All that glitters…

The most important place to adopt the truth, trust and full transparency formula is in the small office of your bank manager. COLIN BENJAMIN

By Colin Benjamin

Don’t be fooled by all the media talk that tells you that short selling has been brought under control, that the Government is going to rein in naked greed and hassle-free traders or that the US Congress has introduced the triple T standards (truth, trust and transparency) that have been the subject of earlier Futurist columns. Nick Sherry is yet to unveil any legislation beyond the short-term fix by the ASX that continues to fight for the dual right to be regulator and rentier of other people’s money.

The bale out of the thousands of mortgage investment funds is still being done. The demand for accountability on the part of the Wall Street sharpies continues to frustrate US President George W Bush and nobody believes that there will be any reduction in the credit crunch as a result of the issue of a rescue package.

As indicated in last week’s column, now is the time to prepare for a further round of bank pressures. Even Graeme Samuel at ACCC is now asking the ANZ about possible changes to the four pillars position as more and more concern about consolidation follows Merryl Lynch and Goldman Sachs reverting to retail banking.

The most important place to adopt the truth, trust and full transparency formula is in the small office of your bank manager, as most of the lending decisions about your business are being squirreled away with commercial lending managers who are concerned with bank liquidity rather than your commercial operations. Now is the time to spend a little time on getting your bank to understand what you are doing, what pressures you are facing as a result of the downturn and credit crunch, and how you are shaping up to these crises.

Get together with your top team and your accountant to go through your books and make a realistic assessment of cash flow and profitable ventures until February 2009. The US deal will take a couple of months to make any significant difference on your business risks unless you have been gulled by a poor source of advice to put large sums into hollow logs.

At this moment, the banks do not want your assets – what they want is reassurance that you will be able to pay them on time and often. They will want to see how you are reducing staff that are less than productive, increasing marketing to get new business and adopting the focus focus focus maxim on business essentials.

Take a good business and marketing plan that sets out the short, medium and longer term directions that your business is taking and assures them that they can increase your financial degrees of freedom against a secure payback cycle.

Specifically it will be important to set out how you are going to manage to reduce your inventory a little, improve your terms of trade on required purchasing practices, tighten your delivery schedules with better customers and seek orders from your best long term prospects.

Your banker will then become your buddy in looking for ways in which her/his bank can get you to consolidate your accounts, increase your credit limits and expand your business options into overseas efforts that can win export incentives and subsidies.

For those lucky enough to have substantial capital and funds on hand, now is the time to discuss more effective funds management and ensure that you are well placed to consider both acquisitions and market entry strategies that build upon well considered product and service initiatives.

Don’t listen to the sharks that are circling with special deals, and remember that all that glitters in the gold and oil markets are just another form of the credit crunch bubble.

Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton. 

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