conversions.
Why would they buy from you?
Answer: Because we are local, experts at Loft Conversions, and can give references from satisfied local customers
Now you have a market position mapped out. Next problem is tell people who you are and what you do.
Get a web site. Get an ad in Yellow pages. Get some ads running in the local parish magazines. Get some ads up in the local newsagents.
Now the most important thing: Remember your answers to the questions above in everything you do now. Those ads need to leave the reader with one impression – ‘That company does Loft Conversions in my town, and they are good at it’.
So marketing for the small business is simple. The rules are,
1. Work out a market position. What do you sell? Make it specific.
2. Work out who will buy? Who are they? where do the live? What do they read?
3. Keep the answers to the first two top of mind and communicate in everything you do. Even in face to face conversations, because in a small locality word of mouth grows fast
Keep to those simple rules, and your business will grow fast. Start growing and you can have a second, third or fourth speciality, and you can become that wide ranging general builder you wanted to be, but not known as a generalist, but a collection of specialty services.
Good luck, and remember it worked for my friend the builder.
I recently wrote about my friend the abingdon builder who at first felt Marketing was something other people were expert in, and he could only build. (See here.)
I saw him yesterday and its now obvious he now really understands the marketing thing.
He has started a referral programme. Its amazingly simple, but is bound to work, and I thought I would share it.
He has been in business for a little under two years, and has been permanently busy, with most business coming from word of mouth. His new programme is designed to try and accelerate the word of mouth growth.
He has written to all of customers from the last two years, thanking them for their business. The letter explains in a very personal and human way how nervous he was when he started, but thanks to his customers he has been very successful and really enjoyed the last two years.
He explains that word of mouth has grown his business very well, so well that he now has more employees. He thanks those customers who have passed on his details to others, and gently asks the rest to do likewise. He includes 5 business cards with the letter.
It is well written and quite brilliant.
The end result is a letter that:
1. Reminds existing and past customers of his existence, and prompts them maybe for the next project
2. It thanks them for their part in a success story
3. It is a feel good story, making them feel good
4. It points out that he now has a lot more experience, and that many of his customers have passed on his details. For those who have not yet done so, it points out that this would help their friends to get a reliable builder
5. It asks for customers to email him a reference if they would like that he can pass on to other new customers, buidling his reference file, and restatring a convesation with lapsed customers
6. It does not offer discounts for referrals, since to do so looked desperate and tacky. It simply points out that its a good thing to do
7. It shows customers how much work he has done for others, and if they are referring him, he must be good
Getting business from existing customers is the easiest way. Getting those customers to be advocates for your business is even better.
We got a letter from the bank today, telling us great news, they commit to not asking for immediate repayment of our overdraft, and this is a commitment they will endeavour to stick to for at least 6 months.
Given that its only a few weeks since we agreed a new deal, and they took a big arrangement fee of several thousand pounds for setting it up, it all seems a bit rich.
I know there is small print, but am I being naive in thinking that the clause that says they can ask for immediate repayment is only used if we break the banking covenants?
How often do they actually ask for overdrafts back when the company is sticking to the rules of the agreement?
Or is the letter from the bank a piece of PR and attempted reassurance from bad press reports of banks taking credit back?
Is there any other business where I can commit to a contract, extract thousands in fees for delivering that contract, but still withdraw with no penalty? If so, it seems a good business to be in.
George Osbourne was criticised a few backs for claiming that the Labour Governments plan to combat recession by borrowing billions would cause a run on the pound. Has no-one noticed that we already have one?
Sterling has collapsed against the dollar and euro in the last few weeks. One day it dropped 5% against the dollar. I have never seen such volatility, and frankly it makes planning impossible.
Why is sterling getting hit so hard? Are not the USA, Germany and France in just as much trouble as we are? Why is our currency hit so hard? Is not the USA on similar path, borrowing billions?
How come Obamas’s plan to borrow and inject money in to the system gets the dollar stronger, but Browns plan hits the pound?
I don’t understand the sentiment? Anyone help explain?
In the meantime, where will it end? How low will it get? How do we plan for the next 6 months?
Imports (and that means almost anything manufactured) will be suffering with massive price increases in the next few months. How does that help the UK economy?
Found this on the web today. A post from October 2007:
Pound hits 26-year high on dollar
Posted on November 1, 2007 by cibiyuk1987
http://hom3.wordpress.com/2007/11/01/pound-hits-26-year-high-on-dollar/?referer=sphere_related_content/
31 October 2007
The pound has broken a 26-year-old record against the dollar as interest rate hopes on both sides of the Atlantic pushed the currency higher.
Sterling reached more than 2.06 US dollars as economists forecast a further reduction in rates in the US.
CMC Markets, currency expert, James Hughes said: “We’ll probably see the pound test these levels a few times ahead of the interest rate decision.
“Potential strength on the decision depends if a cut has already been fully factored in, but I don’t think it has yet.”
Back on November 5, 1980, the pound hit 2.446 dollars, before which the highest levels seen were in the early 1970s, when it reached 2.644 dollars.
But Mr Hughes said it is possible the sterling could break through the level seen in the 1980s, given the current fears over the US economy.
The news is good for investors looking to buy businesses or property in the US, although exporting firms are feeling the pinch.
Meanwhile in the UK, previous hopes that rates will be cut as early as November have been scaled back after inflation and economic growth figures provided little compelling evidence for a reduction.
Where is Mr Hughes now? How is is US property portfolio? Or is he out of work?
I get a daily email from 3 different currency exchange firms. Everyday they tell me what has happened, what is driving it, and mostly an estimate of what will happen in the next few days and weeks. In October 2007 they were saying, it could reach $2.20 very shortly. No-On predicted the total collapse.
Now they are saying could reach $1. If they really knew what was happening, why are they not billionaires, and why are they still flogging currency for a living?
So Woolies has gone, and is probably unrescuable. Seems also their DVD distribution arm, that was previously described as the plum asset is also unrescuable in the current form.
Is that the recession or is it something deeper. I think the company was doomed anyway.
Woollies has long been described as a big company without purpose. I buy books, DVD’s and CD’s on-line now, don’t need to nip down to Woollies. In fact I don’t even buy Cd’s on-line, I download them. So Woollies and their Distribution arm were doomed not by the recession, but by the change in technology and lifestyle that meant their market had changed.
The shipbuilders and weavers that disappeared last century could not cope with a changing industrial landscape, so went. Woollies is no different. The management had a responsibility to change the company.
The recession has accelerated the demise of Woollies and similar firms, but the were always doomed in their current form. Thousands of other companies are also doomed, not by the recessions, but by changing markets.
Get online. Get in tune with new technology. Get your product delivery changed. Get faster, get more efficient. Its the only way, always has been the truth that if you don’t adapt then you die. This is evolution.
Its no different to a cold snap killing off the weak, or a drought killing the weak wildebeest on the African plains. Have your strategy mapped out, and make sure its in tune with the modern world or die. The recession is a massive drought that will kill the unprepared and weak, putting them out of their misery because otherwise it would be along lingering death.
But when the rains come, and things turn around, the companies left will be stronger, fitter and better able to grow fast.
Lets just hope it is deep and fast rather than long and drawn out. We want to get on with the future.
Everyone runs their reviews of the year in December, and I expect Barrack Obama to get every man of the year award, so what about a UK only candidate?
Chris Hoy? Lewis Hamilton?
For me I vote for Alistair Darling. Not sure if it is driven by him or Gordon Brown, but he can not be accused of not chucking everything at the recession to try and help. Mega interest rate cuts, hundreds of billions spent, banks bought, now car companies rescued, he really is trying everything.
But for me I vote for him because on August 30th 2008 he said:
“The economic times we are facing… are arguably the worst they’ve been in 60 years. And I think it’s going to be more profound and long-lasting than people thought.”
He was laughed at, and it was generally seen as proof that he was not in control of things. Laugh again now. On August 30th did any commentators predict the total chaos we are in now? Only Darling it seems. Perhaps we should have listened? Perhaps we should be listening harder now? Perhaps his instinct or insider knowledge was wiser than most?
I vote for him not because he is brilliant. Not because he is doing everything right. I vote because he doing something, but most of all he had the balls to say something unpopular but truthful, and took the criticism.
Newspapers reckon 15 or so retailers are in desperate trouble and wont survive next month. Sales in the luxury goods market are massively down, and who knows what will happen in the next 12 months?
What do you do? Firstly, learn to live with it. Change is a fact of life. it is change that allowed humans to become the dominant species, so we should welcome it. Many people fear change, but don’t try and control it -you cant. Instead live with it, roll with it. Remember you can never stay the same, you are either going forward or backward. The same is not an option.
So change is necessary, and helpful. Problem is change at the moment is more rapid than ever before and so many things are changing that it is hard to work out what is happening, but trust me, this is one of the best opportunities you have.
Second thing to do, is get yourself stable. Plan for a massive downturn. Sort out your cash flow, and be comfortable with a disaster budget. If you run short in your new disaster forecast, then plan for cash. Sell some assets, cut everything absolutely not essential, get an investor.
Thirdly, plan. Get a vision for what things will like after this recession. What will you be selling? What will your building look like? Who will your customers be? What will the size of the company be?
Draw a picture in your mind of what things will be like in the perfect world. Trust me, this is enlightening. It will begin to map out the must dos from the why dos.
Once you have that vision, question everything you are doing with that goal in mind. Does it help to get you there, or is it a diversion?
Believe in the future. Positive thinking works. there are scientific reasons to do with serotonin, that means it really does, but trust me again, it does. Once you start to feel positive about the goal a road plan to get there will emerge.
Write it down, and start on positive steps. They don’t have to all cost big money. Remember when you started out? You did everything on a shoestring. go back to that method. Beg, be creative. Try things that don’t cost much, but try lots. But keep the goal in mind.
For more help, I recommend Brian Mayne’s goal mapping techniques.Find him at www.liftinternational.com.
Try it, it wont do any harm, but it will work.
And read this:
“Until one is committed there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation there is an elementary truth, the ignorance of which kills countless ideas and splendid plans. That the moment that one definitely commits oneself, then providence moves too. All sort of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, racing in ones favor. All manner of unforeseen incidents and meetings and material assistance, that no man could have dreamed would have come his way. Are you in earnest? Seek this very minute whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Only engage and the mind grows heated. Begin and then the task will be completed.”
There is something about the power of decision that activates all your mental powers. It increases your courage and confidence and raises your self-esteem. It boosts your energy and enthusiasm and raises your level of self-expectancy. Making clear, unequivocal decisions about who you are, what you want to accomplish and what you are going to do, frees you of the indecisiveness that traps most people.
–From the second pre-amble to ”Faust”, Johann Von Goethe
So…. get committed. And let me know the results. Having a plan gets you there. Living without one is called drifting .Cut out indecisiveness, and set a plan.
We sell outdoor toys. Not really essential at any time, but in the middle of winter, just after Christmas, when it is -5 outside, definitely not essential.
There are though plenty of big bargains to had for canny buyers, and there always are in the winter time. Truth is, the winter is a great time for reinvention, and reorganization, and gives a great opportunity for thinking on about the season to come.
One subject exercising us here is: Will consumers still buy, but buy smaller units or cheaper brands? Getting the decision right here changes the stock bought and therefore availability. Getting it wrong can make or break a season.
So we looked at it in huge detail. On the subject of downsizing, easiest place to see it is in sales of Trampoline Accessories. We sell all sizes of accessories, including sizes where we don’t sell any trampolines, so our accessory sales cover all brands and manufacturers.
So, some evidence there that the 8ft Trampoline is increasing at the expense of the 14ft Trampoline. Whilst all sales are down on the previous year, 8fts and 10fts are down by much less than 13ft and 14ft Trampolines.
How about the situation on Trampoline Safety Nets?
