Some Thoughts on Brexit from our Economist, Roger Martin Fagg

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“Everything will change and in ways which we cannot predict; we cannot know what we cannot know.

The economy is characterised by positive feedback. This means a small change in one part of the system is magnified by the systemic response. As I write this, global stock markets are crashing, sterling has fallen to $1.30, and Moody’s have said the UK will lose its AAA rating. These are knee jerk reactions but they are destabilising: positive feedback has already been triggered. The Bank of England has made soothing noises and will supply short run liquidity to prevent the wholesale market from seizing up.

The entry of China into the global system has driven the West to move further up the added value chain which has increased the demand for highly skilled employees, and reduced the demand for the unskilled (and their real wages).

It is my opinion that these fundamentals are now driving the attitude of the electorate who tend to sum it up in simple terms: blame it on immigrants, the ruling elite and the unelected bureaucrats in Brussels who are depressing wages.

Brexit does not change this at all. It is not the solution. The solution is a significant increase in the education and training of those who have suffered falling real wages.

To get a copy of the full article email

As always I would be delighted to discuss the 2 Academy groups i run serving Bristol, Bath, Swindon:

CEO group – for CEO’s of aspirational businesses and organisations, typically between £5m and £50m turnover

DF group – for teams of Directors and Managers of the above businesses.

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An Open Letter To Whoever Wins The Election

An open letter to whomsoever wins the election (and with apologies for its length) by Roger Martin Fagg.
To whom it may concern,

I hope you will refer to this frequently to ensure you do not screw up an economy which has been through the worst recession since the 1930s and is now on the mend.

The letter includes…

The Causes of Austerity
Austerity is the inevitable consequence of the excess of debt taken on by ordinary working people from 2000 – 2008. Light touch regulation of the banks (thanks to Ed Balls) allowed them to expand their balance sheets recklessly. They in conjunction with all those who lied about their income when applying for a mortgage created the biggest spurious increase in
wealth we have experienced as house prices shot up.
In 2008 Barclays, RBS and HBOS were technically insolvent; they had unwisely lent to individuals and property companies who would only be able to repay the principal if the property boom continued forever. 70% of all bank lending is on property. To restore their balance sheets banks, began to destroy what they created – they destroyed £350Bn. This is about 20% of the UK money supply. When the flow of spending in the economy slows or contracts, the automatic stabilisers kick in. These are the balance between Government income from tax (it goes down) and Government spending on social support (it goes up). It is these which caused the spike in Government as a proportion of the economy in 2010.
Since 2008 the Government has spent £600bn more than it has received in taxes. Most of this has been spending on ordinary working people. The biggest bills are for pensions, health and education. None of these have been cut back in cash terms, but unfortunately capital spend has, by 15%. It has fallen from £57bn to £42bn.
The Banks are now fixed, their solvency restored, as a result they are creating new money which is flowing through our system. The consequence of this will be the end of austerity. Government income is growing again and so the deficit will drop automatically. The arithmetic is straightforward: a 5% growth in nominal GDP should increase Government income by the same amount. Income is approx. £660Bn, 5% is £33Bn. Spending is £740Bn. If this grows by say 3% a year, then each year the deficit comes down!

Read the full article here

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Why we need reminding of life’s simplest lessons

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Malcolm Miller, a member of ACE 47, talks about his company RTS Group

Malcolm MillerMalcolm Miller is group Managing Director of Wiltshire-based RTS Group, an automotive learning and development agency, which trades across Europe, South Africa and the Middle East. Established in 1989, it employs 50 people and uses a further 100 associates.

The company specialises in helping automotive manufacturers develop frontline staff working in their dealerships. Clients include well-known manufacturers such as Mercedes-Benz, Toyota, Mazda and BMW. RTS devises, designs and delivers a wide range of learning solutions that improve the knowledge and skills of these frontline, customer-facing staff. These are delivered using methods ranging from one-to-one and classroom learning, through to elearning using smart phones, tablets or online tools.

“What we do isn’t technical training, and it’s not really the softer end of learning development,” Malcolm explains. “It’s about improving performance. It’s about improving sales, customer service and the profitability of dealers. That sounds fairly hard edged but it’s all to do with people skills in sales and customer service or management.”

One arm of the company – FIMTRAC – focusses on vehicle finance, and it is this area of expertise in particular which is seeing growing demand overseas.

