SME Blog

Reputation and the SME

Reputation is considered to be important, but why?  First of all I’m going define what reputation is.  I’ll take Steven Nock’s definition as “a shared, or collective perception about a person.”

I would take the word person to include a legal entity such as a SME company.  Also note the word perception.  It is quite possible for a good person to have a bad reputation.  It is also quite possible for a company to be trading on its past reputation, but delivering at a lower level than its competitors.

Daniel J Solove in his book The Future of Reputation notes that “We have a lot at stake in our relationships…in many circumstances we look to people’s reputation to decide whether to trust them.”

For most of us trust is a very important ingredient in business.  This is especially true for the majority of SME's that obtain work through recommendation.  Anything that damages trust and reduces that chance of recommendation for the SME should be a real concern. Loss of reputation is without doubt a genuine business concern.

When it comes to reputation men and women have for centuries been concerned about their reputation and with good reason.  The opinion of the individual’s community could be a matter of life or death for individuals such as “witches” that did not fit comfortably within the norm.  Whilst the consequences of reputation damage are unlikely to be as dire in the modern business world the means of the damage are similar and often result through:

1.    Reputation damage brought about by untruths and dubious data,
2.    Reputation damage by shameful behaviour or action that doesn’t meet the norm being exposed.

One strategy to avoid reputation damage is to keep a low profile, but given that a good reputation can help build trust and bring businesses keeping a low profile for a business is not always the best approach.

My own take on the situation is that the internet is bringing with it transparency and also leaving a trail that is likely to be semi-permanent.  The approach I can recommend is to be involved in something where you really strive to deliver and of which you are personally genuinely passionate.  It should reduce the risk of point 2 above and with any luck your business will have some supporters to stand up to any nonsense from point 1.   

Work life balance

In the words of one entrepreneur:

"Yesterday I was sick as a dog. But my business partner was out of town, so I had to go in to work. I was supposed to have a nice steak dinner with my wife that night. All I really wanted to do was curl up by myself on the couch..."

The above quote comes from Jeff Weinstein in an article in BusinessWeek.  Jeff is trying to solve the problem of the work life balance.  Good luck to him.  My hand is up, this is one problem I can't ever seem to quite crack.

Life can be incredibly rich. I find there isn't enough time to do everything well and make it fit neatly into one box.  Jeff however thinks he has cracked it.

He's tried all the traditional methods such as budgeting time and not bringing work home, but that has not worked.  He is now taking on the 21st century solution of being flexible and realising that work is no longer 9 to 5.  Now Jeff takes some leisure time during the 9 to 5, but works in the evening when required.  The odd email or phone call at 8pm shouldn't be a problem.  He discusses his work much more with his wife in the evening.  By the end of the day he's completed all his tasks.  Eureka! It is early days but Jeff thinks he has cracked the work life problem. The 21st century approach of flexibility works after all?  Not a chance.

The reason it is working for Jeff is that it is early days.  He has not yet established a pattern of working in the evening.  Once he does he will also establish an expectation on the part of the people he is working with.  Soon they will be expecting that Jeff respond in the evening and will be disappointed when he doesn't.  Work can be a bit like traffic sometimes.  It fills up a new motorway or freeway almost instantly.  I hope I'm wrong, but I expect a return visit to Jeff in two years will see him working harder than ever.

I remember watching Tomorrows World in the 1970's and being given the message that we all have more leisure time in the future.  It hasn't really turned out that way and that message has been well and truly trashed.

From the customer point of view this is of course good news.  Why can't the customer have instant response and extended hours.  It is a benefit that Jeff is available from, say, 8 to 8.  Why shouldn't a customer get this service? Like it or not that is the way the world is moving and the work life balance problem is becoming larger.  It is one problem that SME Blog certainly wants to crack.

Does the UK government understand the world we live in?

Every UK family with a child under 16 is currently at risk. Where are the two data disks with the personal data of 25 million citizens? No one knows. MI5 and the police are no doubt on the case. Let us hope they get there first and the disks don't fall into the wrong hands. There is a real risk that the data will become the property of identity fraud gangs. Worse still our children on the lists could be targeted by gangs of a different kind.

