Wednesday, 2 October 2013
Microsoft raises dividend, sets new $40bn share buyback
Monday, 16 September 2013
Sharpen These 4 Small Business Management Skills
Monday, 9 September 2013
Lagos pays 185 retirees N943.14m
Toyota repeats US vehicle recall on suspension worries
Thursday, 8 August 2013
Identify Stress Drivers To Get New Customers
Customers make buying decisions every day.
Some are difficult because brands all seem the same.
Other buying decisions seem to bring them a sigh of relief.
One reason why has to do with the attributes of products or services. Customers have a list when they make buying decisions.
Some attributes that they rate as most important if you asked them.
However they may buy products or services that do not rate as highly on these attributes.
The reason is they look at other attributes and often they are related to stress or things going on in their lives.
For example convenience and time saving attributes may be key considerations and for open up ways to get new customers in a competitive market.
As more customers are seeking brands that help simplify their lives having this as an attribute it provides your business with opportunities. You have to know your potential customers well and look past the usual demographics or areas related to the market.
The good news is much of this is common sense if you think of their lives in total and not only regarding your products or services. Think of what could be causing stress and how your products or services can help.
For example it appears that eating cereal at the breakfast table is declining. However people know that missing this meal is not good for their health. This also applies to parents with children. Currently two large manufacturers are launching a range of liquid breakfasts that can be consumed on the go.
If you can discover the stress drivers you can build the attributes that provide relief into your products or services.
For example if you target small business owners then you know they wear many hats, even if they have employees and often money is tight. That is why some businesses offer simple website designs based on templates at a reduced price as a base option. This helps the small business and the company gets new customers.
Simplicity has many advantages and can differentiate your products or services to help you get new customers.
Over to you: have you considered building in simplicity based attributes for your products or services? Have you bought brands that have these attributes?
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Should You Discount Prices To Get Customers?
Some of you will say never to discount price.
Getting your pricing right is an important element of marketing. And to get the extra sales boost you may want to consider price promotions.
One of these is offer a price discount that can be an effective tactic to get more customers.
This article is not about reducing your price to get a one off sales and hope extra business will someday follow.
It is about using discounting in a smart and simple way to get your business new customers and increased sales in short term.
When you are launching in a competitive market.
If you offer a discount price in the initial period, it can reduce the purchase risk for customers. And it can help them to switch from competitors to try your product or service.
However caution should be made if the market is full of commodity products or services. Or if you know your competitors will retaliate with reduced prices, as you do not want to get into a price war.
If there are going to be ongoing repeat sales
This is an old and proven way to get customers to trial your product or service. It can be effective if your business sells subscriptions, ongoing service, software etc.
As a lead in price
You often see this type of price discount when a business knows they can add other products or services to the purchase. You see this type of promotion in the travel industry.
If your product or service is bought on a regular basis.
If they are bought on a regular basis it can attract new customers and reward current customers.
A key factor is to think of price reductions as a short term reward and not one that you have to rely on to attract customers to your business.
Does it fit in with your marketing strategy?
If it doesn’t then this tactic should not be considered, as it will not help you grow your business. having a marketing strategy helps you avoid the marketing tactic smorgasbord.
Do your sums
This is to see how much extra volume of product or services you need to break even. Before you jump in look at the different rates of discounts, you could offer to see how much volume you need. This is important because if you do not get the volume you will affect the margin and potentially the profitability of the brand.
Will it affect your current customers?
If you decide to offer a discount for new customers, then consider if your current customers who paid the full price will react. A way around this is to ensure you have a customer care program in place so they do not feel upset.
Does this tactic have a good fit with other tactics?
The combination of tactics is what matters to get cost effective results. Otherwise it costs your business time and money.
Don’t use this tactic because your business is desperate for more customers and sales. There are better ways and tactics than reducing prices.
However if you have always said never maybe this is a tactic you might want to reconsider to grow your business.
Over to you. As always, I would love you to share your thoughts about using this tactic to get new customers.
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How to Use Content to Attract Prospects and Keep Customers Coming Back
It is your job to know all there is to know about your business. Your livelihood depends on it. Your customers and prospects are different. Most don’t know the intimate details about your company, products, services, processes, and policies. They do know when they have a problem that needs solving. It’s up to you to provide the education they need in the right language at the right time.
Doing this sounds easy because you know your company’s service and products well. All that you have to do is share it. And that’s when the problems start. When people ask, “How does this work?” what they really mean is “How will this work for me?” or “Does this solve my problem?” Asking a few questions before answering saves time and reduces frustration. The first step in good communication is starting on the same page.
The ability to ask questions is limited in the self-service marketplace we call “Internet.” Your answers have to be readily accessible to the people seeking guidance. If you do it well, you’ll receive some search engine benefits as well. Sears Parts department is a good example of how to provide answers before the questions are asked.
Our dishwasher stopped working a few months ago. There were two issues. The first one was that the cut-off switch didn’t work intermittently and flooded the kitchen. The second was a broken piece on the tray. People who know me well understand that a broken dishwasher is a huge problem in my house. My theory is that dishwashers were invented so I don’t have to wash dishes. With very few exceptions, if something can’t be washed in the dishwasher, I don’t want it in my kitchen.
There are two wonderful features about dishwashers: they wash dishes and are relatively simple in their design. A Google search for schematics took me to Sears Parts Direct. They have everything you can imagine including drawings. After reviewing the information available, I unassembled the water intake valve and found that the filter was clogged. (Note to engineers: When designing products all filters should always be easily accessible. Having to dismantle the intake valve is ridiculous.)
Cleaning the filter resolved the overflow issue. The next step was to replace the broken part. A few keystrokes and a credit card took care of it. In the future, I’ll start with Sears when there are appliance repairs needed in my house.
The knowledge and experience you have with your company can interfere with more than customer communications. It can also cause you to drop profitable products, services, and promotions because you are bored with them and presume your customers feel the same way.
Before making changes to your offerings, review the data to insure that they are warranted. You see these things every day. What looks stale and dated to you may be fresh and new to your customers and prospects.
To attract and convert prospects:
Always make sure that you understand what your customers and prospects mean before answering questions. They may not ask the right question.Educate your customers and prospects about your products, services, processes, and policies. The more they know, the easier it is to communicate.Use technology to improve your communications. Anticipate questions and provide answers throughout the shopping process.Confirm conversations and provide additional answers with follow-up emails. It opens the door to a relationship while serving well.Use analytics to guide marketing, merchandising, and service decisions. Your opinion doesn’t matter if your customers don’t agree.Don’t presume that your customers and prospects know how things work at your company. Ask them what they need so you can provide the right answers.Remember that your website is an excellent place to share information. Create pages for distributing information. They will improve your natural search rankings and serve your visitors.The more you know, the better you serve. Always seek to learn more about your business, products, and customers.
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Sunny Gupta of Apptio, on the Half-Empty Glass
We also had a lot of kitchen-table debates in my family. My dad used to always say, “The best idea will surface if you debate.” That actually has been an incredible strategy from an entrepreneurial perspective, because one of the biggest challenges is surfacing good ideas from other people. If you don’t have debate, people will suppress them.
So when did you move to the states?