Not so clear but on Safety Nets. Here the 12ft is down, but the 14ft did well. The conclusion here is that prior to 2005, many trampolines were sold without Safety Nets, but now almost all trampolines are sold with them. The larger trampolines take more bouncers, so a safety net seems more useful. I believe the same relative decline in size requirement is still true, but we are selling lots of trampoline safety nets to old 14 ft Trampoline buyers, who originally bought them without the net, and are now concerned about safety. Prior to 2005, the 14ft Trampoline was the norm.
On Trampoline Tents, there is no change from 2007 to 2008. On Trampoline Pads, the situation is distorted by the relatively large number of poor quality trampolines sold by the multiples, that do require replacement pads. The strange size choice by some multiple retailers distorts the market for replacement trampoline pads, so no conclusion is possible.
So, not a massive amount of evidence to go on, but our conclusion is that yes, consumers are downsizing. This will change our buying pattern for 2009. Does your market have a similar pattern?
Can you win this year by choosing subtly different stock from last year, and still have stock of the smaller sizes when the competition have sold all theirs?
Came across this post, about the fun and excitement of putting up the trampoline, and the dilemma of using the safety net. Its true, the net does take much longer, and our fitters are always saying the kids want to start as soon as the trampoline is up and complete, but the safety net takes much longer.
This family must be a great outdoor buyer because the trampoline picture also shows their Intex Pool.
Woolworths has finally gone today. There was much talk about Theo or someone else rescuing some or all of it, but seems it has all gone. 27,000 people lose their jobs. Will this be the biggest loser in this recession?
Also over Christmas Adams childrenswear, Zavvi, MFI, and loads more have entered administration.
Its the comparison between Woolworths and Zavvi that seems the most interesting.
Woolworths is an ancient brand, and widely seem as old fashioned and out of touch with modern trends. Why do you need Woolies is what everyone says? They sold a wide range of different things but were not the leader in any one. Only a matter of time before the specialists killed them off says the wise thinking.
Zavvi is the rump of the old Virgin Megastore. A specialist, selling Games, DVD’s, CD’s, and entertainment stuff. Shouldn’t Zavvi have been one of the specialists that saw off Woolies? How come they went too?
Is it the changing technology? CD sales are down. Downloads are up. Want a new Wii game? Then buy online, it comes in the post. Don’t need to go to town.
So is it just technology. Internet taking sales from the High St? CD’s too old fashioned?
I think so.
Is Richard Branson crying that his famous old Virgin Megastore did not make it? Nope, he sold it a year and bit ago, but seeing as he only got £1 for it, seems he actually gave it away.
He flys Planes now, and Trains, and he has a bank. And the rest of Virgin.
That’s the real lesson. Keep moving. Try and get more than one leg to your business. Don’t be too sentimentally attached to any one part of the business. That sentimentality will keep you from making the changes you need. Branson is happy looking forward, I don’t think he is too worried that 30years ago he was big in records, and now its gone.
Now, I don’t compare us to Branson, but we also need to keep moving. Stop and you will be the next Woolies. Its the same for us all. If you think you have cracked it, and don’t want to change too much, then you will die. You are either developing and changing, or dieing. It may be slow death, but still dieing.
Very hard to do, but the lessons are all around us. We used to be a mail order company. The web has killed traditional mail order, so we no longer do mass mailings we are now a manufacturer.
Some years ago we bought a manufacturer of Croquet Sets after he had gone bust. Time had passed him by, he was manufacturing in an old building, using old machine and old methods. It was easy to see how to improve the business, and it had to be done. He could not do it, he had been doing it his way for too long.
So the lessons?
1. Change. always look at how you can change.
2. Challenge everything. How could it be done better. What is done how it is, because thats the way we always do it.
3. Look long term. Branson saw the end for his Megastore, and saw better businesses. Could you?
4. Be prepared to walk away, and start again. Always, every year, ask yourself, is it time to walk away. What would be more fun, more exciting, more a business of tomorrow.
5. Even for web business, change is critical. If you cant innovate then get in some new younger management with new ideas. But do innovate.
It’s not just Woolies, MFI and Zavvi. Its the cobblers, and ship builders, engineers of yesterday that went 30 years ago. They also should have changed. Don’t let it be you next. But….. don’t ask me what you need to change to, that’s the really hard bit.
Marks and Spencer today announced like for like sales over Christmas at -8.9%, and total sales only down by 1%.
Result, universal discussion in the media about what they are doing wrong, and how this reflects badly on the management. Robert Peston, never one to under react says results are ‘truly horrible’.
Yesterday Next announced sales down by 7% and Peston said ‘breathe a small sigh of relief that its performance in the last five months of 2008 wasn’t even worse’.
Marks and Spencer are still on course to make profits of over £600m, and have a smart plan to cut investment and make saving to bounce back from this hardly disastrous level in 2010.
Seems to me that the BBC, Peston especially and the media in general are hugely overreacting to the M&S announcement.
Could it be that the Next PR agency set up expectations of worse results? Or are Marks just a fashionable company to knock.
Seems to me that the next saving for Marks should be sack the PR company.
Just goes to show that public announcments need to be wisely managed or the wrong message gets out.
For me, Marks and Spencer results are no worse than Next, and the Next share price bounced hugely yesterday. Mind you the M&S share price also improved today, so maybe the city traders are wiser than Robert Peston.
At last, commentators are starting to realize that the collapse in the pound WILL impact on prices here in the UK. Quite soon.
Few things are manufactured in the UK now. Even hi-tech items are made in China, and the international currency is US Dollars.
Big retailers plan forward and hedge, so last Christmas sales were at last Springs rates. Sales this Spring will be at the autumn rates, but those retailers planning for the summer, autumn and next Christmas will have to accept huge price increases. The changes in commodity prices will not compensate.
In our markets, Table Tennis Tables have had an increase in January of up to 30%. Not too much of a problem since all major manufacturing of tables is done in Europe and all brands have had increase roughly in line with each other, but still a huge increase.
Watch out for more of the same with increases on European manufactured products imminently, and Far Eastern manufactured products later.
If the Bank of England was worried about deflation, this will solve the problem.
As I’ve previously discussed, there will be many winners from the recession. The winners will be those that identify the areas of growth. The challenge is to identify them. But how?
Well here’s one way which makes use of an organisation that makes (literally) lots of money, and spends some of it employing what they call agents to wander the country, talk to business people and try to understand what the xxx is going on out there in the real world!
Embedded in the latest Bank of England “Agents’ summary of business conditions” are a number of statements that suggest where the opportunites might be. And to make it really easy for you to grow your business and make money / gain market share through the recession, I’ve extracted those statements from the December report below. I hope some of them provoke ideas in your mind of how you can capitalise upon the fast changing world we’re living in!
Export orders had continued to grow
Consumers had continued to shift towards cheaper, unbranded products
There was some evidence of trading down in leisure expenditure
increased demand for fast food relative to other restaurants.
businesses were prolonging the use of existing assets
growth in demand for countercyclical services — such as business advisory work and corporate litigation
There were, however, a few exceptions to the picture of falling output: for example, food processors and the aerospace industry
falls in price were seen for construction-related materials
a quarter of firms had chosen to refuse potentially profitable orders
Actually comparing the December report to the November report it is quite clear things got significantly worse in the last two months of the year. When I first decided to do this analysis based on the November report there were many more items that could be interpreted as an opportunity than there were in December. Let’s hope that the January report is beginning to show a few more positive signs! I’ll keep you posted, but in the meantime, look at the above and see how you can move your business to where the demand is! Good luck – We all need it!
One positive aspect of the recession is the new ‘make do and mend’ culture. This means an upswing in sales of replacement parts, as people try and repair their old equipment instead of buying new.
Even second hand sales which apparently are booming will benefit as consumers need to replace some parts.
Trampoline Sales are hard to come by right now, but the sale of replacement parts such as Trampoline Pads are great. As are Trampoline Covers, as consumers try and look after equipment better to make it last.
Watch for this trend in your market place. What replacement parts should you be promoting?
Might be fun to make some predictions and see what happens. Feel free to add your own, or to lay some bets on the predictions:
1. Portsmouth to be relegated from the Premier League in May. Along with Stoke and West Brom. Manchester United to win the Premier League.
2. Euro Pound exchange rate to bounce back and hit 1.3 Euros to the pound again by end July 2009.
3. Don’t really think this is measurable, but I will let you know what happens in the marketplace. I predict serious stock shortages in Trampolines and Above Ground Pools, as suppliers do not invest enough in stock, as they are expecting a tougher marketplace than reality.
4. Oil price reaches $80 dollars again by end of 2009
5. England win the Ashes
6. Andy Murray wins a Grand Slam Tournament
7.General Motors and Chrysler to merge
8. BP and Shell to merge. (If not then another mega merger in the Oil Sector.
9. ITV to find itself in serious trouble and has to find a buyer before year end
10. Summer 2009 will be a hot one, spreading positivity in to the UK economy, and start the process of rebuilding confidence which will end the recession.
Now, post your forecasts and predictions for 2009, and lets see who the visionaries are……
There is lots of gloom out there, and the news is terrible, and like most others, we have become transfixed by ‘how bad could things be?’ So much so that we have written an alternative ‘Disaster Budget’, that makes assumptions on how low things could go and makes cuts accordingly.
Trouble is, once you have made that ‘Disaster’ plan, the focus is on that, and probably, that is where you will end up.
So, as an alternative, counter viewpoint, how could you grow in the recession?
The ease of this largely depends on your market share. It wont be easy, but it is possible and in fact the recession will mean that it costs much less than in a growth period. How, read on.
First, lets look at growth targets. I will use our own markets as examples.
Using our own, and best guess forecasts from our industry, we believe our markets, being luxury consumer goods, are in deep recession, the likes of which no one in our industry has seen before. This is made more difficult this time of year, because the markets are highly seasonal, and its easy to delay a purchase of a summer use product whilst in the winter.
So, we think our markets are down heavily:
Trampolines currently down -70%, estimate for full year 2009, down -35%
Above Ground Pools currently down -60%, estimate for full year 2009, down -25%
Climbing Frames currently down -70%, estimate for full year 2009, down -25%
If your market share remains the same, then obviously your sales will be down by the market decline. But, how much do you need to increase share by for your sales to remain the same?
The formula is: new market size/old market size *100. You don’t need to know the actual market sizes.
Take Trampolines for example. If the market is down -35%, then assume the market is currently 100, and the new market size will be 65. Using the formula, 100/65*100 = 53.8%. That’s the amount you need to increase market share by to keep your sales the same.
So if you had a 5% market share, then you will need to achieve 5% x 1.538 = 7.7% market share and your sales are the same. That would mean despite sales in your market collapsing, you only need to add 2.7% share and you remain the same.
Now your planning, your effort, your brains, should not be on cutbacks, but on how to gain market share. If you are a small share, its a lot easier than if you are a high share. If you were already 40%, then you would need to grow to 61.5% to keep the share the same – not an easy task.
How do you grow share? I don’t know! It depends on your market, but the first thing is to be positive. Your thoughts are now on selling to a few more people. To get that share from 5% to 7.7%, you need to find and convert just 3 in a hundred of potential buyers. That’s all!
Don’t think about markets being down. Imagine nothing has changed. Get your whole team together, and start a project called ‘Convert 3 more people’. Ask the team, how would go from 5% share to 8% share if the market was the same as last year? What would the actions be? Once you have written down the growth plan, then implement it. Aggressively.
Now the good part. Growing share in a recession is much cheaper than in a growth period. Much Cheaper. Why? The cost of stock.
Again using Trampolines as an example, the serious seasonal nature of the market means stock holding is high compared to sales. If we want to grow sales, then we need a lot of extra cash for stock. Our estimate is that for every £100k we grow in sales, we need £20k in stock, and then we need the space and staff to handle it, so and extra £100k in sales, need £25k in cash. And that extra staff and space is hard to find as well as hard to fund normally.