Normally, I try to see the other point of view and be fair minded. On this matter I'm struggling. Whilst SME's have to make do with limited resources the government has huge resources. Whilst I see many SME's that are innovative and understand the IT world we are currently living in, I have huge doubts now about the government. This is jaw dropping incompetence.

We're told a junior official posted the data discs to internal audit. This is staggering in two respects:

1. The junior employee had such easy access to the data;
2. Internal audit requested it in this format.  Even with internal mail the existence of these two data disks outside a secure environment is a risk.

I can only come to the conclusion that when it comes to IT privacy the UK government does not understand or want to understand the world we live in.  No doubt they are rightly going to receive a very painful 21st century lesson.

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Work life and home life

Following on from the 9-5 post there is growing evidence on how our work life and home life are blurring.  Best Practice Magazine  highlights research that shows 31% UK finance professionals take the office with them on holiday via a laptop or handheld computer.

It doesn't surprise me.  Emails, mobile phones, 24-7 shopping - the desire for immediate response is ever increasing.  Technology is changing the whole dynamics of how we all work.  In many ways that can be liberating as there is no need to be chained to a desk to deliver results.  The flip side to that can be CrackBerry addiction.  The bottom line is we are going to all have to deal with it. How do we do that?  I think it comes down to a blend of good technology, business structure and expectation management.   

 

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Great success whilst being a 9-5 person?

Running a SME is a consuming affair.  Have you met anyone who has achieved this with great success whilst being a 9-5 person? 

For most people success requires hard work and effort.  A comparison with the sporting world and we see even naturally gifted athletes have to be driven and put in the extra effort to get to the top.  The same could be said of becoming and being a partner in a firm of Chartered Accountants.  According to the article in the Observer, Scott Cormack, a partner at KPMG, certainly worked hard.  70 hour working weeks were common.  The resulting stress is thought to have contributed to two broken marriages and prostrate cancer. 

It is never easy is to obtain a good work life balance whilst driving for success.  However, I do believe that the workflow and culture of an organisation makes a huge difference.  Good workflow saves time and an open culture means not being chained to a desk to deliver results.  The aim being to achieve more from the effort put in.  In an ideal world this would be enough, but the reality is for most successful SME owners there are times when you are going to have to work painfully hard.  Just try to avoid doing it all the time.

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A moment in the sun

Recently the weather in the UK has been wonderful and we've had our moment in the sun.  By some strange coincidence so have I.

First there is a profile article from Liz Loxton of Best Practice magazine and then a mention in AccountancyAge by editor in chief Damian Wild.

Damian manages to mention accountants and rapper Vanilla Ice in the same article.  Quite a feat.  It's also good to see the Wiki Wednesday event get such a favourable mention.

Liz's article gives my views on using technology at work and to benefit business.  As a professional journalist she does a much better job at explaining it than I ever could.

Moment of glory over and it's back to making the teas. 

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Blogger beats accountants

Last July SME Blog posted on Catherine Sanderson and her blog at La Petite Anglaise.  She got dismissed from the Paris branch of accountants Dixon Wilson as a direct result of her blog. 

Google search Dixon Wilson and you’ll find her story on the first page.  On top of this she has just won compensation for her dismissal.  It all adds up to a total PR disaster.

This illustrates the dangers of not understanding how business is changing through new technologies.  It is going to be harder and harder to hide what really goes on behind closed doors.  That’s not a problem if you are proud of what you do, but beware if you are not.

Check out AccountingWeb for a further business persepctive.

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IT and the 1970's car

It's not everyday you find yourself on the front page of a magazine so I may as well make the most of it. That's me on the front cover of Reach magazine discussing GJ's experience with Neverfail.