I felt like I needed to go to the U.S. because everybody said, “You can start from nothing and create something.” India was not that way at the time, though it has changed a lot now. My dad couldn’t afford my education in the U.S., so he said, “All I can give you is $2,000 and a plane ticket.”
So I flew here, and because of my SAT scores, I got a partial scholarship at the University of South Carolina. I started working odd jobs to support myself. I cleaned dishes. I worked as a mover. I studied like crazy and got a full scholarship. Then I applied to be the intern for the president of the university. I told them I was like Avis — I’m just going to work harder than anybody else. The president told me later that that was the reason he selected me.
And what were the early years of your career like?
My first job was as a software developer, and then I did some consulting. But I said to myself, “This is going too slow.” It was not even really about the money. It was just too slow. I felt like I was more talented than the pace at which my career was moving.
I really felt that I could do my boss’s boss’s job. Yes, you don’t know what you don’t know, but I just had this strong conviction within me. I also felt the cultures I was working in were too bureaucratic, not transparent, and not customer-focused. That all really bothered me. It was probably the easiest decision of my life to start my own company.
Tell me some things about your management approach today.
We have this phrase that I use a lot: “glass half-empty.” My marketing guys wanted me to change it to “continuous improvement.” But I said to them that “glass half-empty” is not gloomy. It’s all about how, every single day, maybe 85 percent of things are going right, and there are 15 percent that aren’t going right. And if we have an hour, I’d rather focus on the 15 percent that are not going right, because that’s how you become great.
It’s hard for people to get behind that principle because my sense — having managed a lot of people — is that human beings are generally driven by a desire to be recognized every single day. And I absolutely believe recognition is important and you’ve got to recognize people. The culture has to be set right from Day 1 that we are going to recognize you, but our culture also has this maniacal focus on the things that are not working. People can get frustrated because they feel like you may be attacking them or always asking them about the things that are not working.
How do you hire?
One of my favorite questions is asking people about the three to four things they need to work on, or the things they are just not good at. And I will ask what their managers would say they need to work on. I’ll ask that question three to four times from different angles until I am satisfied with the answer.
And what are you listening for?
I’m looking for transparency, and it also goes to the glass-half-empty approach. If they cannot internalize the things that they need to work on, then they’ll probably get frustrated because they need too much patting on the back.
I also ask them about tough times they’ve faced, in their personal life or at work. That tells me a lot. With managers, I always ask, ‘How many people have you fired?’ I’m looking for whether they’ve actually dealt with poor performers. Are they transparent with their employees? Are they going to give them feedback?
What else about your culture? You mentioned earlier the importance of debate.
In our meetings, we tell people to check their ego. We have a regular meeting that we call Blue Sky. It’s an innovation meeting. I was concerned that people wouldn’t say what they think if I was there. But anybody can say anything to my face. We encourage active debate, and you debate things for a set period of time. Then you get a lot of the facts and you make decisions.
We also insist on a one-pager approach for new ideas. If you have somebody come and present, they might want to spend the entire time giving you a PowerPoint. I don’t want that. If you can’t capture your thoughts in one page, something is wrong. We pass it out in the beginning of the meeting, and everybody reads it. That way, we all have the facts. Then we debate, and all ideas are good ideas to start with. Eventually, we make a decision. It reminds me of the debates we used to have at the dinner table as a family.
What would you say to a class full of aspiring entrepreneurs?
The entrepreneur stuff is pretty core to my heart. My first piece of advice would be to just do it. Not everybody’s cut out for it. It’s 10 times harder than you think it will be. Most of the days are going to be bad days. You have to self-generate a lot of the enthusiasm and the optimism you need to be a successful entrepreneur.
And the key principle that I’ve learned again and again is that humility and relationships are really important. Never burn a relationship. One relationship always comes in handy for the next one, and for the next one after that. The whole life of an entrepreneur is about steppingstones.
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A Great Manager Should Expect a Peaceful Vacation
The owners not only focused on the current projects, but also constantly looked ahead for other opportunities. I learned about the relentless pursuit of business from them. They were very focused. When we got a little too rambunctious on the floor where all the draftsmen were, they’d say, calm down, let’s keep going.
What were some other early management lessons for you?
Like many people who move from doing to managing, I probably stayed more involved at a granular level than what’s optimal. When you do that, you spend less time managing. Whenever you don’t know what to do, you revert back to what you know, which is, “Let me do it because I can get this done.” The challenge that created was that I wouldn’t necessarily develop people as quickly as I probably should have, because I would often say it’s easier for me to do it, and then they’d watch. But that’s not the same as giving someone the guidelines and saying, “You do it,” and though it may not be exactly the way I would have done it, I can give guidance.
I probably did not do that as well as I could have early on. If you develop people, it means fewer phone calls and fewer interruptions when you’re on vacation. If you haven’t developed them, then you’re tethered to the organization. Some people love to know they’re needed constantly, and that people have to call them. Unfortunately it’s common, but it’s not the best for the organization. I found that when I’m on vacation and getting calls and constant e-mails, then I must not be doing as good a job as I should to make sure that the group can perform without me.
What kind of culture did you want when you started your own firm?
I wanted this company to be operated in a way that doesn’t have the faults or shortcomings that people might have seen at their prior employer. Any large organization has certain issues. I wanted to make sure that we’d do whatever we could to mitigate those. The biggest issues are people not necessarily being valued for their performance and instead being caught up in the bureaucratic hierarchy, where they were either going to survive or thrive or do poorly because of the area they worked in, or their careers could be enhanced or held back by their relationships or lack of relationships.
I want this to be a complete meritocracy. That’s something you have to make sure you constantly let people know. You’ve got to judge people on their merits. You have a variety of personalities, and it never fails that anyone, including me, might prefer to spend time with one person instead of another. But if people are professional, productive and an asset to the firm, my personal preferences shouldn’t have anything to do with it. I try to make sure I emphasize that regularly.
One big challenge for C.E.O.’s is to make sure they get out of the bubble that naturally gets created around them, because people only want to bring them good news. How do you counter that?
Probably the most honest and direct and frequent feedback I get is from my wife, who is a senior fixed-income salesperson here and a partner in the firm. Sometimes my colleagues may not want to come directly to me to find out what I think, or they’ll want to get a message to me, and they will go to her. I don’t always agree with her assessment of me or a situation, but it’s good to hear the input in an unfiltered way from someone else, rather than people just telling me everything I want to hear.
How do you hire?
The first thing I look for are the nonverbal components of one’s overall presence and presentation. Would I buy from this person? Would I want to do business with that individual? Do they look me in the eye? Do they have a certain energy level? Do they seem confident? Those are the kinds of things that really matter most.
I care less about your résumé in terms of the places you worked or where you went to school. What I do care about is how your résumé can give me insights into why you went from one position to another. I’m listening for how someone weaves together the changes in their career, and why they left one job for another. We all make mistakes. We all have setbacks. I’m listening to why someone left.
If I see multiple positions where there wasn’t necessarily progression, that’s always a point of concern for me. I listen closely if someone had a position that is a major change from the rest of their career — if there’s an outlier role. It’s not the worst thing to say, “I was laid off, and I needed a job and so I pursued this position, I gave it a shot, but I eventually went back to my area of specialization.” That’s perfectly fine.