“Our particular expertise is we know the automotive world inside out, upside down and back to front,” Malcolm says. “We’re well established in the UK with a strong presence in Europe, but they’re both busy markets with a lot of competitors – good competitors. So increasingly, we’re looking to places like the Middle East, South Africa and now China.”

After a dramatic decline in the 1970s and 1980s, the automotive industry has become something of a British success story over recent years, Malcolm says, both from the point of view of product and expertise.

“The UK is very successful in exporting cars – just look at brands like Aston Martin, Jaguar or Land Rover. But it isn’t just that, our retail model is also held in high esteem. We’re good at retail. So other countries are looking to the UK not just for products, but for that expertise, to learn how we do it and why we do it better.”

“We certainly don’t try and thrust the British flag down our customers’ throats,” Malcolm says, “but we do talk about where our processes systems and experience where is it having the best effect.”

One area in which the UK leads the world is vehicle finance, and exporting this expertise to less developed markets is now one of RTS Group’s main areas of international growth.

“People don’t buy cars for £ 25,000 or whatever the equivalent is. They buy them now for £350 a month. It’s a financial proposition. We’re extremely good at that in the UK. It’s the same model as a mobile phone contract. No-one would dream of buying an iphone for £500 pounds. You buy one through a contract, and that’s also how people buy cars.”

But if that’s how people buy cars, how have Chinese car manufacturers come to be buying expertise from a company based in Chippenham? The answer, says Malcolm, is partly by design and partly through good luck.

“We were already doing work in the Middle East and South Africa and the opportunities of the Chinese market were certainly on our strategy map – after all, China is a huge market. But actually, the opportunity came out of our work in South Africa, which is viewed by the manufacturers as part of their Asia-Pacific market.

“We’d been working in South Africa for manufacturers developing programmes for dealership staff to increase finance penetration at point of sale. Our clients were impressed with our work and our expertise and they asked us to repeat the model in China.”

While having that referral was a vital break, is had to be reinforced with plenty of face-to-face activity, too.

“We spend a lot of time on planes. As Woody Allen said, 95% of success is turning up. We have seriously tried delivering a pitch via video conferencing but it’s just not the same. You have to turn up and look people in the eye. Making that effort is what wins it.”

The other theme that runs through Malcolm’s approach to winning business abroad is authenticity.

“Obviously you need to know enough about the local culture not to commit any major faux pas. So things like how to offer a business card in Japan – stuff like that. But the number one thing is to be yourself.

“Understand that in the first five minutes – whether it’s at a first meeting or in a formal pitch– the message you need to get across is a very simple one. It’s about confidence. Not overconfidence, not arrogance but just presenting yourself as a confident and competent professional. Within the first five minutes, a potential client needs to know that you’re a safe pair of hands, that they can trust you. That’s what needs to come across in your bearing and the questions you ask and the comfort you give people.”

And in just the same way that effective learning and development depends on engaging and capturing people’s imagination, so Malcolm uses the same principles when he’s pitching for new business.

“We try to pitch in the same way we deliver our training and learning which is to get people engaged very early on. So forget the PowerPoint stuff – people see enough of those in their lives – what works well can be anything from a simple hand-out to physically demonstrate something.

“One thing we once did when we were pitching for some work to realign a sales process was to get the key messages put on some mouse mats. We left a couple after the pitch and they called us up and asked us to send them some more! We won the business too, thanks to those mouse mats…”

Another tip is to bring the team with you even when you can’t bring them with you. As Malcolm explains: “Obviously we can’t take everyone to every pitch, so another thing we do is record some video nuggets or short interviews with key people. We use green professional screen technology, but even using something like Skype or a webcam can bring someone to life. A video of someone real speaking on a screen is so much more powerful than just talking about them. It doesn’t need to be much – a minute and a half is perfect.”

Malcolm’s last piece of advice is simple. Ride your luck.

“For all the strategic planning in the world, you make your luck? We know we’re doing a good job, but if someone asks you to speak at a conference or come and talk to them about AB or C, take that opportunity. Your luck is there. If it doesn’t quite fit your strategy, then what the hell, take it anyway and then strategy will grow around it, which is exactly what’s happened to us.”

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Economic Outlook 2015 from Roger Martin Fagg

As I write this the wind is icy cold, the snow is intermittent; there are no real signs of life in the garden. The snowdrops are struggling.

But if we turn to the manmade UK economy, it is warm, no longer struggling and now showing every sign of a sustained recovery. In the last quarter of 2014 UK retail had its best sales for 12 years, even with the supermarket price war and the price cuts on so called Black Friday. Investment spending picked up strongly as did business cash flow. We also received new data from the ONS showing that earnings (this includes any overtime and bonuses) for people who have been in continuous employment for more than a year were growing at 4%. Thats right 4%

Some of my predictions for 2015..