But, your plan to grow from 5% share to 7.7% share, leaves your sales the same, so increased share with no extra cash! And no extra staff, or extra space.
The real benefit comes later. At the end of the recession, your share has increased in a market down 35%. That means your competitors have reduced their sales by more than 35%. That’s means reduced cash generation, reduced stock holding, reduced capability as they let staff go, so when the recession ends, you are best placed to take advantage. If the market regrows, just back to normal, the market will see a growth from 65 back to 100, that’s a 53.8% increase. If the actions you took keep your share the same, then your sales will naturally grow by 53%. At that point you will need extra cash to fund the new sales, but you are best placed, since uniquely your sales did not decline during the recession.
Or in the recovery phase, you could decide to put up prices, and increase margins, carefully controlling your growth, managing your cash.
The most important thing is a shift in attitude. Focus on the market for buyers, not the decline. How can you satisfy best those who are still buying? When your competitors are cutting back, losing skills and staff, what can you do to be the best in the market?
Its been bad since just before Christmas, with a seemingly never ending list of retailers failing. Truth is, things have been bad for months before that, but with less news profile. The list of casualties is shocking:
12 January: The furniture chain Land of Leather has gone into administration after running out of working capital, leaving its workforce of 850 people facing an uncertain future
9 January: Some 1,400 store jobs will be axed as the Cardfair and Card Warehouse chains close down
7 January: Viyella, the 225-year-old company that is one of the great names in British textiles, joins the queue of heritage brands felled by the recession when it called in the administrators.
7 January: Miller Brothers, a Doncaster-based electrical goods retailer, goes into administration, putting 110 jobs at risk.
6 January: The body count in the retail sector continues to rise with nearly 200 redundancies at specialist chain Passion for Perfume
5 January: Around 850 people lose their jobs at the failed childrenswear chain Adams when administrators announce the closure of 111 stores
5 January: Waterford Wedgwood, the maker of glassware and china, falls into administration – 250 years after it was founded – after failing to secure new funding
30 December: Photography studio Olan Mills set to enter administration after ceasing trading on Boxing Day, leaving thousands of families hoping for pre-paid photo shoots disappointed
29 December: USC, the fashion chain owned by the Scottish entrepreneur Sir Tom Hunter, enters administration but under a “pre-pack” deal Hunter buys back up to 43 stores through another of his companies, Dundonald
24 December: Entertainment chain Zavvi, formerly Virgin Megastores, appoints Ernst & Young as administrators
23 December: Menswear retailer Officers Club goes into administration. PwC sells 118 out of the 150 stores to TimeC 1215, a company backed by the Officers Club’s CEO David Charlton
23 December: Tea and coffee chain Whittard of Chelsea is immediately bought out of a “pre-pack administration” by private equity group Epic
12 December: Strategy Retail, the 51-store group that includes the home decorating chain Fads, is forced into administration
4 December: Furniture and accessories retailer The Pier collapses into administration after being hit by the housing downturn
26 November: Woolworths appoints Deloitte as administrators; all 800 stores will close by 5 January, it is later announced
26 November: Unable to pay its rent, the furniture and fitted kitchens specialist MFI crashes into administration
21 November: Fashion discount chain MK One sinks into administration for the second time in a year
10 October: Hardy Amies, dressmaker to the Queen for almost 50 years, files for administration after its Icelandic backer Arev turns down a request for emergency cash
1 October: Young fashion label Miss Sixty, which controls the Energie fashion brand, falls into administration
26 September: Clothing and homeware chain Joy, whose clientele includes actors Keira Knightley and Sienna Miller, calls in administrators ahead of its quarterly rent payment
26 September: Home textile retailer Rosebys calls in administrators KPMG
25 September: Willis Gambier, a furniture supplier to Marks & Spencer and John Lewis, calls in the administrators
4 August: The collapse of Wrapit, the internet wedding list company, leaves 2,000 newlywed couples bereft of gifts
21 July: Floors-2-Go collapses, but a month later it is bought out of administration by the Hodges brothers who founded the business in 1999 and made millions when the firm floated in 2004
3 July: Sofa chain ScS Upholstery is rescued from collapse by private equity firm Sun European Partners in a deal that leaves shareholders empty-handed
26 June: Danish furniture chain Ilva appoints Kroll as administrators of its UK business
21 May: The 170-store MK One chain falls into administration only three weeks after being acquired by retail restructuring specialist Hilco
12 May: Upmarket furniture retailer New Heights falls victim to the tough economic climate and shuts all its shops
15 April: Merseyside retailer Ethel Austin collapses but is later bought out of administration by the former MK One boss Elaine McPherson
1 April: Bed retailer Sleep Depot appoints Kroll as administrators after failing to refinance its debt
1 April: Toy shop chain Toyzone finds itself in the hands of administrators from KPMG
11 February: Clothes retailer Base, which sells labels such as Ted Baker and Firetrap, calls in administrators
10 February: Plus-sized fashion chain Elvi falls into administration after the departure of its private equity backer Langholm Capital
1 February: Bargain bookseller The Works goes into administration after its bank HSBC decides against putting together a rescue package
28 January: Shoe retailer Stead & Simpson, which owns Shoe Express, is bought out of administration by Shoe Zone
21 January: Shoe chain Dolcis appoints KPMG as administrators after failing to pay its £2.5m rent bill
At last statistical analysis has caught up with what we already knew.
As if it is a surprise, the government announces the second quarter of falls in output, therefore we are in a real recession.
But, we already knew didn’t we? Sales last quarter were appalling. We knew things were bad. Ask people who worked for Woolies, MFI or Zavvi. We did not need the officially stats.
But, is the reaction over done? Look at this on the BBC story:
Neil Mackinnon, chief economist at ECU Group, said the GDP figures were “grim” and underscored the depth of the recession.
“There are no green shoots of recovery, no light at the end of the tunnel,” he added.
The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five.
In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s.
So, the really bad ones have lasted 5 Quarters, and some forecasters think it could be as bad as that. Given hat we have already had 2 quarters, isn’t it true that we have only 3 more to go, and Q4 this year should be an improvement?
In fact my analysis says that the worst ones since the war have actually lasted 6 quarters. We have had 2, and the one before that was only flat. So, if its equal worst since the war, it will be 3 or 4 more quarters. Given that Vat goes up again Q1 2010, i think that will provide an artificial boost to Q4.
My prediction is Q4 will be a growth one, and last only 9 months way. Given that we have already had 6 or 7 months of bad news, then we are around half way through.
The Financial Times has done the chart I wanted to create. Superb, and shows that its not uncommon to be in recession, and it always feels as if its the worst ever, and things will never be the same again, but it always bounces back.
Ask them what they expect the summer to be like this year.
With all the constant bad economic news, everyone has a disaster story to tell, but I have noticed a distinct two camps when it comes to looking to the future. Some people believe the summer will be great, can imagine basking in the sunshine, and really enjoying the good weather. Obviously they are the ones who can detach themselves from the recession, and are the optimists.
The other camp are so downbeat, they cant believe that anything will ever be good again, and that includes the weather. Talk to them, and you should remove all sharp implements from the area. They are the pessimists.
Seems to me that there is not much room in the middle, but the optimists are much more fun to have around.
What do you think the weather will be like this summer?
With the recession, some retailers have disappeared already. Its a long winter season in this industry, and not everyone will survive.
Its not all doom. Most have not gone bust, but have retired or moved on to other things, but retailers that we have heard will not be around for 2009 summer season include:
We can. It is noticeably lighter in the evenings as we go home, and the bulbs are poking their heads above ground. On a big bank near the office there is an impressive display of Snow Drops.
And…. we are getting busier. Customers are ringing. there is a definite upturn in business. It feels good, and maybe, just maybe, its the beginning of a turnaround in optimism, and the start of a recovery on the outdoor toy sales. Every sector seems to be benefiting from Above Ground Pools to to Sandpits and Trampolines. Lets hope for a great Spring.
Peter Mandelson announced what has been described as a ‘bailout’ for the car industry yesterday. He got some serious stick, but it all seems quite sensible to me.
I have several times described that the best defence against the recession is to attack. Keep pressing on, develop as many new ideas as you can, and use your spare resources to create the best products and services for the turnaround. But this only works if you can afford it.
Mandelson’s plan it seems to me is to make sure the car companies keep investing in the products that will be the successes in 10 years time. there is a real danger that when the tough times come, we all cut back hard, cutting back on the developments we need for the future. The plan is to make them spend on future ideas.
When the beer industry moan ‘what about us’, what is it they want for the future? If they could create a compelling case for creating a world leading industry with jobs here, that is best placed to give the world what it wants when this mess is all over, then they too can have some help. In the meantime, no one will get help for day to day difficulties.
We sell luxury goods. We are a leading business in a small industry. What we need is the big industries in the UK to lead the world, earn huge profits by being the best, and giving the UK a strong position in the future world. With that, our small business can do very well indeed in a very rich country.
So, Mandelson, carry on. Keep supporting the future, and don’t be tempted to subsidise the present. True there are real problems managing with the reduced demand, you don’t have to tell us, but keep the investment in the future.
A new product is launched by TP Activity Toys this weekend the Ballooppa, with a PR push that should mean it is seen on our TV screens.
A new football game, with a tethered ball and a movable hoop, is looks fun and interesting. It is a big money launch for TP, and is great news, showing that they are pushing ahead with new things despite the recession. Lets hope its a big success. Its certainly being talked about!
They have a large number of expert marketing agencies in on the launch, and it is being promoted by a soccer freestyle world champion, John Farnworth.
If more companies had the confidence to press on with their plans and laucnh new things, talk positively and think about the long term future then the injection of confidence would solve the whole UK economy problem.
Compare the economy to your own budget in your company, when things get tough and sales are down, there are two ways to compensate. One is focus on cost and start using cheaper toilet paper and the like. The other is focus on sales and get the top line back. Truth is when the hard times are over those who take the second way are better placed.
We are looking for the the first signs of positive news, like you might look for a swallow in summer.
And, there are some. Carpetright today announced results, declaring that November was terrible, December very poor, but January has been much better. Thats exactly what we have seen in the Garden Trampoline business and in Climbing Frames. Maybe November was the worst.
A friend who is an Abingdon Builder has had a run of confirmed projects in the last week and an upturn in enquiries. Very Positive. He has also had the balls to start a new business, an Abingdon Plumber, which takes some confidence, but is working, he is busy already.
Poitive signs, but for us, the most positive today was the reaction of the BBC to Carpetright. At last they started talking as if it could be the first sign of the end of the beginning of the recession. Not quite an upturn, but positive news.
True employment is up, bankruptcy is increasing but its still only a few hundred thousand out of 35 million. Its when the 34.8 million workforce stop thinking that they are next and feel positive that things will upturn and the unemployed can get back to work. Lets hope today was the start.
Halifax have announced that house prices in the UK were up last month. Great news. The outdoor toy industry has been harshly hit by the lack of housing activity. Not as much as some markets, for sure, but nonetheless, house moves do drive sales of Wooden Climbing Frames, and big outdoor toys such as Trampolines.
The BBC did not give the story much airtime, but trust me its important. It may prove to be a blip, but at last it is some respite from the constant bad news. And.. anecdotally, we are seeing movement. At least three groups of our friends are looking for new houses, so maybe, to quote Churchill, maybe, it is not the end, not even the beginning of the end, but it is perhaps, the end of the beginning.
Anthony Worrall Thompson has been all over the media in the last two days blaming Lloyds bank for the failure of his businesses.
But from his own mouth he explained the issues and frankly looked foolish. It made it look as if the real issues faced by real business are like his, and they are not.
The facts are:
His businesses were £250k overdrawn.
Trading losses meant he needed more money.
He asked the bank for an extra £200k.