But when people try to present the story of their career so that every move was a step up, everything was perfect and everything is wonderful, then I have to question whether they are realists. Are they going to be someone I’d feel comfortable working with? Or are they going to be constantly putting a spin on everything that happens?
I also don’t want anyone who’s constantly going to tell me what I want to hear, or what they think I want to hear. I find there are times when, if I make my view known too early, then I’ve just shaped the whole direction of the conversation. So when I’m interviewing someone, I will ask them how they feel about certain issues and points, and how they feel about certain organizations.
Before I describe how Williams Capital operates, I want to hear about their ideal environment. I want to hear how they interact with their colleagues rather than me saying, well, here’s the way Williams Capital is, because then I’ll just hear something similar back from them.
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Wednesday, 7 August 2013
The Top 10 Consumer Complaints
The new list of the top consumer complaints is out and once again problems with auto sales and repairs are No. 1. Home improvement and construction along with credit and debt disputes continue to be high on this year's list.
Susan Grant, director of consumer protection at the Consumer Federation of America (CFA), said the list shows "the persistence of complaints related to economic hardship" from foreclosure problems to landlords skimping on the heat as well as "the boundless creativity of scammers to find new ways to fleece consumers."
The top 10 list of consumer complaints for 2012 is based on a survey by CFA and the North American Consumer Protection Investigators of forty state and local consumer protection agencies across the country.
Complaints related to autos are all across the board and include: misrepresenting the true mileage of a used car, selling used vehicles with undisclosed mechanical problems, deceptive sales practices and unlicensed used car dealers.
"It's really no surprise that auto transactions continue to lead the list of complaints. Not only have cars become more complex and expensive, but many dealers still can't get it right when it comes to treating their customers fairly and with respect," said Jack Gillis, CFA's director of public affairs and author of "The Car Book 2013."
The report suggests various ways you can protect yourself. They include:
Get a second opinion about any significant car repair. You'll probably need to pay for the mechanic's time, but it could save you money and a lot of hassles in the long run. Get a written estimate so you won't be surprised by the charge for the diagnosis.Before buying a used car, check its history so you'll know what you're bargaining for. Most states participate in the National Motor Vehicle Administration, which lets you get information about the title, confirm whether the mileage that shows on the odometer is accurate, and whether the car was previously declared a total wreck.Don't buy any used vehicle until you have it inspected by an independent mechanic you trust to look for hidden mechanical or safety problems.Here are the rest of the nation's Top 10 Consumer Complaints for 2012:
2. Home Improvement/Construction: The most common problems reported were shoddy work and failure to start or complete the job on time.
3. Credit/Debt: Complaints ranged from billing and fee disputes to bogus credit repair and mortgage-related fraud. The agencies reported various illegal or abusive debt collection tactics, including harassing phone calls and attempting to collect a debt that was not owed.
4. Utilities: Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas service were frequently cited.
5. Retail Sales: False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates and failure to deliver were listed.
6. Services: Complaints included misrepresentations, shoddy work, failure to have required licenses and failure to perform.
7. Home Solicitations: Misrepresentations or failure to deliver in door-to-door, telemarketing or mail solicitations and do-not-call violations were among the complaints.
8. Landlord/Tenant: Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes as well as illegal eviction tactics were included.
9. Internet Sales: Misrepresentations or other deceptive practices and failure to deliver online purchases were among the complaints.
10. Household Goods: Complaints included misrepresentations, failure to deliver and faulty repairs in connection with furniture or appliances.
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4 Kinds of Fraud That Could Destroy Your Business
1. Payroll fraud.
Last year, we took on a local construction firm as a new client. Their payroll account had never been reconciled to their time-keeping system, so we made that one of our top priorities. According to company records, two workers and their manager were working massive hours and getting paid a ton of overtime that amounted to more than $80,000 in additional annual pay. Their timesheets revealed they were working on construction projects that were more than 50 miles away from one another simultaneously.
Hmmmm. It took about three seconds to figure that out and fire the employees, but the money was gone.
While it is easy for you and me to say that this could never happen to us, the additional salaries given to these three guys amounted to an increase of only four percent of the total payroll cost -- a figure that when unchecked could easily slip through the cracks. Most companies don't keep clean enough records to notice such an amount, especially when they fund a six-figure weekly payroll.
The best way to prevent payroll fraud is to reconcile all balance sheet accounts and payroll records monthly or, at the very least, quarterly. Look for any discrepancies and investigate them until you have a clear answer.
2. "Double check" fraud.
I know of a restaurant whose former bookkeeper stole $550,000 over five years. She did this by writing two checks each time she paid a bill, one to the vendor and one to herself. For example, if she had to pay $500 to ACME Insurance Company, she would simultaneously write another check to herself for $100 that she coded in the accounting system as "ACME."
It is very hard for business owners to catch this type of activity. Even if they are looking at the financial statements frequently and the bills look a little high, they can generally seem reasonable. But this can add up quickly. In this case, more than half a million dollars was stolen by writing 20 to 30 "double checks" per month for nominal amounts spread across multiple expense accounts.
This fraud was only detected when the bookkeeper fell ill and another bookkeeper took her place. Very quickly, the new person noticed that the bank account had not been properly reconciled in months. After doing so, it was clear that there were multiple payments in the same month to the same vendor.
As a business owner, it is difficult to find good accounting help, but it is important to have more than just one person signing checks and reconciling the bank account. Also, it is important to have an outsider come and look at the books and reconciliations at least annually, and at random times.
3. Over-ordering fraud.
Another one of our clients had a 12-year part-time office manager who would routinely order and receive all the office supplies. She was paid $10 per hour and given just enough work to get her up to the point (but not over) where she still remained ineligible to receive health benefits. She was a single mother, had a child at home, and became disgruntled.
For at least the last three years of her employment, she began over-ordering office supplies. She would return supplies the company did not need in exchange for a gift card, which she then used to buy something small and take the remainder in cash. It is unclear how much was stolen, but our estimates were that in one year it was over $19,000.
The easiest way for this business to have avoided this type of fraud is to do the right thing from the start. Good employees pay for themselves on average tenfold, and bad employees can ruin companies. In this case, the manager was short-sided in wanting to save $250 per month in health insurance premiums. The result was an unhealthy work environment and a scenario where this lady felt that it was “fair” for her to steal.
4. "Friendship" fraud.
A brilliant engineer friend of mine once hired his best friend's daughter to be his bookkeeper. He had known her as a kid. She was smart, hard-working and, because she was a single mother, she needed a sound income. As it turns out, she also felt mistreated by her father, felt her previous boss was out to get her, had problems at home, and needed this job to get out of debt. My friend is a great guy and a very trusting person. Within a year, the bookkeeper was the only one writing, signing and authorizing checks. She was running payroll and the only contact for the IRS.
In late 2011, he was astonished to learn that all of his bank accounts were frozen and levied by the IRS. Though he had paid and filed all of his personal income taxes on time, his bookkeeper was stealing the money that was supposed to go to payroll taxes. As the only IRS point-of-contact for the business, she strung this out over a three-year period and stole $439,000. Three days later, the company was forced to shut down, 15 employees lost their jobs, and the shareholders (including her father) lost all of their money.