Looking back I can see how much technology has changed my industry sector.  I qualified as a Chartered Accountant well over a decade ago.  In those days we were all using pencils and paper.  There was one computer and that was seen as an extravagance.  We now collaborate internally and externally online, in real time, sharing the same business systems and using online meetings.  Our business processes are now welded together with IT which means we have to ensure the IT infrastructure can deliver business continuity and high availability. 

I tend to view current IT like a car in the 1970's.  Most of the time it worked, but some days it just had problems and was difficult to get started (especially in the Winter).  Looking back it is clear that the 1970's car just wasn't reliable or resilient as the cars we are now using in the 21st century. On top of that in the 1970's there was a big culture of not wearing seat-belts (compulsory wearing of font seat-belts only became UK law in 1983) something that is not unlike current SME IT disaster planning.

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Philip Woodgate

YouTube and a glimpse into the future

You are probably aware that YouTube the 70 employee strong SME has agree to sell to Google for $1.65 billion in a stock for stock deal.  It's undoubtedly the SME success story of the year.  YouTube created this success by differentiating themselves from the competition in how they combined technology with social interaction.

If the YouTube deal gives us a glimpse into the future then the Museum of Media History takes this glimpse and pushes it further to 2015.  This popular future vision movie (8 mins) can be found by clicking here and then clicking on the Epic 2015 link to start the movie.  As the movie says, "The press as you know it has ceased to exist".

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Philip Woodgate

Where did my £1.3m go?

Sharon Hibbert had a reputation for efficiency. In fact she was very efficient.  Over 7 years she stole £1.3m from her UK employer.  As a bookkeeper on £15k a year that is quite a top up. Neighbours thought that she had won the lottery.  She hadn't, but like a host of lottery winners she went on to spend, spend, spend.....

No complicated trail to follow in this case - most of the cash went straight to her husband's bank account!  Not surprisingly, Sharon and her husband are guilty and going to jail.  Where did it all go wrong?

The usual reason is controls or lack of them.  Controls are what companies have to safeguard the company's assets.  I'll give you an example, 2 signatories on all cheques.  Give the bookkeeper the power to sign all cheques and you've got problems.  All it needs is a fake invoice (easily created in Word) and a cheque written out to a private bank account.  How do you pick that up?  If you have got good financial information then the greedy thief will reveal themselves.  Variances in the figures will appear in the accounts (high office costs, odd margins) due to fake invoices.  Financial information being reviewed by another pair of eyes noticing a supplier in the books does not actually exist. 

SME management are often locked out from the financial business information.  It sits on the bookkeepers PC closed to the world.  This is a nonsense. Good management leads to successful companies and good management needs access to accurate real time information upon which to make decisions and spot errors.  Share sales and debt information with the sales team, allow your external accountants access for tax mitigation and take a look yourself for any unknown suppliers.  It's easy to do and it's not expensive.  Just take a look at the online accounting systems now available.

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Summer in the UK

We're currently getting some great weather in the UK.  As much as I enjoy writing this blog, at the moment it's too good to be sat in front of a computer in the evening.

Anyone who lives or has visited the UK then you'll know the good weather just does not last.  But, if you really are a workaholic entrepreneur then check out this article from BusinessWeek on a new breed of entrepreneur.

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There's a new fish in the pond

I was quite happily swimming along, taking the young to nursery fish school when, blow me, I spot a new fish.

The new fish is called www.sme-blog.com and what’s more he’s brought his friends!

I’ll be keeping a close eye on this fish to see if he’s friendly.  He seems to be looking out for the start-up fish.  That’s a good sign.  The poor start-up fish doesn’t last long in these parts.  He tends to get eaten by the hungry cash fish.

The thing is it’s a big pond and I reckon there’s enough room for us all.  I think I’ll be seeing a lot of this new fish as we are generally swimming in the same direction.

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Small wonder

I missed this story first time round, but it is such a good Friday afternoon story that I though I would dig it up and put it on the blog.

It just goes to show that sometimes it pays to complain.  Someone should give her a job at Pepsi!

Think about your loved ones

Sometimes in all the rush we forget to do a few simple things that would save our loved ones some serious aggravation in the future.