He showed them a revised business plan that put the business back in the black.
So far, so good, normal banking activity.
But here is where it gets mad. the bank, not unreasonably asked him for security from his personal fortune.
He said no.
He was quoted as saying:
‘He said he had battled to save the firm – even considering mortgaging his home at Henley-on-Thames in Oxfordshire, which he shares with his third wife Jacinta – but it had been a “horrendous risk”.
“It makes me cry,” he said. “It is just appalling. I am furious, to be honest, that the banks didn’t support me. I am absolutely gutted about this whole situation.”‘
So, his business plan was so good, that he thought he would lose his house. It was a ‘horrendous risk’! And he expected the bank to put up their money.
Bonkers. He gives all of us small businessmen a bad name. He clearly doesn’t know what he is doing, and deserves to have gone.
We had two days last week of serious snow. Some staff made it in both days. Some did not on either day.
Do we pay those who did not turn up? Some of them live closer than than the ones who made it. On both days there was a lot of snow first thing, but by 10am the roads were clear.
Even if it is hard to get in first thing, I do not expect staff to write off the day, but to try again later.
Every month as a regular feature, we will give you a simple list of the top issues facing us. The things exercising our minds. Add yours too:
1. Overall sales levels down. When will the recession end? When will the upturn start? What can we do now to drive sales?
2. Exchange Rates. The collapse of the pound has had a catastrophic effect on cost prices. Is it really long term? What do we do about pricing?
3. Appraisals. We are only small, but we work an appraisal system that makes everyone aware of their own objectives. If we get this right, it keeps everyone pointing the same way.
4. Summer stock levels. Sales are down. The prospects for the summer are in the air, dependent on the weather and the recession. What should stock levels be to be ready for the summer?
5. Supplier Security. Sales are down, and customers are failing. What happens if key suppliers fail. Would we be ready?
We wrote last week about Worrall Thompson and his attack on the banks. Here is an article from the Daily Mirror that clearly feels the same way, just writes it better and funnier:
At many of the business meetings I attend there is a buzz around ‘how can we profit from the Green Economy?’.
Everyone it seems is turning greener, and becoming more environmentally aware. It is undoubtedly a macro trend, and will grow. The Schools are preaching the issue, and youngsters especially are green aware. The market is big and growing, so business leaders are right to think about how can they take advantage.
Not with stupid meaningless stunts, like using recycleded toilet paper, but with real initiatives and developments. There is demand and it will grow.
But what if the the doom mongers are wrong.
When I was at school, our teachers used to preach that overpopulation would end humanity. Before that it was the Nuclear war threat. We also had the year 2000 IT bug, Aids and Mad Cow disease. All were going to end the human race as we know it.
I don’t know. I am not clever enough or have access to all the facts. But it makes me wonder – does anyone know the facts? Does anyone really know.
Clearly Aids was not the disaster they expected. Year 2000 bug went away. Nuclear War has not happened yet.
Could it be some knid of mass low panic hysteria. Does the human condition need to think ‘the end of the world is nigh?’ With the decline in religion, is this a reaction? Did mass religion used to provide a role for humankind, that we need to invent disasters to recreate?
If Global Warming is not real, how long before we realise? Will we all think that we saved the world by recycling our beer bottles, and that move down to a 2litre car?
What will be the next ‘end of the world is nigh’ story?
In the meantime, there is lots of business to be had from the greening of the population. Certainly in our markets, Metal Climbing Frames are in huge decline and have been for 5 years, and Wooden Climbing Frames are growing fast. Is that the green revolution?
I know we are all clinging to any piece of good news, but among the doom and gloom stories all around, I still want to spread positivity when I can.
The Trampoline market is in freefall. Volume has collapsed since the end of last summer, and it truly feels as if it is going to be a hard season indeed. But…. sales of Trampoline Covers are up. As are sales of Replacement Trampoline Pads.
Customers must be looking after equipment they already have, so there is some business still being done, and it is good business too. Perhaps also there is a strong second hand market in trampolines,and perhaps those second hand buyers are replacing some items, and trying to look after their new purchases.
Don’t mind why, but its great that at least some aspects of this terrible market are positive.
We are optimistic here. We are convinced this year will be hard, but we are grateful we are us and not some others in our industry. We are convinced we will end the recession stronger than we started it. We are so positive here, I have looked up some quotes on optimism:
The one I like best:
“But, on the most part, he belonged to the optimists; he felt that there would be time enough to suffer when catastrophe really struck” James Gunn
Others I also liked:
“It’s better to be an optimist who is sometimes wrong than a pessimist who is always right” Unknown
“A pessimist finds difficulty in every opportunity; an optimist finds opportunity in every difficulty” Unknown
“An optimist will tell you the glass is half-full; the pessimist, half-empty; and the engineer will tell you the glass is twice the size it needs to be” Unknown
“Optimist: Person who travels on nothing from nowhere to happiness” Mark Twain
“In the long run the pessimist may be proved right, but the optimist has a better time on the trip.” Daniel Reardon
We buy currency from 3 different currency dealers. Each of them sends a email most days, telling us whats happened, the reasons why and often giving their view on what will happen in the next few days.
Most emails end with ’so if you want dollars – buy now’ type of message.
I suggest these people and all the city currency dealers read their emails from 3 weeks ago, or 10 weeks ago, or 1 year ago.
Its clear they have not got a clue.
Every day they get it totally wrong. Often they will contradict themselves withing a week.
Always of course they give enough signals each way to be able to say in a few months time, ‘if you look back we predicted thsi’ conveniently missing the fact that they also forecast plenty of other outcomes too.
For us, it simply means that we can not expect to be currency dealers, so we buy spot, and take the risk, and that becomes a constant fear of getting it wrong.
TP have launched a new range of trampoline called TP Trampolines Planet Range. Combining an enclosure with a trampoline, its a bit like the Jumpking Jumppod, with what TP describe as a more modern design.
Its got very soft rods, keeping the enclosure in place, making for a very safe bouncing environment.
It also has a strange feet design, to give better stability on uneven ground, which can be a problem for some trampoline styles.
Its a kind of octagonal shape, combining some of the bouncability of a rectangular trampoline with the safety of a round trampoline.
Every month we have a meeting with other local business leaders. We share experiences and help each other.
Since mid 2008 we have had a show of hands on when the downturn will end.
Consistently every month it was getting worse, and in December, the consensus was Q1 2010.
Last month it moved forward for the first time, up to Q4 2009.
Next meeting is next week, I suspect the news is bad, and it will have moved back again, despite positive news from the housing market and sterling. Will let you know.
whats your view. Very simple just say what quarter. And come back if it changes.
According to Andrew Sentance, a member of the Bank of England Monetary Policy Committee, “the global financial crisis and synchronised global downturn” were “producing a recession which is relatively severe compared to past precedents – but not yet clearly worse than the mid-1970s and early 1980s downturns in output”.
I think that the previous bad ones were 6 quarters long, so it should end either Q4 2009, or Q1 2010. Much as the Trampolineman poll predicts.
Seems new car sales were down 22% in February. For all the bleating from the car industry, you would think they were down 100%. I am not belittling how difficult a 22% drop in revenue is, but our industry is worse. We reckon sales in the Outdoor Toy and Trampoline Business is down 40% in February. Housing sales are down further.
There are plenty of green shoot stories around if you look for them.
22% down in February, is much better than the 40% down car sales had in November.
A firm of solicitors reported that pre Christmas they were working on legal issues around redundancy. Much less now.
A Personnel Group taday announced that they think the ‘cull of employees’ is over the worst.
An Estate Agent friend this week reported that he personally had bought two houses since Christmas and things were looking up.
At a meeting of Managing Directors this week, they were very pessimistic, but if the recession is to last 6 quarters, then we are around half way through, and it is bound to look bad. But it will get better. Wont it?
And we are spending 75bn to ‘quantitative ease’ the economy. Don’t know what it means, but its a lot. On top of £300bn for banks and £12.5bn for Vat.
All told we are spending around £500bn. Or is that wrong.
Is it working? Historically recessions last 6 quarters – and thats the bad ones. If this one lasts only 6 quarters, then surely the money spent is a waste?
Did all the other rate cuts work? Why then will this one? I don’t think it will make any difference. Full marks for trying though.
For £500bn could we have done something else?
What are the problems?
Not all of them, but some major ones:
- People over borrowed to buy houses. House prices are going down, so people who can not pay can not sell. this causes losses for the banks.
- Declining house prices means the securitised debts become problem debt for the banks
- Writing off assets at banks reduces their asset base so they can not lend
- Not lending from banks causes less people to get loans, so house prices fall further making the problem worse
- Dropping asset prices makes people feel poorer so they stop spending
- Seeing people stopping spending makes others think things will be bad, so they stop too.
So a circle of bad news, making things worse and worse. And it seems most of the money spent so far has made little difference.
But lots of the issues start with the housing market.
Now , if a house on average costs around £200,ooo, then £200bn would buy 1 million houses.
what if the government had spent £200bn on houses? then:
- At the end they would have an asset of 1m houses
- They would have a rental return on that asset
- It would underpin the housing market, meaning people in difficulty could sell, and cover the loan
- Consequently, no bad debts from the housing market, so no toxic debts in banks
- Hence no bail out required for banks
All in all, less money spent, and a massive asset bought for the future.
They could even do it now. It would rescue the housing market, and everyone would feel richer again. Peter Mandelson, Alsitair Darling, Gordon Brown. Get on with it. Try something new! Its only another £200bn.
Lets not spend, lets make do seems to be the message for the first half of 2009.
Clearly with bad news widespread, and everyone knowing at least someone, and probably many people who have lost their jobs already, many if not all consumers are cutting back on expenditure.
Now we only sell new items, but it seems there is a booming market in second hand large outdoor play items. We are asking ourselves, is this a market we should be playing in?
Could we become a middle man, buying and selling second hand trampolines? Maybe buy them, refurbish and check them, boost quality in some cases with a new set of pads and some new springs, and sell on for a margin. The price would be less than buying new, and could this give us an edge?
What would be the downside, or the risk?
Any one else involved in the second hand market?
One interesting factor is the size issue. The overall market is not the same as our market. We are being asked for spares and replacement parts for trampoline sizes that we do not even sell. For example we do not sell any 13ft Trampolines, but for years Argos have sold loads, consequently we now sell spares and replacement pads for 13ft Trampolines.
We are obsessed with the recession here. Its the first big one we have worked through, and its a completely new set of challenges from anything else we have ever faced. Its horrible, but strangely interesting.
We are in the outdoor toys industry, seasonal and dependent on the weather, and not really essential items. We have been meeting other business leaders and trying to understand how the recession is impacting on their businesses, to see if there are things we can learn.
We met recently with an Automotive Management Consultancy, who told us how the recession was changing the structure of the car supply business.
The downturn, that then turned in to a recession meant that the car manufacturers did not cut back on production early enough. The complex supply chain in automotive manufacturing means that the car manufacturers have Tier 1 suppliers, Tier 2 and Tier 3. All of these carry inventory and when the manufacturers needed to cut back, they all got hit – HARD!
The concertina effect means that the impact gets amplified as it goes through the chain, and at the end, on the smallest level, they get the deepest cuts in production. That’s why, here, deep in car supplier country, we have many companies laying off staff at deep levels, and working short time.
The good news, is that when the inventory goes down, then production starts again. Not at the same levels, because according to the consultants, the industry will not reach the peak levels of production gain for at least 10 years, but it does start again, and at a regular level.
That means those companies start up again, go back to full time working,and so begins the end of the recession.
That, they estimate will be at the end of the summer. Good News.
The lessons for the rest of us, are about flexibility in inventory control and forecasting. how can we build in flexibility without the crisis caused down the chain if we get it wrong. If we are down the chain, what lessons can we learn for next time. The automotive industry has some lessons to learn, and we suspect a new shape for automotive supply chain in the future.