The moral of the story is to never hire anyone solely based upon friendship, family, obligation, or feelings of sympathy. Build a culture of accountability, measure results, and make sure everyone knows that you are looking at their performance. Then, hire based on talent, and pay for that talent to perform at a high level of accountability and integrity.
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The Number-One Reason Entrepreneurs Fail
Early in his career, Daniel C. Steenerson accompanied another insurance broker on a sales call, but found himself excluded from the transaction because he lacked a certain financial services credential. That experience prompted him to take the required exams, but he initially failed every one.
“The feeling of failure was terribly uncomfortable,” says Steenerson, a leading authority today in the disability insurance field and president and CEO of Disability Insurance Services. This feeling of discomfort is the hallmark of what Steenerson considers one of the biggest hurdles to experiencing success as an entrepreneur: the all imposing “middle mile.”
“Using a marathon as a metaphor, there are two really exciting times during the development of a business: the starting line and the finish line,” he says. “At the starting line, you’re eager and focused on your goals. Near the finish line, you are exhausted but elated, and it’s easy to stay motivated.”
Between the starting line and the finish line is where you do the hard work and burn the most energy. It’s also where you encounter steep inclines, fatigue and setbacks, such as cash flow shortages, hiring issues and burnout. During this middle mile, there's a huge temptation to quit, which Steenerson believes is one of the reasons roughly 60 percent of businesses fail in the first five years.
Here’s how to make sure you make it through the middle mile and cross the finish line to wild success.
Avoid getting stuck at the starting line. A surefire way to failure as a business owner is to be all talk and no action, says Craig Gussin of Auerbach & Gussin Insurance and Financial Services. “So many business owners fail because they get stuck at the start line and fail to follow through.”
You can dream and plan and set goals for yourself all day long, but if you do nothing tangible to see those goals through, you'll simply spin your wheels.
Embrace discomfort. “Some business owners fail because the terrain is too treacherous, they become winded, or they simply don’t have the fortitude to continue,” says Steenerson, who eventually passed his CLU exams after rising two hours early every morning before work and then hitting the books again every night.
“To gain something, you have to be willing to give up something,” he says. “Foregoing sleep to study was difficult, but it was the only way to meet my goals and grow. Nobody likes to be uncomfortable, and it’s a natural inclination to avoid discomfort, but it’s necessary to be successful. This can mean working late to ensure deadlines are met or making lifestyle changes in order to be able to invest in a new venture. Either way, sacrificing comfort now can mean success later.”
Stay on course. Entrepreneurs who falter can get overwhelmed by the daily demands of business and the rigors of that middle mile. When they become physically and mentally tired, they can become complacent and settle for good enough.
“Head in the right direction by focusing on excellent service and high-quality products,” Gussin says.
While giving your all, keep putting one foot in front of the other, no matter how rocky the course, and you will reach your goals.
Simplify whenever possible. Like marathoners, successful small-business owners determine how to achieve maximum results with the least amount of effort, Steenerson says.
”Working hard is important, but deploying your resources in the most effective way possible is even more critical,” he says. “Simplifying processes makes it much easier to accomplish more in less time. It also makes it quicker and easier to share your knowledge and bring team members up to speed when necessary.”
Never stop visualizing the finish line. Keeping your eye on the prize can help ensure you reach your goals. “Remind yourself why you started your journey and allow your destination to inspire you,” Steenerson says. “Many business owners fail because they simply lost sight of the finish line coming up around the corner.”
And as you trudge through the middle of the course, believe that your efforts will eventually pay off.
“Small businesses rarely progress at an even, regular pace,” Steenerson says. “You can work very hard for three years seeing only gradual progress and then suddenly experience a big surge in revenues or profits. Although the surge appears to happen in a moment, it is a cumulative result of many small steps.”Now that you know some of the common hurdles entrepreneurs face on their ways to success, you can survive the middle mile and reach your small-business goals to the sound of cheering.
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The 5 Fastest Ways to Go Out of Business
Many entrepreneurs dream of starting their own business for a very long time. They plan and save their money for years and finally make it happen. Then, all too quickly, their small business goes under, and they are left wondering where it all went wrong.Here are the most common mistakes that will quickly put you out of business and how to avoid each of them.1. Not managing your cash. Every company goes out of business for exactly the same reason: They run out of cash. Most entrepreneurs mistakenly think that building a business is about growing sales or profit. It's really about monitoring and ultimately increasing the cash retained by your company.
How to avoid this mistake: Learn to read your cash flow statement monthly and find out the sources and uses of cash in your business. At a minimum, review a reconciled bank statement to see if your company has more or less cash at the end of each month.
2. Breaking promises or lying to customers, vendors or employees. Many startup business owners make promises they can't keep. Mistakes will happen, but for some reason, entrepreneurs can repeatedly commit to product features, delivery or service levels that are unrealistic or unprofitable.
How to avoid this mistake: Go to great lengths to always tell the truth regardless of how painful it may be at the time. Being open with all the people you work with will build loyalty and trust.
3. Implementing poor computer infrastructure security. Small businesses are targets of cyber criminals since they traditionally have less resources to protect their company. According to Monica Hamilton at McAfee, more than 75 percent of data breaches target small businesses, and it's estimated that 60 percent of these companies go out of business within six months of an attack.
How to avoid this mistake: Make an investment in protecting your company by using security solutions like antivirus software on all company computers, as well as on the devices employees bring with them to use at work. BYOD, or "bring your own device," is increasingly common in small companies, where employees use their own personal devices for work purposes. This can leave your business wide open to attackers. Use services like Sitelock to protect your company website from cyber attacks.
4. Setting no human resource policies. A small business can easily get stung by not implementing HR policies as the company grows. Employees and managers can all too easily run afoul of employee laws that prevent discrimination, sexual harassment and many other offenses from happening in the workplace. You need to protect yourself, and your employees.
How to avoid this mistake: Create a handbook and policies soon after hiring the first employee. There are many cloud based solutions that can almost do it for you. As the company grows, seek shared outside professional HR help to shape your policies.
5. Not focusing on what the customer wants. A company can't sell whatever it wants and survive; it has to sell what the customer wants or needs. As the market shifts and competitors appear, there's a good chance this will change over time.
How to avoid this mistake: You need to be ready to adapt to a changing market. Continue to focus your products and services on your customer, and target those people who can pay for what you're selling. Always ask current and new prospects what they need and will pay for.
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What Older Business Owners Can Teach Young Startups
Not long ago, neurologist Oliver Sacks, musing about turning 80 in The New York Times, said getting older "is not a shrinking but an enlargement of mental life and perspective." Unfortunately, this is not how society generally views those in their twilight years. Eastern cultures revere their elders. Our Western culture, however, is more inclined toward ageism. We tend to view those who are older as yesterday's people, and we are more predisposed to shoulder them off the stage. The regrettable thing is that these individuals have the most to offer in their last act—their intellect is unwrinkled.
The "enlargement of mental life" encompasses many aspects. For one, those who have been on the long path in business have learned to foresee and walk around stumbling blocks. They know the shortcuts that come from experience. Above all, they understand the true meaning of ego-transcendence—that feeling that we are now beyond concern with the self and able to perceive reality with greater objectivity and less egocentric bias. The list of age advantages is long—these business veterans have a lot to offer if we are willing to reach out and take it. This is especially important for young entrepreneurs who can benefit immensely from rubbing shoulders with older entrepreneurs.