  • I forecast a sharp Chinese slow down. Electricity consumption supports this although Government official data does not.
  • I forecast strong USA recovery strengthening to 3.4% this year.
  • I forecast no growth in the Eurozone or by 1% at best.
  • I forecast UK inflation at 1.7%.
  • I forecast UK average house prices inflation this year is likely to reduce to 3 – 5%.

Read it all here

Roger Martin Fagg is a regular speaker at ACE sessions.

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Profile of ACE 47 Member Jane Oakland in Bristol Business News

The LAST WORD: Jane Oakland, partner, Thrings
October 3, 2014
By Robert Buckland

Jane Oakland

Each week Bristol Business News will give a prominent member of the city’s business community the chance to have the last word on its weekly e-bulletin. Jane Oakland, partner at commercial law firm Thrings, kicks off the series by answering our 10 questions.

What was the LAST:

Film you watched?

I recently watched Overview on Vimeo. It’s a fascinating short film about astronauts’ experiences in space, and includes some astonishing music and visuals of earth from space. The movie, which was crowdfunded, was made by Planetary Collective, while the original score was penned by Human Suits, all of who are from Bristol. Our city is home to some fantastic creative companies, and this added to Bristol’s well-deserved reputation for excellence.

Book you read?

I’m reading The Goldfinch by Donna Tartt. I’ve read a few of her other books – ‘The Secret History’ and ‘The Little Friend’ – and I really enjoy the way she constructs her stories and brings the various strands together at the end. I love reading, and am a member of two book clubs. The scope of books we read varies hugely, and I’ve read many novels I wouldn’t ordinarily have chosen.

Music you bought?

My taste in music is pretty broad, and my collection ranges from classical to contemporary. I recently downloaded Martha Wainwright’s most recent album, ‘Come Home to Mama’. It’s a blend of folk and rock music; her style is interesting.

Concert or play you went to?

I went to see the Hilary Mantel’s Wolf Hall at the Aldwych Theatre in London. The Royal Shakespeare Company consistently puts on wonderful plays, and the standard of acting is never anything less than sublime.

Sporting event you attended?

A few members of my family ran in the Bristol Half Marathon in September and I went along to give them some support. The race has grown hugely since it was first run in 1989 – both in terms of popularity and participation – and to see so many people taking to the streets of our beautiful city made me, as a local, feel extremely proud. It was also great to see people pushing themselves to complete the 13-mile course for so many worthwhile causes.

Holiday you went on?

I’ve just returned from Italy. We flew to Siena for a wedding which was absolutely magical and then caught a train up to Florence. It was a real treat to travel through such stunning countryside and see so many small villages. The vineyards, terra cotta roofs and sunflower-filled fields combined to illustrate Italy’s beauty and vibrancy.

Restaurant you ate in?

I recently went to the Grillstock Smokehouse in Clifton and had the beef brisket sandwich – it was absolutely delicious!

Thing that annoyed you?

Like many people, I’ve been frustrated by the seemingly endless roadworks in Bristol. I appreciate the need for repairs, but it feels like work is going on everywhere at the moment. There’s never a good time to dig up the road, and it was a shame that many of the 500,000 visitors to the Bristol International Balloon Fiesta didn’t get to see our city at its finest.

Thing that made you laugh out loud?

A couple of weekends ago, I was painting my garden shed. Somehow the ladder I was using moved and I ended up falling off it – with the paint in hot pursuit. I wasn’t hurt but I got a good soaking, as did the lawn. I didn’t know whether to laugh or cry. Fortunately the paint I’d chosen was green, and it matched the grass. It could have been a lot worse!

Piece of good advice you were given?

A friend recently told me something the American poet Maya Angelou once said: “You can tell a lot about a person by the way they handle a rainy day, lost luggage, and tangled Christmas tree lights”. I couldn’t agree more.

A partner in Thrings’ corporate and commercial team, Jane Oakland acts for a wide-range of businesses on acquisitions and disposals, financing, strategic advice on managing change and appropriate structures including joint ventures and partnerships. Jane has lived in Bristol for more than 20 years and is a well-known member of the city’s business community: she is currently Chair of the Bristol International Balloon Fiesta organising committee, a member of the Bristol Chamber of Commerce and the Guild of Guardians, and a trustee of both the Bristol Drugs Project and Bristol Cathedral. Jane is also a regular guest on BBC Radio Bristol. Jane has been a member of The Academy for Chief Executives group in Bath, Bristol & Swindon since 2012

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Executive Coaching Survey – Stanford University

Infographic Design Via Step Shift

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WEB SITE VISITORS IDENTIFIED

I recently came across a B2B service that is imho quite remarkable!