Lots to work on, but at least we are all agreed, the recession will end.
The 2002 Companies act made so called ‘pre-packed administrations’ a new form of recovery from company disaster. Now though are some companies using the process not just to protect jobs and businesses but to launch new ones, ready created and unencumbered by the start up debt or a cock-up debt problem.
It used to be that bad companies went bust. And companies that made a big mistake got through it, incurred the debt, and paid it back out of future profits. Now companies can just write off the debt, and start up as a new entity, and the creditors pay the price.
Is the process being used to save one company at the expense of others?
There is even a company calling itself Pheonix Administration: http://www.phoenix-company.co.uk/. This company advises SME’s on how to write off their debts and start again, with the same directors, the same premises, the same customers. Is this just theft being legalized?
The latest company to do this is The Sleepover Company. In to administration on 6th March, the assets were bought by the same Directors using a new company Sleepover World, and now continues to trade. They bought the stock, the goodwill and as far as the web site and most customers are concerned nothing has changed. All except for the creditors of the old company who have to write off the debts. All legal, but is it fair?
In Novemeber Iwrote here asking if the government and the forecasters really knew how bad things were, or if they were hiding the figures because they feared the collapse in confidence.
Since then, the figures cam out, and as we knew from the end of October there was a dramatic turn-down in business and confidence.
So the conclusion – the figures lag the real activity by some months, but they get there in the end.
In November we knew things were really bad, but the official statistics and forecasts were not reflecting what we knew.
Well good news- its the same now.
Things are much better. Since mid February, things have been better. Not yet up on last year, but the decline has stopped and its really much better. Its real, and its as dramatic as the November collapse. and guess what – no one is talking about it.
In fact so called ‘expert’ forecasters are saying its really bad, and going to stay that way. Much like in October and November they were saying is not that bad, and could be a slight downturn.
My conclusions:
1. Forecasters have not got a clue. The stats they use are so out of date, they lag too far behind. They use the project what happening now in to the future as their best guess and don’t have a real touch of real lives
2. Real activity says that things are getting better, Its not just us – its widespread
3. The figures released from June and July will start to show this improvement
4. In June and July the ‘experts’ wont believe it, and will say its a blip.
5. By September, they will believe, and will have a consensus that the recovery its on its way
6. Q4 2009 will show positive growth
Remember you read it here first. Log it, and comment if its not true later in the year.
Commentators are ’surprised’ by news today that inflation excluding mortgages is up.
Don’t they live in the real world. Most things you use are not made in the Uk anymore. They are made in the Far East or in Europe.
The collapse of Sterling has made everything imported massively more expensive. That’s almost everything you buy from clothes to toys to cars and food.
All getting huge price increases.
The ‘threat’ of deflation was a myth. Inflation is the big threat. Trust me – its real, unless Sterling recovers, and if we are right and we are on the back end of the recession, it may also recover.
Economists should read this blog. Get in the real world.
Today the Retail sales Figures for February are released, showing sales growth of only 0.4%. Less than recent months and less than ‘experts’ predicted.
Lets start a game of predict the next one.
Here, and with anecdotal reports, in many places, March looks much better.
My prediction for March : +3%, and a shock increase for the so called ‘experts’.
Its already over. Its just the detail now to sort out.
I have been saying in many posts recently that things are better – much better. And that when things were bad, really bad, the official view was blind to how bad it was.
Well here is some thought on why.
Firstly, the things that caused the recession are over. It was the financial crisis that started this whole thing. The banks got sick, then stopped working as normal and they began to get very sick. Merrill Lycnh, Lehmans, AIG, HBOS, Iceland, RBS. All at least 6 months ago. Since then banks have stopped going bust. The sickly ones now get government help, and plenty of it. Human nature is to overreact, so I suspect for most of those basket cases, the government got a pretty good deal as the ‘toxic assets’ prove to be not as toxic as feared.
The main point is that the banks have stopped collapsing. that’s the thing that created the mess. After that, consumer stopped spending, business stopped investing, and we got a normal recession. The experts who failed to call the recession are naturally too shy to call the end prematurely, so they will only call it too late.
The thing about normal recession is that they get better. There is a cycle of disaster, bad news, more bad news, then gradual improvement as the system gets back in to equilibrium.
So the banking crisis is no more, and we are in a normal recession. Normal recessions also have a life of their own. the bad news creates cut backs. Some companies go. Many more jobs go. What also happens is that business and consumer spending gets cut back, and people save more for a rainy day.
Those savings will create higher bank deposits, righting the problems in the banks. Bingo – The banks have money again and need to lend. Where will they lend? To the governments to back the massive loans taken out to save the banks! and back to us. Business will be able to get loans for investment. The investment will create jobs, the energy created creates positivity, and we are back to the norm.
When? NOW! Its happening now. Get on board. Start buying assets, get ready for the upturn. Its coming.
don’t believe official statistics. They lag behind. when the statistics start showing that things are better, you will be behind. You will have missed the opportunity to buy cheap assets, and will be running to catch up with the market.
Maybe you are not brave enough to get on board and start spending big yet, but at the very least start planning.
We called it first. February 2009, the lowest point. March 2009, the start of the recovery. There will be some blips to come, but its on the way up, don’t miss out.
So here is the foolproof way to ensure it really is over.
Tell everyone you meet that the recession is over. Its that easy. Tell them passionately and with confidence. Give them back up, like the stuff about the banks on the previous blog.
Tell them that the worst since 1945 has only been 6 quarters, so we are already well past the middle of this one. Tell them that the people who make the most money on the upturn are the ones who spot it fast. Advise them to start getting on board and investing, getting ready for the good times again.
Most importantly urge them to tell their friends and colleagues.
Before you know it everyone will be on board and its all over. That is if you did not believe that it already is.
Incidentally have you noticed the subtle change in the news agenda? Its no longer all about the downturn and the bad news. Its a quiet time on that front. Wait for it. The next thing is the news media start talking about the ‘green shoots’. That’s when everyone starts thinking about investing, and everyone else will know what you already know.
I know, I know. I predicted that the recession was over because the banks had stopped collapsing and then next day, one collapses.
Still, in my view it changes nothing. In reality the Dunfermline collapsed last autumn, but limped on with crutches, hobbling along, until it realised it could no longer keep walking. Just because the management there managed to delay the end, I still stand by the original theory, so still tell your friends that the end is near, and the recession is over.
Seems the Dunfermline got big in to commercial property just as it was turning bad. Bad luck, or bad timing, but it could happen to any of us.
Perhaps they suffered from ‘We must do something new’ syndrome. Its a problem I have seen many times before. The standard activity seems boring, so everyone is looking for the new. The thing that will drive growth. Then it does not work out, and if it too large, then can take the boring bits with it.
Still Robert Peston, a man I blame for many of our problems, but also a man with good contacts, announced yesterday: ‘no otehr substantial building society is expected to need rescuing in this way’. good enough for me. His evidence for this is that the government has created a new credit guarantee scheme for building societies, but there was only one that the refused to add – the Dunfermline!
So to use a cliche, Dunfermline is the exception that proves the rule. Bank collapses are over, and we can get on with the recovery.
As always, being optimistic and looking forward we are looking out for those ‘green shoots’ that prove what we have been saying that the tide has turned on the recession.
Our friend the Abingdon Builder, has an excellent business in Loft Conversions in Oxford. Its a classic business success story. He started with one project, and word of mouth has accelerated the activity, so now is nearly always doing at least one loft conversion somewhere in Oxford.
There are two interesting things for the rest of us in this story.
Firstly its word of mouth driving the business. He is using his referral system, but one good job, done well, turns in to two more quotes and one more job. Easy when things work like that. Lof Conversions were not his main aim, but he has now carved out a significant position in the Oxfordshire Loft Conversion market.
Second interesting thing for the rest of us, is that the market appears to be buoyant. with house prices low and mortgages hard to get, people are looking to extend and use the asset they have. Hence Loft Conversions have become fashionable. In fact they are popping up all over Oxford. Many of them with our friend the Abingdon Builders name on.
Growth in the Loft Conversion market for me is one of those signs that people are still spending, just maybe on slightly different things, but get yourself in the right place and do a good job, then things will work out.
Peter Gelardi the boss at Wrap-it that went in to administration last year was on Radio 5 today I imagine to promote his new venture Please and Thankyou, but I suspect is not too pleased since he got a really hard time from customers who lost out at Wrap-it.
He says he is not involved in the new venture, but is chairman and his son seems to be running the company, but it does appear to be owned by a company in which he is a shareholder, so not sure what is the truth, but he clearly is involved. He certainly has amended his LinkedIn profile to say he is the owner at Please and Thankyou. Woops! Maybe people forget how public the web can be.
We believe that the new rules on pre-pack administrations are not working correctly and encourage phoenix administrations like The Sleepover Company which we discussed a few weeks ago. We think they are wrong.
Whilst Wrap-it is technically not a pre-pack pheonix launch, clearly it owes a lot to the old company, and they have made some mistakes in using some of the old text and web designs.
Peter Gelardi is helping behind the scenes and will own shares. But WrapIt was not Peter Gelardi’s first business venture that has ended in failure. He was a director of Alternative Investment Market-listed World Telecom between 1994 and 1999 before he resigned and the company called in the receivers.
Like WrapIt, World Telecom ran out of money and could not find a trade buyer. Peter Gelardi has resigned from eight companies between 1991 and 2004. Six of those companies have been dissolved.
Should he be given another chance? In my book it comes down to the way that WrapIt was run in the months leading up to the administration. KPMG’s reports provide some insights. WrapIt never made a profit and its directors were seeking to raise finance from August 2007 onwards
There are clearly issues here that need exposing, and we welcome the discussion. We think pre-pack and phoenix companies should be banned.
The hard time Peter got on the radio today was great. He has serious questions to answer it seems from what I heard about his management of the old company and his involvement in the new company. It was really good hearing him defend himself, and the guests they had were knowledgeable and eloquent. A small victory today for the victims of an administration. Well done. It cheered me up.
Only a week ago, we told you to start looking for ‘green shoots’ type media stories as an indication that we had hit bottom and the end was around the corner.
Today two surveys talk of improved confidence, and the BBC has gone big on the story.
Companies surveyed for the Access to Finance report from employers’ group the CBI were less negative in March than they had been in February.
Also, there was a small rise in short term confidence in March measured by the accountants BDO Stoy Hayward.
BDO’s Business Trends report showed a modest increase in confidence based on whether companies expect good revenue from orders.
While it only rose from 88.3 in February to 88.6 in March, it is a big improvement on recent big falls.
“Until now, confidence has been in freefall, and while conditions in the employment market will worsen in the coming months, some businesses are starting to view the future with less trepidation,” said Peter Hemington from BDO Stoy Hayward.
Just to add to the general feeling that things are changing, we can add our personal experience to the Internet, to expand the number of people talking about their experiences.
We never felt that the banks wanted to stop lending last Autumn. Quite the contrary, they wanted to lend us money, and as much as before, but they did want to charge much more for it, and reduce service, by taking out a personal manager.
Now though, are things changing?
Our current bank is being just as hard nosed about rates, but we have two banks sniffing around, desperate it seems to lend, and at discounted rates.
Could things be changing? Or is the reality starting to hit at the banks. Now they have their capital base sorted, they have to get out and lend again, and it will be competitive.
So, rates could be turning. Our advice – look around and push hard.
UPDATE – April 6th 2pm
Robert Peston today picks up on the same theme. Amazing, things really are moving:
The survey claimed that in the first quarter of this year there had been a slight increase in the availability of loans to companies and a less-than-expected reduction in the supply of unsecured credit to households and small businesses – although the supply of mortgages shrank again.
Perhaps more relevantly, credit conditions were expected to improve in the coming three months: credit will remain tight, but not quite as tight as it has been.’