There is a misconception that most startups are formed by young entrepreneurs in their 20s and 30s. A study by the Kauffman Foundation, a research think tank on entrepreneurship, found that the highest rate of startups formed in the past decade was in the 55- to 64-year-old group. What's more, the Kauffman Firm Survey, a longitudinal study of around 5,000 startups formed in 2004, shows firms that survived the financial crisis of 2008 had principal owners who were much more likely to be older than age 45. Over 60 percent of the companies who survived were led by entrepreneurs in the 45-and-up age group. The study reports that previous industry or startup experience had less impact on the company's survival than did the owner's age.
Age does have its privileges. Some smart law firms, for example, know the value of having an elderly, retired judge in their mix—an individual who is a repository of knowledge and wisdom acquired on the bench. They know that harvesting this resource will accelerate the development of younger lawyers. What can young entrepreneurs, those who are at the beginning of their journey, learn from those who are at their journey's end? Here are five lessons from the field:
Long-term planning pays. Those who have been in business for a long time know that "hurry and repent later" is not the way to go—whether in marriage or business. Sometimes entrepreneurs fall in love with their idea and rush to start a company, without having taken the time to do any long-range planning for the survival of the company. They are influenced by the glamour of those larger-than-life serial entrepreneurs who flipped companies and made millions of dollars. The reality is that these are the exceptions rather than the norm. Young entrepreneurs can learn a lot from successful older entrepreneurs who built businesses to last. Apart from thoughtful planning, these stalwart veterans have combined hard work with the fortitude it takes to take a company through its various stages—they didn't set out with the mindset of having an "overnight success." Building something of value requires patience—the patience to nurture a business and watch it grow.
Sales and marketing are animals of a different stripe. Sales and marketing are two distinct business disciplines. Simply put, marketing is about identifying target market segments, researching what customers want and how much they will pay for it, and creating awareness of your product and services that fill that demand. Sales is about converting leads and prospects into actual contracts or shipments. It's about creating customers and keeping those customers. Many entrepreneurs wear both hats and lump the two activities into one. They don't realize until perhaps a few years later that they needed to have paid equal attention to both disciplines. Marketing and sales demand a different skill set. A new entrepreneur may be good in one but fail in the other. A seasoned entrepreneur can bolster your potential weakness in this area.
What's more, the alluring concept that "if you build it, they will come" may be good for baseball, but doesn't hold true in business. It's not uncommon for a solo entrepreneur, for example, to start an online business by creating a website that clearly explains the company's products and services, write compelling blog articles and even take up expensive advertising in some publications, and completely miss the importance of SEO in driving traffic. It's an important lesson in marketing that business owners who are not well-versed in technology may miss.
Less is definitely more. A regret often mentioned by entrepreneurs is that they set out in too many directions, bringing too much complexity into their budding companies. Having surplus energy is a mark of youth. As a young entrepreneur, your drive to accomplish is on steroids, and this can get you to have too many pots on the stove. Know what you're good at, what sells and what can endure, and leave the rest on the back burner. Older entrepreneurs know that you can burn your fingers in business if you don't keep your priorities straight. Diversifying in too many areas can be a recipe for failure.
In Profit From The Core: A Return To Growth In Turbulent Times, the authors' 10-year study of more than 2,000 companies shows that most growth strategies fail to deliver value—or even destroy it—primarily because they wrongly diversify from the core business. How many times have we seen a successful small business decide to expand rapidly in different directions, only to crash and burn?
Take time to listen. This advice comes from Paul Bennett, chief creative officer at IDEO, in an article titled "8 Successful Entrepreneurs Give Their Younger Selves Lessons They Wish They'd Known Then." As Bennett puts it, "Slowing oneself down, engaging rather than endlessly debating and really taking the time to hear and learn is the greatest luxury of becoming older.” With age comes an appreciation of the value of silence and contemplation.
There's more to life than making money. You often hear older entrepreneurs regretting the fact that they didn't spend enough time with their family. Getting a company off the ground and ensuring its success is hard work that doesn't leave much surplus time. What often tends to be sacrificed is spending quality time with those who matter most, our loved ones. You may be a distracted presence at a child's event—or even miss the event altogether; you may stop nurturing your friendships or put off having a quiet walk with an elderly family member; you may be on a family vacation in body but not in spirit—while your family is trying to make memories at the beach, you are trying to make phone calls. All of these times are non-recoverable. If this describes you, learn from those who have been on that trail and make changes now to right the balance between life and money. There is an Italian proverb that says it all: "Our last garment is made without pockets."
Feel the need for some wisdom from seasoned entrepreneurs in your business? Here's how you can seek them out:
Assemble a group of people you can turn to for advice. Call them your personal advisory board. Don't just include other young entrepreneurs or experts in your field. Consider adding a retired or semi-retired executive in the mix, someone who may know nothing about your particular business but who has the business acumen garnered from having been in business for many years. They will shepherd you along the way—whether it's on business survival tactics from the school of hard knocks, creation of the right business model, or the ins and outs of people development. It's one of the smartest things you can do to shorten the learning curve and avoid costly mistakes.
A resource for budding entrepreneurs to learn operational efficiency, for example, is from military veterans. Military education has equipped these veterans with a multitude of skills that are gold for running a small business. These include the importance of planning, teamwork, resourcefulness, self-discipline, risk taking, decisiveness, unmatched loyalty and tenacity, to name a few.
You can gain a lot by having a military veteran in your team, someone who can add a calming perspective in dealing with challenges and obstacles that are inherent in the growth of a small business. "Every entrepreneur has experienced the feeling of things spinning out of control. The awful fear that failure is just around the corner," says Derek Blumke, a principal at Hire Purpose, an organization that matches talented veterans with companies that can use their skills. "A veteran is likely to see things much differently and exude confidence when those around him are riddled with doubt."
Above all, young business leaders can learn a lot from ex-military men and women about what it takes to be a leader.
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Monday, 5 August 2013
China invests in South African wine
Yangzhou-based Perfect China has made the Asian country's first investment in South Africa's wine industry, acquiring the Val de Vie estate in the Western Cape in a deal expected to boost exports of South African wine to the Far East.
Perfect China, through its 51% shareholding in Perfect Wines of South Africa, purchased the 25-hectare wine farm between Paarl and Franschhoek that includes 21 hectares of vineyards, a manor house and wine cellar.
Perfect Wines of South Africa was established as a joint venture between Hein Koegelenberg from Leopard's Leap and La Motte and Perfect China in 2011.
"The L'Huguenot brand was born out of this joint venture and has already been responsible for the export of 2.8-million bottles of wine to China in 2011 and 2012 - amounting to about 25% of the total annual South African wine exports to China," Perfect China, Perfect Wines of South Africa and Val de Vie said in a joint statement on Thursday.
Perfect China distributes L'Huguenot throughout the Far East with a sales team of over a million agents and 5?000 depots to markets including Malaysia, Thailand, Singapore and Vietnam.
"The Chinese wine market is very important to our industry, and this first Chinese investment in the South African Winelands is a clear indication of their interest in our wines and can lead the way to a bright future for the export of SA wine to the East," said Perfect Wines of South Africa chairperson Hein Koegelenberg.