Lots of businesses are like mine and spend huge amounts of time effort and money trying to drive traffic to their websites in the belief [hope?] that “some mud will stick”.

We all [well I do] analyse stats from Google Analytics / Adwords, but  the missing link is the ability to see who exactly has been visiting your site and do something about it.

I discovered a company/service called Lead Forensics [http://www.leadforensics.com] who basically can identify about 20% of your web visitors and give you not only the company name, but the pages they visited, how long they spent on your site, etc.

Researching the market before buying we came up with another company called A1webstats [http://www.a1webstats.com/] and ran the free trial they offered.

In our case we elected to go with Lead Forensics, partly because they had identified a visitor that lead to a £25k quotation before we had even signed up for the service. The results are that from our 750 or so unique visitors we can now identify c 150 of these a month and do something proactive about it. Actually this is testing our resources to deal with that many opportunities!

As databases of IP addresses inevitably grow, then the number they can identify will certainly grow.

In my business’ case, at average transaction values, it will take 1 additional transaction to cover the cost.

No Brainer? I’ll let you know in a years time!

In the meantime, to learn more about The Academy for Chief Executives, please give me, Jon Penn, a call.

 

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New Economic Update from Roger Martin Fagg

Unsecured lending is growing at 5%, credit card by 4%, mortgage lending by 2%, which is enabling consumption to grow a lot faster than income.

Although good for short term nominal GDP growth it is going to be a real problem when interest rates increase.

For the recovery to be sustainable, real post tax incomes have to be growing by at least 1.5% yoy which requires at least 3% on wages and salaries. At the moment the UK economy is showing signs of 2004-2007, when nominal GDP growth was maintained by credit expansion, not wage growth.

To read the full paper go here

To join with a dozen high performing businesses from different sectors and “learn with leaders” including speakers of the calibre of Roger Martin Fagg, contact me, Jon Penn.

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Survey confirms big problems & opportunities for S W Businesses.

Jon Penn

By Jon Penn

Whilst 89% of SME businesses in the South West responding to a recent survey by The Academy for Chief Executives said they were planning “increased growth” or “dramatically increased growth”, nearly 60% of businesses have to find other ways of funding that growth than traditional bank overdrafts or loans. For most businesses this was funding from cashflow or the Owners own resources.

Access to finance isn’t the only issue highlighted by the survey which went to a large number of SME businesses across the South West: 2/3rd of the business owners surveyed were “not totally confident” in their own abilities to lead their businesses. However we work with an outstanding group of business owners and leaders in ACE, from across all sectors, and one of the things I notice is that the really excellent leaders are always asking themselves –

What am I missing?  What could I do better?

so I am not surprised that so many SME owners and leaders marked themselves down! The follow up question – What would increase your confidence? – revealed an overwhelming desire for more personal development, time & space in order to think, build strategies, and develop their managers & staff.

Some curious contradictions are shown up in the survey. While nearly 90% of businesses are planning on Growth, nearly 30% are planning no change or even [for 3%] a cut back in Marketing Budgets. This may be explained as a result of the massive up switch to digital marketing reported, and where LinkedIn was by far the most popular site with well over ½ the businesses saying this was a high priority tool for them.

When answering questions about how they measured their progress, there was an overwhelming [91%] response indicating increased profit but only 20% measured this as a ratio of sales. Fewer still measured cash generation or return on assets.  This could mean that now the brakes are easing up on economic activity, people are going for sales volume without paying enough attention to which products or services or customers make the most profit, and then getting rid of some of the dead wood or even firing any toxic customers!

On staff development, the businesses reported placing equal emphasis on bringing “bright young things” into their businesses, as they did on developing their Boards and their R&D/New product/service development activities.  While it is great to see the equal importance attached to these different areas, the overall scores in terms of importance were depressingly low, scoring only 2 out of a possible 5; this speaks to me of a massive opportunity to improve the performance of local SME’s.

For the full survey report go here

The Academy for Chief Executives works in the South West with mainly SME owner managed businesses typically in the £2m to £50m turnover range, developing leadership and helping transform business performance.

For more information contact Jon Penn

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