Apologies for harping on about the economy so much. This is actually a blog about working in a small trampoline and outdoor company,but with sales down by up to 40% this winter, there is nothing here as important as the economy.
So, that’s why for the last 3 or 4 months, so many of our articles are on the economy and the general outlook.
Its my belief though that retailers, especially ones of luxury consumer goods are at the sharp end and can see and hear things way before the figures show them.
Right now, we are positive. sales are doing well. March was actually up on last year! There are many positive things happening.
Robert Peston today suggested that there were some positive things happening and in 92 comments so far they nearly all call him barmy. Now I think Peston is a self-serving journalist who has not taken responsibility for his part in the collapse of Northern Rock and the following banking disasters, but I think on thishe is right.
Why then so many people disagreeing.
Not sure who said it, but there is a famous quote on stock market investment that goes ‘when the bell-boy is buying then sell’. Basically, everyone not in the know works on data so old and on opinion that feeds on itself, that the general feeling out there is always way behind. so many people disagree because they can not feel it, and the data which lags why behind says things are bad and getting worse.
Not so. things are getting better. Trust me. And since the bell-boy is still not buying, then get buying yourself, and sell to him later.
Tongue in cheek, because we don’t think our sector is at all recession proof, but its true, we are incredibly busy. So busy we have taken on some more people for the summer, and we were sure we would not have to this year.
Why are we so busy? Well the Above Ground Pool season has started, and supposedly there is less stock in the UK this year. also many of our trampoline competitors seem to be short of stock, so that helps.
Some people in our industry were hoping that more stay at home holidays would boost the market for outdoor toys this year, so maybe that’s also a factor.
Being busy is great. We have had a very hard winter with sales down by as much as 40%, so to be busy again is superb. Long may the good weather last.
Some weeks ago, we told you that the media and the BBC especially would begin their hunt for the so-called \’green shoots\’.
Well its happening, you can hardly switch the TV on now without someone using the \’green shoot\’ cliche.
After that the next stage is to to start showing you how some prices and assets are moving and how smart investors are taking advantage.
A warning though, the final stage before the recession actually ends is the collapse of some really big names.
After studying previous recessions, that\’s the trend. Total disaster predictions, a quiet period, green shoot phase, then \’don\’t be left behind\’ phase, then new worries as some big companies go.
in previous recessions, the big casualties have been at the end. They keep going for longer than the small ones, but eventually the banks pull the plug as promises made a year ago are not kept to, and the realities of harder rules of lending kick in.
If that\’s true, then which companies will be the big ones to go? Let us know?
Also let us know about your \’green shoots\’ stories you see.
We always find it interesting to look at the detailed trends within sectors to see if we can draw any conclusions about what consumers are thinking and doing.
With all the turmoil in the economy in the last year, its been really interesting to see how some sectors have changed.
We have reported before that the market for trampoline accessories is buoyant, but the market for new trampolines is weak.
Now, its the pool season, we thought we should look at the early sales of pools to see whats happening.
Now, its the really big pools that are moving fastest. Surprising really, because they are really quite expensive at between £500-£1500, and those are the price points that have been suffering during the winter on climbing frames.
So the top 5 best sellers in the last 3 months are:
A regular update item: what is concerning us this month?
1. The economy – When will the recession end? what is the impact on volume in our market? Have we gambled right, and got the right stock levels in?
2. Staffing. We normally bring in summer only staff when the season starts, but this year we decided not to, since sales were down, and we have a large full time team anyway. Sales in the last two months though have been up on last year, and now its late in to the season, its late to train people up. The team here have discussed the issue and would rather do overtime than bring new temps in.
3. Stock levels. Related to the two issues above. We had to decide in the peak down period last autumn what stock levels to go with this summer, and now sales are picking up fast. We will run short o some items. And to make it worse, so will the rest of the industry, and of course demand switching from other brands will make us run out faster.
4. Pricing and the exchange rate. Prices have moved massively already and will have to move again. What is the impact on volume.
5. Bad debts. There are still retailers failing, and bad debts are an issue.
What issues are worrying you? Maybe there are some we should be worrying about.
Stoke and Portsmouth look safe, so lost that one. Man Utd should still win.
Euro exchange rate looks optimistic, but we will see. Trampolines are already in short supply, and Pools are looking to go that way too, so looks like a winner. ITV does look in some trouble. Overall one failure, two probable wins, and the rest yet to happen.
Phillip
Right on with base rates at 0.5%. Not expecting government forecasts for recovery to be 2010 just yet, and seems the Tories to win an election in 2010 looks like forecasting the sun will come up tomorrow. Overall 1 win, 4 to see.
Ebony
Massa better get his finger out, or you fail. Dexter Blackstock moved to Forest on loan, and could still get a big move this summer. Grand National was won by 100/1 shot. Oxford United failed to win the Fa Trophy. Could be right on the Premiership relegated teams. Shay Given has already gone, Kinnear too, only leaves Owen. Three Failures, most others looking ok.
Simon
Yes unemployment is up. freeview does have a lot more channels. Two wins, 3 to be decided.
Steve
Liverpool could still win it. Optimism is definitely in. England looking good. no failures, most others, wait and see.
Hardybee
FTSE has danced around 400 several times, so well done. Many shops in Witney are indeed board up, so two wins, the other wait and see.
Tesco announce massive profits, and buoyant sales, and again everyone says ‘I hate Tesco, I don’t shop there’. But someone does! And quite a lot it seems.
The truth is we all hate the uniformity of shopping where everyone else shops, and would like to feel individual. We all hate the demise of the local butcher, and florist, but still go to Tesco.
Tesco are brilliant at Marketing. And I mean Marketing in its true sense, working out what consumers want and give it to them. Tesco are masters at it, hence great profits, and a fabulous business.
But, its true, they are bullies. They do squeeze suppliers, and they are a pain to deal with, but they are massive.
For manufacturers, supplying Tesco and the other major retailers becomes a drug you can get off without huge withdrawal issues.
And for us as manufacturers, we hate the way they cherry pick from markets, going for the vanilla, big volume lines, with little or new spares or service, but in doing so, crash prices for the whole market.
How many times, have people said, ‘Its cheaper in Tesco’, when they a comparing a 30mm Pad, 96 spring quality trampoline with the basic 80 Spring, 20mm pad, Tesco version. And when those pads wear out in 12 months, no use asking Tesco for replacements, they don’t do them.
When selling spares and replacements for cheap Tesco and Argos products, we often point out that if they had bought from us in the first place, then they would not have needed replacements.
But, they are here, and they do sell the big volume lines cheap. So we have to compete. Make our products better. Make the service better. Make the range complete, with cheap value lines, but the opportunity to upgrade to better quality lines too.
In short, if Tesco take on your market, you have to be better at marketing then them. And as a specialist in your market, you can do it. Tesco put a 22 year old graduate in charge of buying for your sector. He doesn’t know much, and doesn’t care much beyond what will I sell next season. You are more knowledgeable, just don’t be lazy, put it in to your product range.
And stop criticising Tesco, its a waste of effort.
Our placement student from Bournemouth University left last week, but here legacy is here to stay. Launched this week is the last of her work, a new Pool section on the Etoyszone website.
It takes Etoyszone from being a total specialist on trampolines to a whole new sector, the above ground pool. It features some of the most impressive Intex pools on the market, including the incredible 32ft Intex Ultra Frame Pool
Other star products include the top selling 15ft x 42 inch Intex Easy Set Pool, and a unbeliveable price on the 18ft Easy Set pool
All carried in stock and available for fast delivery the pool market is a major launch for the etoyszone business, and if the sun shines should increase sales dramatically.
A new sand pit called the Sand Sailor is announced today.
It is a fabulous sand pit, in the shape of a boat, with a host of interesting and fun features.
Available from the end of May for delivery, it is a large item, with lots of play value. It has a sail, a ships flag and a ships steering wheel, and the little girls especially love ’sailing’ the ship. And it has a large sand play area, complete with an integral wooden cover, which folds back to create two bench seats for the kids to seat on whilst playing.
And a huge storage area in the bow is revealed by lifting the lid, which then becomes a play table complete with a blackboard for chalk play.
Its a real winner. And will be available from all good sandpit retailers.
Like many others in the outdoor toy business, we have been pleasantly surprised by the good weather this spring, and the very positive impact on sales it has had.
Trouble is, like everyone else, we expected the summer to be very hard, and sales to be well down. Consequently it was not the season to be bold and brave on stock levels, and although we have invested massively, we have not taken too many flyers or gambles on stock levels.
That means that like many others in the industry, sales are unexpectedly up on last year, when stocks are not, so stock will be ins short supply this summer.
Already we are seeing the impact in trampolines, where many of the big brands are out of stock. TP went out of stock of the 12ft TP Emperor Trampoline last week for a month. Supertramp have no Large Rectangular Trampolines for ages, and many retailers own labels are also short.
Pools will also be tight this year. We hear that the import of Intex is down by as much as 60% this year. so with 60% less stock, prices may rise, and we advise consumers to buy early, since any kind of sunshine will make them sell out. 2003 was the last time that Intex pools sold out completely, so selling everything would be great.
What are we doing? Well simply trying to get as much stock in as we can, and as early as we can, but if the sun keeps shining. it wont be enough. We have another 130 pools arriving later this week.
One of the pressures of running a small and seasonal business.
Interesting to hear the budget and read the mountains of stuff written on Alistair Darlings forecasts.
Two things came in to my mind.
Firstly, he had a lot of criticism about the level of the forecast and his prediction that we would be growing again by Quarter 4 this year. Many of the TV reporters simply said, ‘its a brave call’ and ‘what if it doesnt’ and then in a circular loop type way quoted other commentators who also thought it was unlikely. I think that if they keep saying its unlikely then it wont happen. PLEASE, stop talking it down, and start saying, ‘YES, it is possible’.
Its the fear of further downturns that keeps investment low, and reductions in staff as hey leave, and reductions in inventory. If we all start planning for an upturn, even in a gentle way, then it will happen.
Secondly, we were struck by how global the GDP growth figures are. They cover the whole economy, and there are huge differences within it. Take the City. I read it accounts for 27% of Corporation Tax. Don’t know if that true, but its likely to be big. And we know that the banking sector is in big crisis.
Maybe that accounts for why we , and many other business that I talk to supplying consumers, or similar are pretty positive and seeing sales higher than the expected, and higher than reported in the press, but the economy is still down.
Could it be that the City is down 20% and the rest of us, hardly down at all.
Could it be that in Quarter 4 this year, we are seeing a great Christmas season, but GDP is still down, but its only the city left in decline? Or is the Q4 2008 comparison for the city so dire that even that will be showing growth?
Overall seems to be that we will all be ok by Q4 2009. Not sure about the city, but in the real world, it does not seem too bad.
Vestas announced yesterday that they would close their Isle of Wight factory, costing 600 jobs. Not caused by the recession, profits are up, and a sales are up 20%, but other factors, some of which don’t make sense.
They say they export 100% of the blades produced, and one problem is the collapse of the pound, causing some import components to be more expensive. If they export everything this does not make sense at all. Can someone explain? All the added value production is cheaper because of the pound, and once reexported, the extra cost of imported items is re set to zero. No sense in that argument.
Then they blame the UK market. Some issues here, but they export everything from that plant. and would need to retool anyway for UK production , they say.
Then the real reasons, in the small print:
‘We can keep it open if the government fund us’! The real reason. They are holding the 600 jobs hostage until they get a slice of the governments new green technology investment fund.
And….’New plants in the US can now supply the US market, previously the outlet for the UK production’.
So, the US ‘green fund’ has helped them build new plants in the US. And they can only keep open in the UK with government cash.