Perfect Wines will host 700 members of the Chinese sales team on an incentive trip to Cape Town in September, in the first of a series of planned annual incentive trips, to introduce them to South Africa and equip them to better sell the wine in the Far East.
Val de Vie's cellar facilities will be expanded as part of the agreement to increase production and maturation capacity. "Producing these volumes of quality wine requires many services, which will effect job creation in the winelands," the companies said.
"With this venture we want to focus on tourism from China to South Africa.
"Bringing the Chinese customers to South Africa and letting them experience our wine beauty will turn them into permanent wine ambassadors," Koegelenberg said.
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SA steps up small business support
South Africa's Department of Trade and Industry (DTI) has ramped up its incentives for small businesses over the last year, and put a number of measures in place to help them become more competitive, says Trade and Industry deputy director-general Tumelo Chipfupa.
Briefing Parliament's portfolio committee on trade and industry in Cape Town on Wednesday, Chipfupa said grant approvals under the DTI's Black Business Supplier Development Programme had increased fourfold - from 306 approvals valued at R96.6-million in 2011/12 to 1?213 approvals valued at R451.2-million in 2012/13.
The Black Business Supplier Development Programme provides cost-sharing grants for technology and business support services to black-owned small enterprises.
The number of grants approved under the DTI's Co-operative Incentive Scheme had increased by more than 70% to 182 approvals valued at R85-million over the same period, while grants under its Export Marketing and Investment Assistance Scheme had increased by 17% to 1?018 grants valued at R70-million.
The Co-operative Incentive Scheme provides cost-sharing grants to co-operatives to purchase equipment or carry out enterprise support, while the Export Marketing and Investment Assistance Scheme help businesses to attend national pavilions, trade missions and trade shows.
The DTI spent about R100-million helping over 1?000 businesses attend 22 national pavilions, 43 trade missions and eight trade initiatives and special projects in 2012/13, in the process enabling them to generate sales of R3.8-billion.
Chipfupa said the department had been able to step up lending through the Black Business Supplier Development Programme by appointing key partner organisations in South Africa's provinces.
In all, 409 of the programme's 1?213 grants in 2012/13 went to women-owned enterprises, and Chipfupa said the department was considering ring-fencing some of the grant funding for women and youth-owned enterprises.
The DTI administers about 15 incentives aimed largely at improving industrialisation and broadening economic participation in the country.
Other grants approved by the DTI in 2012/13 included the following:
In addition, R169-million - half of this provided by the government - was committed to support 14 incubation programmes under the DTI's new Incubation Support Programme, which was launched in September.
Cost-sharing grants were also approved for six projects under the DTI's Critical Infrastructure Programme, helping to leverage R9.8-billion in investments.
Chipfupa attributed the drop in Automotive Investment Scheme grants and beneficiaries - from R798.2-million in 2011/12 to R281.3-million in 2012/13 - to a slowdown in the number of big projects by car manufacturers in the last financial year.
He said the department was in the process of rolling out a web-based platform which would make it easier for businesses to apply for grant funding.
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MTN tops South African brands list
Mobile phone companies lead the pack when it comes to the country?s most valuable brands. South Africa?s Top 50 Most Valuable Brands 2013 were named by Brand South Africa and Brand Finance Africa on 1 August, with MTN in pole position, followed by Vodacom.
The leading brands are listed by financial valuation in South Africa; they are driving competitiveness and the nation?s reputation. Brand South Africa chief executive officer Miller Matola and Brand Finance Africa chairman Thebe Ikalafeng announced the leaders at a breakfast attended by representatives from some of the companies that make up the Top 10 Most Valuable Brands.
Matola emphasized that the nominated brands had not only contributed to South Africa?s competitiveness but had also built civic pride. South Africans who believed in South Africa ensured the world believed in us, he said. ?South African brands are playing a leading role in building the future while adding value for shareholders.?
Brand Finance Africa valuation director Rupert Kemp outlined the Royalty Relief methodology used in the selection, which involved estimating the likely future sales that were attributable to a brand and calculating a royalty rate that would be charged for the use of the brand. This methodology considered three pillars, he said: brand support, for example marketing and distribution; equity; and, brand performance.
South Africa?s Top 10 Brands 2013, he said, were:
MTNVodacomSasolStandard BankAbsaNedbankWoolworthsFirst National Bank (FNB)ShopriteMediclinicKemp said Mediclinic was the highest upward mover in the top 10, moving up four places. The private hospital group is the sixth largest in the world and is now the most valuable health care services brand in South Africa.
Shoprite had experienced huge expansion and had a presence in 16 countries outside South Africa, he pointed out, while FNB had built a strong brand that emphasized innovation. Woolworths had built its brand on innovation as well as high standards in food and clothing, said Kemp. Nedbank had steadily been growing its brand presence and had for the second time been voted Africa?s Socially Responsible Bank of the Year at the 2013 African Banker Awards.
Kemp said banks on the whole were facing a challenging market exacerbated by up-and-coming newcomers such as Capitec claiming more and more market share. With Barclays increasing its stake in Absa to 62%, the local organisation faced important decisions. Standard Bank came in at number four, top of the banks in South Africa?s Top 50 Brands 2013, after a similarly tough year.
At number three was Sasol, the fuels company, which Kemp said was a sterling achievement for a large B2B player. Innovation and building on trust and reputation were its formula, he said.
South Africa?s two largest cellphone operators share the top two slots, with Vodacom coming in at number two. This was exemplary for a brand which had changed its identity to reflect parent company Vodafone while at the same time holding on to its heritage.
MTN, at number one, was the only South African brand to be placed in the top 500 global brands, said Kemp. The company was constantly expanding and taking on new markets and could be seen to ?fly the flag for South Africa in business?.
Matola congratulated the winners, saying they were playing their part in building South Africa. ?They are not only building value for shareholders but for the 50 million stakeholders? they had in South Africa. Their contribution would work towards building a great country brand.
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Online Business Alternative Solution To The World's Unemployment
According to one of the article that I have read out of this population 16.7% is in the unemployment category. If we are to make a conservative assumption to 10% of the world’s unemployment population it would translate to 716,908,070 people who are in the unemployment category.
One of the solution that can help to address the unemployment rate is Online Business. But this solution is sometimes neglected and too many skepticism appeared when we are speaking of Online Business as a solution.
It is because the internet first generation geniuses become too greedy at the very first time Online Business solution was introduced in the market. Many of this geniuses took advantage of the peoples innocence, they build marketing system that was very powerful (MLM , Network marketing) but had misused it, staining the peoples belief of the system. Turning themselves into bad apples.
This marketing system are the right solution to unemployment especially when we apply it as an Online Business, combined with the power of the internet this marketing system undoubtedly can address to solve the unemployment issue of the world.
What are the few steps you can do to find the right Business Online for you
1. The very first thing that you can do is to make a profile research of the prospected company offering the said Business.
2. Look for some review or articles concerning the Business
3. Analyze properly the Business Pricing scheme if it’s feasible for you to afford.
4. Check for the Business compensation plan.
5. Make a research about the Business Income proof.
6. Consider the Business Back office support
7. Don’t be overwhelmed by too many sweet offers, many of them haven’t realized but not all have realized the earning potential.