Yesterday my firm and Turner & Debenhams gave a joint seminar on Inheritance Tax (IHT), the present name for UK death duties and it raised a few pointers for us all.

Make a will

If you die without making a will then the rules of intestacy made by Parliament govern who will inherit your estate (money, property and possessions). 

In real terms this means you do not get to choose who your assets are given to on your death. Do you really want to have your loved ones deal with this?

Create a power of attorney

A power of attorney allows another specially appointed person (the Attorney) to take actions on your behalf especially if you are incapacitated through illness.

We all have to face up to the prospect of going gaga at some stage, but by creating a power of attorney beforehand, we can at least save our loved ones some serious aggravation (and legal costs).

Nil band discretionary trust

If your joint estate with your spouse is valued above £275,000 and you would like to pay Gordon Brown a potential extra £110,00 in tax (and not your loved ones) then don't bother with a nil band discretionary trust.  If you are less keen for Gordon Brown to have your money then speak to your Accountant or Solicitor about the nil band discretionary trust.

Business owner

Do you ever wonder why the super rich never seem to pay Inheritance Tax.  The answer is that they have clever Accountants and Solicitors who can work within the legal rules and minimise their tax liabilities.  If you are a business owner (especially if you are nearing retirement) then you can also benefit from tax planning to minimise your tax liabilities. 

The above really is an area where you need good advice.  You certainly need more advice than a short article in a blog, but it will pay dividends for your loved ones.

Philip Woodgate

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Ride the currents

"Companies that ride the currents succeed;  those that swim against them usually struggle."

It's a good statement.  It's simple, easy to understand and provides some good advice.  Why then is it that time and time again we see both SME's and large companies fall foul of it?  I think the reason is that sometimes companies keep on swimming through habit without actually realising that they are actually heading in the wrong direction.  The trick is to keep an eye out for future trends and understand how they can help your company to ride the currents.

The above statement comes from the McKinsey Quarterly and I'm grateful to Egils Milbergs for making me aware of it.  It's a cracking report on future trends. There is little jargon, it's to the point and raises some thought provoking issues.

On technology the report states that:

"Technological connectivity will transform the way people live and interact.  The technology revolution has been just that.  Yet we are at the early, not mature, stage of this revolution."

and

"We are forming communities and relationships in new ways (indeed, 12 percent of US newlyweds last year met online)...

....For perhaps the first time in history, geography is not the primary constraint on the limits of social and economic organization"

On the global economy:

"Centers of economic activity will shift profoundly, not just globally, but also regionally...

....the world has embarked on a massive realignment of economic activity.

On access to information and knowledge particularly via the internet:

"Companies will need to learn how to leverage this new knowledge universe - or risk drowning in a flood of too much information"

So what's all this mean to the SME?  It reinforces the current view that the use of technology will become increasingly important to help give SME's a competitive edge.  The use of the internet for marketing and trading purposes will be particularly useful for niche SME's.  In addition, there will be a demand for customers and suppliers to collaborate, particularly coming from large companies and internet savy customers.  One example of this will be system to system exchange of accounting information such as orders and sales invoices.

Traditional views of where business is conducted will change.  We are already seeing this with home working and call centres in India, but the change will become more pronounced.  There will be video conferencing on huge screens with better IT to share and categorize all the documents and files we use.  It therefore will become less and less important to the SME that everyone is in the same office.  For example, just moving part of the workforce out of a large city whilst retaining a central city presence could reduce costs without changing the nature of the service or product supplied.

These will be the first wave changes of a much larger global reorganization.

Finally, we are all going to have to find ways to deal with the information overload.  Let me know when you have crack this one.

Philip Woodgate

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Love my business more than you

An article in Business Money tells us that one in ten small business owners and directors are more passionate about their business than their relationship with their partner.  Makes you wonder doesn't it?

If you are in a relationship with a small business owner over 30 then there is good news.  The majority of small business owners over 30 said their primary motive was freedom and flexibility at work.  Sounds to me like they want to spend more time with you.

Philip Woodgate

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