This reminds me of the 1980’s and the worldwide rush for governments to cosy up to technology companies. Governments paid huge sums to get manufacturers t build Silicon Chip plants. We had several here in the UK. All built with grants and government cash in unemployment hotspots. Then when the grants ran out, they were closed, as new production from the next country that funded a new plant cam on stream.
Its a new green tinted scam to squeeze money from desperate government departments.
I see on the web that the Vestas plant in the Isle of Wight was built with grant money. I hope the contract allows for the repayment of all that money if they close, and with penalties.
The Silicon Chip production mess must have cost billions. I bet now that ‘green techonology’ production will also cost us billions, and the money will end up in the distinctly un-green corporate coffers.
I have thought for a long time that there are many shades of green. Its interesting that one shade of green campaigners wants renewable energy, but another shade of greens, don’t want the wind farms built in their areas, and don’t want nuclear.
Becoming green then is not easy, so it has interested me for a while in how we can become greener, without being obsessive or too ‘greenpeace’ about it.
We have actively tried to cut energy use. We recycle paper, card and plastics used in manufacture. We changed products and their packaging to allow us to save 40% on delivery costs by getting more on lorries, and cut stock holding.
All of these were green tinted developments that also had hard nosed cost benefits.
We also produce what we think are modern green products like Climbing Frames that encourage children to get outside and play AND are produced using renewable materials which we make sure come from sustainable forests.
But we have not turned totally green. For some products the most practical material is plastic, so we still have plastic products. They work the best, and giving customers the best products is what we are about, not being green campaigners.
Seems to me if every company goes this way, it will help, but dont preach on about how green you are, if its not total, and I don\’t see how it can be total.
But every business does have responsibilities. If you become MORE green, then that helps everyone.
The Vestas factory closure made me think about responsibility.
There is a company that has a green cloak over it. It produces green technology, and is supported by all the green campaigners. But is ‘being green’ is about supporting the wider community and the planet, then what about the employees? What about the local community.
You can not pick and choose what new age, green badges you want to wear, and ignore a wider, more human feel.
You don’t have to be totally green, just do what you can. Be honest about what you are doing, and don’t try to wrap yourself in green clothing as a sham. And be human. Be respectful of humanity. Then you will want to do what you can for the planet, but would not penalise a workforce that has produced a 70% profits lift and 20% sales lift, just because the Chinese pay you to build another plant somewhere else. Its dishonest.
We have two big negotiations on here at the moment, and I have another outside of work. Given the state of the world at he moment, in our planning meetings its easy to ‘play bertie big balls’ (don’t know where it came from, but its a phrase used often here) and negotiate hard, imagining the other man to be desperate.
In reality, once you have the other man in front of you and you have to front up, its much harder. When you are trying hard to negotiate hard, you have to shoot low, then see what happens. Just because you think, ‘I would not do it’, is not a reason to ask.
Try!
But… part of the reason to write this is that its hard, and I have already bottled it once this morning.
So now, haveing given you advice, I will let you know what happens on our negotiation on Table Tennis.
Something from a news item many years ago has stuck with me for a very long time, I would estimate around 15 years.
It was a new report from Gatwick Ariport, the day a holiday company had gone bust leaving many thousands stranded without their holidays. The news reporter was at the airport interviewing people who had lost their holidays. They were looking for the standard story ‘its terrible’ and ‘we have lost our holiday’.
But one customer said something profound, and really human. He said, ‘I’m sure the Directors of the company are having a worse day’.
It was true, they probably were. But it really made an impression on me that he could think of others first, and set his problem in relation to others. The amazing thing was he seemed happier than the others, who were wallowing in their own predicament.
So, in these hard times, when companies are failing, and not paying you, think of them. Who would you rather be?
And think of the advice of Dr Suess:
‘Its a troublesome world. All the people who’re in it
are troubled with troubles almost every minute.
You ought to be thankful, a whole heaping lot,
for the places and people you’re lucky you’re not!’
Recently we have been amazed at the local banks trying to give us money. Well, not really give, more like sell us money, but given that for the last six months, the news has been that the banks have no money, it seems obvious that now they have plenty.
Two banks are trying hard to sign us up, but the ironic thing is that due to the recession, and our desire to protect ourselves, we have conserved as much cash as possible, cutting back on capital expenditure, and building up some cash reserves, so we don’t need as much now as we did six months ago.
Still, isnt that exactly what causes recessions?
So, it seems obvious to us, that we must be coming out of it.
Are there things that just make you happy? Things that sound right? Things that smell right?
Twenty years ago, we bought a house with a skylark over the field opposite.
Now, in the fields around our office, there are lots of Skylarks, and the sound just makes me happy.
The sound of the Skylark singing makes me feel like the summer, and that feeling is the one I associate with the success of our businesses, a traditional summer outdoor toy business.
What is it for you that makes you feel good? What puts the buzz in to your day?
The news is still obsessed with the recession, and the terrible state of the economy.
Trouble is, the data they make the news about is often quite old.
They made a big story about the first quarter growth (or lack of growth) figures, but they are from the first quarter, and that ended 5 weeks ago.
Many of the data announcements that will come out in the next few months will be horrific. But many will also be what the economists call ‘lagging indicators’, and the press and TV will not talk that up too much.
Unemployment is a good example. It tends to keep rising even after the economy gets better. The recession causes firms to start to plan major reorganisations,and they still happen even after the end of the recession. So expect unemployment to get worse, and the news to make it big story, but don’t allow it to change your own planning for the recovery. Its the businesses that plan now that will get the head start. Make yours one of them.
Good question. Its an issue we have thought about, and always decided to think again later, but never do. It’s too hard to consider the reality.
But truth is, we are a family business, and have two husband and wife teams in place. If one of them were to die, then effectively we would lose two critical people for time.
So its a good question. If the MD were to die, or be incapacitated by an accident, then would your business die too?
Its a question answered by someone I met recently who acts as an Interim Director. He is massively experienced, and expert, but likes change and short term projects. He now acts as the man who comes in for a short time. Sometimes as the MD for a couple of months, sometimes as a key member of a team for a day or two a week. But basically he gives expertise and continuity at a time when the business needs stability. He works across Oxfordshire, Warwickshire, Wiltshire and Berkshire.
Its a good concept, but needs the right person, and I can see how this man makes it work.
Seems strange advice doesn’t it, and certainly not advice for the current situation.
On the other hand, we have spent the last six months keeping staff levelsvery tight, and our mantra has been ‘efficiency’. We have spent ages trying to analyse each problem and work out why, and what we should do. In the end we discovered that some customers were simply too much trouble.
You know the ones. The ones whose product knowledge is too poor, so they ask stupid questions all the time. Then they misrepresent the product to their customers, dropping you in it when their customer is not satisfied.
So, we have decided to drop those customers who don’t meet the standard, and focus effort on a smaller group of experts. Not that we will turn down new ones, but they too will be dropped if they don’t meet the standard.
Interestingly when we stared this plan, the team started thinking what would have happened if we had done this some time ago. Turns out that at least 80% of the customers who have gone bust, causing huge bad debts, would have been dropped under these criteria.
So, not only do bad customers cause inefficiency also the ones most likely to go bust.
So, drop the quickly and get on with supporting the good ones. You will have a better life as well as being better off.
Our webby friends have come up with a promotion, for the bank holiday weekend only, a promotion on Intex Pools and Above Ground Pools. Driven by the predicted good weather (thank you BBC for being positive), they have amended prices, and put some key lines on special offer.
Short term promotions are not something we have done before, so lets see how its goes.
The RMT tube drivers are out on strike today. Chaos on the roads, hundreds of thousands taking two days off, and a major sporting event ruined, with the world watching.
So what is the issue? What would drive these employees to this drastic action?
They want a 5% wage rise!
Don’t they read the papers. In our company and most others in the real world, we have cut bonuses, cut the Christmas party, not replaced leaving staff and cut all rises. Many have taken pay cuts to help keep their colleagues in work. In one local firm here, they are on a -20% wage cut until the crisis in the car industry is over.
Most employees in these firms are aware of the very real problems, and are grateful for management taking firm action, hoping that things get better soon. Overall they are grateful to still be in work.
Last month we released the cancelled Christmas bonus. When I told people, one man said to me that he did not mind forgoing the bonus still, since he was just happy to be in work. Its been a hard winter, but we are through it now, and have started rewarding staff for their commitment.
What planet do the the tube drivers live in? Do they not have friends in real jobs? Do they not watch the news?
They do not deserve the money. Don’t give in management. Fight, and we will support you.
Its not the time to be demanding money with menaces, when so many are suffering. Get a conscience drivers and go back to work.
Been quite a break from this blog, as we took a long holiday, but we are now refreshed and ready to drive on. Sort the winter season now, and get ready for next year.
Holidays are important.
My advice is to work unbelievably hard for three weeks, followed by an easy week, preferably away all together.
As a specialist retailer, its always irritating that the multiples cherry pick a small number of lines to be very competitive on and then don’t offer any support or spares services, but do set the price levels.
Its obvious, that service, product knowledge and depth of range make all the difference in making sales when up against the big multiples.
But, some product fields are so simple that there is precious little after sales service, and it all comes down to buying right, and having the right range.
One area where we seem to have it right now is Paddling Pools. We have benefited from the good weather this spring and many lines are already sold out for the season, not to come back in to stock until next year.
Shame we cant get more, but the buying cycle is so long, we have to commit several months ahead. But its that commitment that makes us successful. We can get plenty of stock in, and get it at the right price, and in doing so get the best range at the best prices.
The success is proven by at least half of the Paddling Pools being out of stock already, and the rest selling fast. We predict that we will be completely sold out some time mid August. Perfect.
Paddling Pools are running short, but many retailers, us included are cutting prices. Seems strange? So why.
Simple answer is that not all pools are short. Buying is very complex and every year some products over perform and others under perform, so some lines still have stock.
The more complex answwer is compettition and perception.
Many of the multiples cut prices in the main season as an image device. ‘Look at us we have the things you want today at half price!’
If they come to us, and we don’t shout price, they think, often mistakenly that we are more expensive.
So prices get cut, on rotation, for very short periods, just to let consumers know that we are not out of line on price.
In ‘Green Eggs and Ham’ from 1960, Dr Suess shows us a campaign for a new product, that the consumer utterly rejects. Consistently the seller attempts to entice the consumer, with his message, each time getting a rejection.
The seller, Sam-I-Am is attempting to use a free trial technique, but the product message seems so unappealing that the consumer consistently rejects, with increasing ferocity. This provokes the seller to come up with more and more potential ways of enjoying the products.
I would not, could not, in a box.
I could not, would not, with a fox.
I will not eat them with a mouse.
I will not eat them in a house.
I will not eat them here or there.
I will not eat them anywhere.
I do not eat green eggs and ham.
I do not like them, Sam-I-am.
Eventually the unnamed consumer becomes so fed up with the constant sales pitch he offers to try them if Sam will then go away. He tries them, enjoys them and then becomes an advocate for the product.
The lessons? Firstly keep going. Believe in your product and keep going. If its good, eventually word of mouth will start rolling and you have something special. Secondly, try new things, if your message is not getting through, then try adapting and changing, but most of all never give up.
Welcome back. Its been some weeks since I posted, since I have had two holidays, and the in between time was hectic. It co-incided with an extremely hot 2 weeks, that boosted sales dramatically, and life became very busy indeed.
Despite the extra business, our whole company has performed brilliantly, and coped superbly.
This has led me to think about bonus payments again. When the recession hit hard last autumn we cancelled all bonus payments, even those already earned, after discussion in an attempt to preserve cash, and ultimately preserve jobs. the staff here were very understanding and willing to help.
Since then, when things improved we paid those bonuses in full.
Now what to do about the next round of bonus payments? I would like to create a system where everyone knows exactly what we get when we achieve, but we have been unable to create a written down scheme that does not distort behaviour and potentially reward unequally the efforts and results.