The above mentioned tips are few considerations for you to realize to minimize the risk of falling into an unprofitable Online Business.
I have found an Online Business site that has the heart for everybody who join its team. I would like to recommend this to you because it’s a kind of Online Business that has a heart towards its subscribers. Hover your mouse on the image to find out.
I tell you guys, if you join me in this business you can influence people who are job less today by giving them alternative employment.
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thanks guys,
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Level One Network And You As Home Business Partner
Dear Readers,
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FYI Google+ user population is currently approximate at 10 million , Facebook users is approximately to reach 1 Billion at the end of 2012, Youtube users approximately at 1 Billion.
Imagine my dear friends, if you only knew how to take advantage of this very great number of people using the internet there is a very great opportunity for business. many people have figure out how to use this multitude and make decent income out of it.
But to make this online business to be realize you have to have enough knowledge how to drive this great number of people to your advantage and that is not easy to do. few consideration to think of is your knowledge to set up a website, how to rank your website after you have launch it, its not really easy but even you have very minimal knowledge about setting up your own website still it's very possible for you to make profit online.
HOW?
The answer is very simple, you have to look for the right business partner, and you should be very cautious in doing so to minimize your investment risk.
Don't be tempted right away to join any paid network or MLM immediately...though it's the most effective marketing approach to make a good business online, you have to consider the companies reputation whether member get the proper payment for their sales, does the company have a good page ranking to capture google's web crawler? training, support , does it make good impression to the users? my friends if you are very careful and have a strong conviction to do home business, online business or whatever business that uses the internet you have to find the right business partner to go with.
My recommendation
my dear friends my recommendation is base on honesty, I am still a newbie in the online business but i can attest to you that this network that I have joined with is a network with really big heart for its subscriber, because it has done all the setting up a website for you, and not only that, whenever you sign up for this network it will give you a front page exposure so that web crawlers can immediately index your site because you are in the front line.
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I have nothing to offer to you my dear friends but my honesty to support you and provide you all the available information in my hands for us to grow together. This are the things that i can do for you. Give your self a chance to join me with this business network that I am working with, the network who thinks of his member to grow first , the only network with a big heart, Please join me with LEVEL ONE NETWORK your true business partner, and home business partner online.
Level one network made sure that you can survive the business with all the aid of a state of the art blogging platform equip with barometer to ensure you that you use your keywords properly to stand out in web crawlers indexing.
with Level one network you have the professional blog site presentation to be proud of, a professional look yet offers a high value of exposure in the online business world. many beautiful website are out there but never did realize making a single dime in term of profit.
with level one network you are in good hands, with level one network you are sure that you are in the right track.
i can not tell the value or attitude that you have but i can tell you that if you join me in level one network we are in the correct direction. that is to earn a decent living online.
Only you can tell, the best time to ACT IS NOW. lift those fingers, click "join the network" and start earning 
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Investors rue opting for OFS route
It has been raining misery for investors who subscribed to stocks under the Offer for Sale (OFS) route. Scrips of 37 of 53 companies sold through this in the current year are quoting below their floor price.
The BSE S&P Sensex has lost 1,120 points, while the National Stock Exchange’s CNX Nifty has shed nearly 400 points or 6.5 per cent, in the nine trading sessions between July 23 and August 5.
“The stocks are correcting on account of a challenging macro economic environment. Until the rupee stabilises and growth actually kicks in, the pressure on the economy and in turn the markets, is likely to continue. The recent measures by the Reserve Bank of India (RBI) to defend the currency have also impacted sentiment and have put pressure on liquidity in the system,” says Gopal Agrawal, chief investment officer at Mirae Asset Global Investments (India).
PSUs slump
Public sector undertakings (PSUs) have been underperformers, with most of these losing a third of their market value after the OFS. These companies have been hit by sharp discounts offered during the OFS, analysts suggest. The BSE PSU index has tanked nearly 30 per cent so far in calendar 2013, as compared to a 3.7 per cent fall in the CNX Nifty and a 1.3 per cent drop in the BSE S&P Sensex.
Rashtriya Chemicals and Fertilizers (RCF) was a major loser among the PSU pack, trading 41 per cent below the floor price of Rs 45. National Aluminium (Nalco) and Steel Authority of India (SAIL) are quoting 37 per cent below their floor price at Rs 25 and Rs 39.90, respectively. Nalco had fixed its offer price at Rs 40 and SAIL at Rs 63 a share.
As regards PSU banks, the June quarter results reveal their non-performing assets (NPAs) have gone up substantially. The market cap for most of these has started to get eroded, analysts say. Says A K Prabhakar, senior vice-president (retail research), Anand Rathi Financial Services: “I don’t think that a recovery is possible. A number of companies have already been lined up for OFS. Stocks of these companies can trend down, as the government is likely to come out with an OFS price which is below the market price. Investors are not interested in buying a PSU stock, since there is pressure on growth, coupled with the government’s disinvestment agenda.”
Outlook
Among individual stocks, Jaypee Infratech, BGR Energy Systems, Elantas Beck and JSW Energy have seen value erosion of a little over 40 per cent, while Adani Enterprises, Jet Airways and Tata Communications are currently trading 27-32 per cent below their offer price.
Despite the sharp fall in most of these stocks, analysts suggest recovery will be slow. “There are a number of companies that are fundamentally strong in terms of business fundamentals in the banking and the metal pack. But as the outlook is a bit hazy, the investors are nervous right now,” says Agrawal of Mirae Asset. Neeraj Dewan, director, Quantum Securities feels there is no quick solution to the problem and investors are waiting for the outcome of next year’s general elections, so that they can take an investment call accordingly. “Once there is an inclination of the outcome of the polls, there can be a minor recovery in overall sentiment. I don’t see lower levels for these stocks. At best, they will remain range-bound,” he says.
Adds Chokkalingam of Centrum Wealth Management: “Some of the stocks had a run-up, pre-OFS, on delisting hopes. So, a fall is some of these counters is also due to over-valuation. In a few cases, the pricing was also quite aggressive. As far as recovery is concerned, I don’t think all of them will recover. Elantas Beck, for instance, can; the company is fundamentally sound and has a lot of cash on its books that can fuel growth. As regards RCF, fertiliser subsidy is a big issue and there is a lot of pain still left for the metal stocks to endure.”
Adding “MMTC, I think, is not a great fundamental story. On the other hand, I am bullish on the prospects of Jet Airways, given the FDI (foreign direct investment) in the aviation sector. We have a buy rating on Styrolution ABS. As regards oil and gas stocks, the pressure due to the rupee and crude oil prices, amid the subsidy burden, will remain an overhang for oil refining and marketing companies. I do not suggest buying Indian Oil Corporation.”
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HSBC falls after earnings as Gulliver says markets slow
HSBC Holdings Plc, Europe's largest bank, slid in London trading after its earnings missed analysts' estimates. Chief Executive Officer Stuart Gulliver said the lender's fast-growing emerging markets are slowing.
First-half net income rose 10 per cent to $10.28 billion after US loan impairments fell, the London-based lender said in a statement on Monday. That was below the $10.57 billion estimate of five analysts surveyed by Bloomberg.
The shares fell as much as 4.6 per cent, the most since February 2012. HSBC, which operates in about 80 countries, said the mainland Chinese market slowed unexpectedly in the first quarter of 2013, while Latin American growth eased in the first half on weak consumer consumption. HSBC also faces a potentially "highly damaging impact" from planned European Union restrictions on bonuses, the bank said on Monday.
"There has been a slowdown in faster-growing markets in recent quarters," Gulliver told reporters on a conference call. "Even emerging markets go through business cycles, and this has impacted our revenue and our profit growth."
Growth remains "subdued" in western economies, the bank said. Gulliver has reversed the lender's expansion in US consumer banking, and closed or sold 54 businesses since he took the top job in 2011, as he focuses on markets where the bank is most profitable. The bank has 55 million customers and 6,600 offices around the world.
Revenue, PPI
The Chinese economy has slowed for two straight quarters, extending its longest streak of sub-8 per cent expansion in at least two decades.
HSBC shares fell 4.3 per cent to 722.6 pence. The stock has still gained 12 per cent in the year to date.
Loan impairments dropped 35 per cent to $3.1 billion. Revenue excluding businesses that have been sold and gains and losses on the value of the bank's debt rose 4 per cent to $33.3 billion. Operating expenses fell 13 per cent to $18.4 billion as wage costs declined.
The lender set aside $367 million to compensate consumers sold loans insurance they did not want, need or understand. Barclays Plc set aside 1.35 billion pounds ($2.1 billion) in the same period.
"Economic growth remained muted and regulatory changes continued to impact available returns," Gulliver said in the statement.
'Highly Damaging'
The lender's investment banking business, led by Samir Assaf, posted pretax profit of $5.72 billion, up from $5.05 billion a year earlier, on reduced costs and impairments. That beat the $5.48 billion estimate from Citigroup Inc analysts led by Andrew Coombs.
"The board is committed to protecting the competitive position" of operations affected by the proposed EU pay restrictions, HSBC said on Monday.
The lender, which last year agreed to pay $1.92 billion to settle US probes of money laundering, said in May it will eliminate as many as 14,000 more jobs, as it plans to cut an additional $3 billion of costs to improve profitability.
HSBC completed the sale of its US credit-card unit to Capital One Financial Corp for a premium of $2.5 billion in May 2012, and sold a $3.2 billion portfolio of US consumer loans in March. The lender is cutting back in the US after its 2003 purchase of Household International Inc required it to set aside more than $65 billion for souring loans in the country.
Asset sales
The pace of asset sales will now slow, Gulliver said on Monday. As well as the loans portfolio and cards business, HSBC closed the sale of its upstate New York branch network to First Niagara Financial Group Inc in the first half of last year.
Last week, the bank appointed PricewaterhouseCoopers LLP as auditor, dropping KPMG LLP after more than two decades. KPMG won the business in 1991 without going through a bidding process, the lender in March. HSBC paid the accounting firm $80.5 million in 2012 for work including audit, tax compliance, computer security and help valuing assets.
Last month, James Comey, former US Deputy Attorney General, who the bank hired in January as a non-executive director and member of its panel to combat financial crime, resigned to lead the Federal Bureau of Investigation.
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Capacity cuts in China fail to cheer market
Why should Indian metal producers be excited by the Chinese administration's recently announced resolve to do away with the economy's addiction to credit, which rose by $14 trillion to $23 trillion in the past five years? In the process, China is suffering from credit exhaustion, as fresh output created by every extra unit of credit fell from a ratio of 0.85 in 2008 to about 0.2.
Our industry officials believe extraordinarily high rates of credit growth, leading to credit exhaustion, is the reason Chinese Prime minister Li Keqiang initiated steps to ration credit to industries nursing large overcapacity, which has proved to be a drag on the economy. All economic policy moves by Beijing are watched closely in India and elsewhere, as China's astonishingly large production of commodities from steel to ferroalloys to aluminium, as well as their exports, have a significant bearing on world prices. Globally, there was no respite from the commodities production and capacity building in China during and after the breakout of the global economic crisis in 2009.
"No doubt China will continue to need lots of steel, as it once again gets into high gear of infrastructure building. Even then, a neighbour owning close to a billion tonnes (bt) of steel capacity, with a share of 46.3 per cent in global production of the metal last year, would require us to be watchful of its export moves," says Steel Authority of India Limited Chairman Chandra Shekhar Verma. While premier Li has set a lower "bottom line" of seven per cent economic growth, Beijing is kicking off a host of new infrastructure projects, including the world's longest undersea tunnel across the Bohai strait, at a cost about $45 billion. China would need huge quantities of steel and other metals to give shape to its new railways and infrastructure schemes, Verma says.
Would it not be comforting for Verma and National Aluminium Company Chairman Ansuman Das, who wants China to lead in aluminium production discipline, to know under instructions from Li, the Chinese ministry of industry and information technology has identified 1,400 companies that must, by September, idle outdated, energy-wasting and environment-damaging capacity and to do away with that by 2013-end? Certainly, this would have been the case if the first instalment of the recommended capacity cut across 19 industries - from steel to cement - had some depth. Examples of proposed steps in steel and aluminium would underline the point. For a country that had a share of 716.5 million tonnes (mt) of global crude steel production of 1.5b bt last year and which, in the first half of this year, raised output by 7.4 per cent to 3,89,870 mt, a capacity cut of 7.81 mt is neither here nor there. China Iron and Steel Association estimates the country's surplus steel capacity at 300 mt. Also, not much is to be read in the
move to cut by one per cent the aluminium capacity of 27 mt by the year-end, as local demand is about 21 mt. Cement capacity phasing-out would stand at 92 mt. China, the world's largest cement producer, has built enormous capacity of three bt, against local demand of 2.2 bt.
There is speculation on the chances of the new capacity curb initiative succeeding, as similar efforts in the past yielded poor results, bringing ridicule to Beijing. According to People's Daily, Beijing's earlier moves to rein in "blind capacity expansion" was virtually a cropper in the face of local governments offering a slew of incentives---from cheap land to tax breaks---to attract investment. Reuters cites the example of the aluminium industry, in which only 8,00,000 tonnes of the new capacity of 18 mt created in recent years had the sanction of the central government. Similarly, provincial authorities have, so far, managed to ignore central edicts to shut factories in their backyards. But unlike the vagueness of past central disciplining moves, Beijing's present capacity downsizing order has to be read in conjunction with a commitment to a healthier form of growth. Li is focusing on a new set of reforms and restructuring of the economy. This time, what is not to be missed is the central government precisely earmarking the units to be taken off the production line; it is unlikely provincial satraps would have the gumption to disregard such fiats.
Moreover, to make sure the plan works, Beijing retains the option to deny credit to the units it wants to shut. The strict operational standards Beijing has set for the aluminium industry, also to be applied to steel and cement, would hopefully restrain capacity use. But Li's capacity-chopping plan has failed to make an impact on commodities markets. This is because China would still have considerable surplus capacity in all the 14 industries. What is not to be overlooked is many of the units earmarked for closure are already idle and every industry has much surplus capacity. So, the possibility of cheap (read subsidised) metal exports from China would remain, in the short to medium term.
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