So we have an unofficial scheme. It is simply, ‘Trust ME’. When the company does well, we will make sure that you do well. This has worked so far. It does take a while for that trust to develop, but once here a few years, the staff do trust that they will get their fair share for their efforts.
Because new starters do not believe in us in the same way, we make sure that every interviewee gets an interview with two existing staff members, and the current team get the chance not only to meet and approve of the new employee but also to explain that scheme does work, and that they can trust that it will be paid.
It breaks my own personal business rule, of trust no-one and get everything written down, but in writing it down, we seem to get altered behaviour, and our current flexible, unofficial system works for now.
But, has anyone really cracked a superb system? Let me know.
I am helping my sister start a new small business at the moment and this week she learnt a big lesson. One of many hundreds she will learn in the next few months and years.
This week she learnt that when you meet people they are mostly thinking about how to make money from you rather than helping you. Of course the two can match up and be equally beneficial, but often you can be sold something rather than buy what you need. Someone she thought was developing a partnership for their equal benefit turned out to really want the takes without any gives.
Made me think, how do most people get honest impartial advice and guidance, when suppliers are obviously thinking most about their own businesses? Even your accountant is first an accountant, not your guide. Even your business coach is first a business coach salesman!
One way could be a non-executive director. Someone on the board, with a vested interest in the business succeeding.
Not a route we have taken, we have a strange support network amongst the directors, where we appraise each other, but structures can not stay the same for ever.
Any one with advice or ideas on how to get unbiased advice and guidance?
Its true that the real businesses saw the very steep collapse in business last October and November as it happened and knew things were really bad way before the official statistics and the news started reporting it.
In the same way, we also saw the upturn that started in the Spring, and started to feel better about things.
Now, the news is full of ‘an unexpected upturn in retail sales’ and ‘recovery in mortgage lending’. We could have told them ages ago!
So, if know, then what is happening. Truth is, things are ok. Sales are steady, not pulling up trees, but we have had 3 months bigger than last year, so good news.
Indications are that this will continue, and I think hat the recession in the real economy is over. That our official announcement.
Now, it may be that the statistics dont show this for a while and not just because they report everything months after the result. The reason is the financial sector in the UK. I read a report that the city is 25% of UK GDP. So if they are down 10%, then that’s -2.5% for the UK on their own, and the rest of the economy needs to grow by 3.3% just to show a total no change. That wont happen for some time, and probably not until they city stops declining by such great numbers.
For the City, the big decline started last October, so I predict that Q3 total GDP will still be minus but driven down by the City, and the real economy will feel that they are bucking the trend, which in a strange way boosts confidence. Businesses will feel that are doing something right so must keep going.
For Q4 the UK will show a GDP growth, and it could be very large, surprising most commentators. If the city is flat vs their terrible Q4 last year, then the real economy could grow 2%, showing around 1.5% growth. And with the Vat increase further distorting the sales figures, it could be as high as 2%.
Everyone feels good and the boom times are back in Q1 2010.
The recession has been hard. For some it proved fatal. For us it was a wake up, and a shocking one.
We had a plan, and we think a good one. We were growing, and had a plan to continue that growth, but it was pretty much, ‘a bit more of the same’. When the recession hit, we had to think hard about the plan. ‘A bit more of the same’ would not work if the business declined by 40% which is the levels we saw at the start of the recession.
So, it shocked us in to action. We had to sit down and really work out what worked and what did not. We had to come with a new plan, but most of all we had to shake off complacency.
So here, we are now, almost 12 months on from the shock of banks collapsing and -40% sales. And we have survived. More than that sales are up, and we have grown share.
So the recession really did benefit us. We are stronger, fitter and healthier. We have a new more aggressive outlook, and a healthier future.
So what do we think the benefits are:
1. Growing in a declining market costs much less. Growing is horrifically expensive. More stock, more cash, more space, more staff. It eats money. Do it when the market is down and you can grow share with out the spend.
2. The competition became distracted. Some competitors cut back, reducing range and staff. That gave us opportunities.
3. We learnt to focus on the best customers. One of the first things to happen was poorly managed customers going bust. It has really tightened credit control and our views on who are the best people we want to work with.
4. We treat things with more respect. From forklifts in the warehouse, to the chairs and computers, people have started to feel respect for things. Everything is less disposable.
5. We learnt to look for value again. We have re-pitched all main items of expenditure, not necessarily giving the business to the cheapest, but the best.
6. We have slowed down and thought more.
Overall its been hard, and I don’t want another one, but It does have its benefits, if you get through it.
We recently had a reunion with lots of thirty something, professionals, living and working in London. Almost without exception they had started growing their own vegetables, many even renting allotments.
In our village, for the first time in thirty years, the village allotments are oversubscribed and there is a waiting list.
It fascinates me that trends can happen so fast, and intelligent, independent people make the same reasoned choices, and end up doing the same thing.Why?
Clearly there are influences creating trends which are pretty powerful, producing rapid change. Very rapid.
Not just the recession causing people to look at cost, but a desire for local production, a mistrust of authority and the big food producers and supermarkets, and a wish to be outside more. All causing sudden change.
These influences are also on your business? how can you take advantage?
What is for sure is that you can not do glib, half hearted changes or brand shifts to try and become a shade greener or more local. Consumers see through that and resent it.
If you want to be it then be it. Don’t play.
We recently helped someone with advice to start a new business that we think is taking advantage of the same trends. Janette Cardy Fitness is a business running top quality Fitness Classes, but outside of the expensive large Gyms. They are taking the same training and quality out to the villages. Less travel, less commitment to huge monthly fees, and its all around the corner, and you exercise with your friends.
We have not worked out yet how to take advantage of the ‘Allotment Revolution’, but we think Janette Cardy has. Good Luck. Starting a business in the recession, but we think she has a great business plan.
We are a seasonal business, selling most by far in the summer months. That summer season is now in the last few days, and we can all feel the relief that comes with the end of the season. Now though our thoughts turn to next year and the Christmas season.
Pool Tables and Air Hockey Tables are our focus for Christmas this year, with of course continued efforts on Climbing Frames and Trampolines.
Its quite an effort now, getting everyone focused on the new season, and next year. Its easy to relax with the pressure of day to day business relaxed now, but its important for the success of next year, not to let up.
So how best to we keep people motivated and focused on working hard, when the results seem so far off?
We will let you know how our motivation and efforts are getting on.
Six months ago, I wrote that we had been caught short by a shift in trampoline size demand. With the recession, demand for smaller trampolines had increased, and the larger ones decreased. Now, six months and a whole season on, I have had another look, to see if things are changing with the improving economic situation.
Not a huge shift, but a definite improvement in sales of 8ft Trampolines, especially 8ft Trampolines with Enclosures, and a drop in relative sales of 14ft Trampolines. Also, 5 years ago Safety Enclosures were an up-sell, now more than 90% of all trampolines are sold with a Trampoline Safety Net, as a package. Now its become an essential part of the trampoline.
To cope with the changes to the market place, Big Game Hunters have re-segmented the market and introduced some new segments, designed to make it easier for buyers to find the product they require.
New segments include, Trampolines by size, Trampolines by Brand, Trampolines by Shape, and a completely new one, Trampolines by Experience, splitting the market from complete novice to expert trampoline user. It has special sections for Family Trampolines, and Trampolines Suitable for Beginners.
Wow, the season has barely ended and already we are launching lots of new things ready for next year. The latest new development online is in Wooden Climbing Frames. Quite the trendy thing to have in the garden, Wooden Climbing Frames are taking over from the old Metal Climbing Frames, so much so that even the brand leading TP Toys Climbing Frames, is developing their wooden offer very fast.
Our new site, Wooden Climbing Frames Online, is an honest review of whats going on in the climbing frame market, complete with a handy Climbing Frame Play Features Guide, with suggested age ranges for each activity.
Its the end of the season for us, and our range of Giant Games, Trampolines and Climbing Frames. We spend the winter developing new products, designing new plans for the next summer season and generally trying hard to better next year than this.
One issue that has come up in the writing of the plans for next year is guerrilla marketing. Maybe its because the team is here is young, but they all seem to want to do some edgy marketing activity. You know the sort – its risky, you do it hoping it makes an impact, but it may not.
We have lots of ideas, from plain crazy to maybe just might work, but they are all different to anything we have done before.
Anyone got examples of things you have done? Show me guerrilla activity that worked. I don’t want to say no to the team, but equally I don’t want to spend a lot of time and energy on stuff that is wasteful., so show me examples of real activity. Not the high profile mega brand ones, because they actually spend big when they do these things, but real life examples from real small companies. Thanks
Across our whole industry, the most expensive products have been hardest hit by the recession, with products over £1000 especially hard hit. Metal Climbing Frames are again declining, thats the 5th year in a row we reckon, but the surprise is that Wooden Climbing Frames are also in decline this year.
The good news though is that August was the first month that showed a year on year increase for wooden climbing frames, and September is looking great for sales too, so perhaps the recession is over and we can see regular growth month after month.
Given that it’s the most expensive products that are hardest hit we thought it would be interesting to look at the top Action Climbing Frames, and see if the expensive ones still sell the most.
So, we have two new ones in the top 5, and both at the low price end of the market, so its true, the lower priced products have done best in 2009.
What is interesting though, is that one new product, the Action Victory Pirate Ship Climbing Frame, is by far the most expensive product in the range, yet is only just outside the top 5 and could really be one to watch for 2010. As the recession ends and the market picks up, there may well be extra demand, and the performance of the Victory Pirate Ship so far is showing that it could take off next year.
We operate in markets where many of the brands are quite similar, and differentiation is hard. But whenever we think we have got it tough to differentiate, we end up talking about the Margarine market. I understand those in the market call it ‘yellow fat’ and it amuses me to think of all those ‘yellow fat’ marketeers sitting in meetings talking about the very subtle differences in each product.
We have a mantra, ‘If they can make yellow fat appear different, then we can differentiate a trampoline.
Remember that next time it seems hard in your market to make your product different from the next. In fact in yellow fats, they have done quite well to split out clear territories for each brand.
St Ivel Gold – Low Fat, made with semi-skimmed milk
Flora – Healthier
Clover – Tastier, more like butter
Utterly Butterly – Tasty and Quirky
And so on……
So in Trampolines, it is easier to add physical differences.
TP Trampolines have 6 legs rather than the more common 4 legs. It’s a clear physical difference, and one that allows them to claim that it adds strength to the bounce, allowing them to save in other areas and get a price advantage against the other premium brands like Supertramp.
Jumpking has the enclosure that slots in to the frame, allowing them to claim that it is safer in that it is designed to be never used without the enclosure.
Supertramp have long held the position of having the most expensive specifications and models like the Boomer, so claim the top of the range position.
Skyhigh Trampolines have a positioning as exceptional value combined with high specification. The best spec you can get for the price.
SkyHigh Xtreme 360 Trampolines are maxed out on each product differentiator, with extra thick pads and more springs, claiming to be the very top of the range.
So whenever it looks hard to differentiate we turn to the Yellow Fat market, and take inspiration. Out job is not as hard as theirs.
Trampolines are ever-increasing in quality it seems, as well as seemingly never increasing in price.
We now have weld-free trampoline joints on many brands. Trampoline Safety nets are almost universal, and we now have ladders with slip proof flat steps. The latest part of the trampoline to undergo the improvement in quality are the trampoline pads. Pads are getting thicker, they are made in new materials, and stitching is greatly improved.
The new SkyHigh Trampoline Pads are superb. Thick, and made of a soft-feel material, they are Deluxe Pads. If you have bought a cheaper trampoline, its true that the pads are where the manufacturer will have saved some money. They will wear out in perhaps as little as a year. No need to worry, they are easily replaceable. SkyHigh trampoline pads are available as spare parts, and amazingly cheaply too!
