You are currently browsing the category archive for the ‘Business’ category.

What a difference a year makes!

14 months ago, I had a secure corporate job (or so we tend to think working for large firms!), a nice paypacket, worked long hours (or so I thought back then), had no free time to do anything but work, and felt like my life was going nowhere fast. And I chose to leave – on my own accord. No-one pushed me, in fact everyone was pretty surprised.

Now – I work for our own company. I earn hardly anything, work 14 hour days and sometimes the whole weekend through which make last year’s long hours seem like a dream, I therefore have even less free time… hmmm…. oh yes, did I mention that I now feel that I’m having fun and feel really alive?

It’s a rollercoaster. It really is. One day you are in the pits of despair and don’t know how this month is going to turn out as there is not enough work. The next day you are inundated by client inquiries and can hardly cope. That’s what happens when you are a very small firm – it is a precarious and vulnerable state of affairs. You want to speed things up and work through this pain quicker – yet are scared of making the wrong move that will destroy the business. So anxiety changes into elation and back again. It’s pretty mad.

We are trialling a new business stream – developing our own software products. It’s very exciting and also very pressurised. There is a real sense of responsibility – a customer who tries the product and thinks it’s rubbish will not come back to you. It’s very different to working for my old firm where internal customers were captive ones – they had nowhere else to go, so sometimes they got substandard software but could not really do much about it (a crap project management and awful stakeholder engagement were to blame for this, of course – not that I am making an excuse for such unacceptable attitude).

We will see if our offerings are going to succeed in the next 4 months. If not, and if revenues do not take off by the end of the year, then I think we’ve not managed to achieve our goal. There is only that long you can go on for on nominal pay, working more than half your waking time. But if we crack it this year, then things will get easier. Wish us luck.

And whatever happens, I will always look back on 2009 as the year when we really had fun. Here’s to working for yourself and for your future!

CuriouslyInspired

Advertisements

We’ve decided to set up business blogs for each one of our key employees and link a feed from those to our website’s pages.

This seemed like a grand idea – I had a fair amount of experience of WordPress and was looking forward to writing a new blog. However we needed to create sub-domains (as in myname.mycompanywebsitename.com) for each one of us, and WordPress does not support this easily. So after a little bit of searching around we found Blogger that does seem to support sub-domains, and set up our new business blogs’ home there.

Arggghhhhh!

Honestly, 2 days into Blogger, I am so regretting we cannot use WordPress! For the life of me I cannot understand how even to find other people’s posts on Blogger. It seems you need to fill out your Google profile, specify your interests in a list or series of lists, and then click on those keywords entered to find people who write about the same stuff. This seems like a daft idea to me – what if I write something incredibly interesting today but that is outside my declared remit of interests as per my profile? No-one will ever get to read that!

I might be mistaken, but Blogger seems to not have the concept of a community approach imbedded in it. And that’s why I am not sure that us putting our business blogs there was a smart move for us – and maybe we will end up trying elsewhere later.

Anyone has had any experience of blogging on Blogger and do you think I am right in my understanding of how it works?

Over the last couple of days, we really have hit a new low as far as UK government’s incompetence in face of flagrant demonstration of corporate greed goes. I am, of course, talking about the scandalous pension due to be paid to Sir Fred Goodwin, previously the CEO of RBS, and the way the government has been handling this debacle.

Read the rest of this entry »

We’ve been trading since autumn 08 but have been extremely unfortunate in our earlier attempts to secure a great-sounding name for our business. The result of this debacle is that we are now facing the third change of name, which is extremely frustrating, so truly this needs to be the last and decisive choice made that we won’t live to regret.

Read the rest of this entry »

Happy New Year to you, my reader.

I’ve not been blogging since before Xmas. To some extent, there is so much negativity around in news headlines that it’s all a bit of a blur. So I’ve been focussing on work – our little IT business – and planning 2009 hiking challenges around Britain, one of our great hobbies. This certainly does make one feel much more positive and I think it’s crucial at this time to have an aspiration which takes you away from the decidedly average economic outlook.

I am extremely happy to see that although companies are more careful with their money, the IT sector is still quite buoyant – so it is not all doom and gloom for us at the moment. My first web-based project should go live at the start of March and this is keeping me very busy. It’s also terribly exciting to know there will soon be a website out there that I project managed. Read the rest of this entry »

My other half and I have recently started a small IT consultancy business. Earlier this week, I went on a 3 day business start-up course to recap on fundamentals of law, marketing, finance and accounting. The course was organised by a UK organisation called Business Link. Its objective is to provide free advice and coaching to new start-ups.

I was a bit sceptical of how useful the course was going to be, but I have to say it was quite good. I feel that it has left me feeling inspired to go out there and make money. They say that at least 50% of small business fail – it must be more than that though – and it’s not difficult to see why this is so. Our tutor said that we as attendees maximised our chances of being in the successful 50% by coming on this course. Judging by the responses of fellow students I am inclined to believe him.

People set up on their own for all sorts of reasons, but it seems the desire for independence and flexibility is one of the biggest drivers. However many are ill-prepared. The students on this course were full of enthusiasm and great ideas. Unfortunately a few were in for a rude shock when it came to the basics of accounting and finance. For example, as we were doing a cash flow forecasting exercise, there was a sharp intake of breath from one lady. She looked around shocked and announced that she just realised she could not implement her business idea for at least another year – she forgot about the costs of buying or leasing a van and other key equipment. And she already printed labels and logos for her products! She is lucky that she realised the problem now and not after investing even more into her start-up. But many more would not have a clue and launch straight in.

Granted, it is scary to make this step at the start of a recession however well-prepared one might be. The people I know – my ex-colleagues – are keeping their heads down and holding onto their corporate jobs for dear life. I really hope there would be no going back for me. I spent so many years dreaming about working for myself that making a U-turn now and running for the relative safety of full time employment is the last thing that I want to do.

It’s all in the mindset, it seems. Over the years, I have lost count of the “final straws” in my last job with my old employer, but I never thought I’d actually do it. Watching myself getting progressively more miserable has eventually tipped the scales in favour of drastic action. So here I am facing the unknown and the daunting ahead, trying to contain my excitement.

Doing a basic SWOT (Strenghts, Weaknesses, Opportunities and Threats) analysis on any new start-up is showing that Recession is a threat. However I firmly believe that it should also teach us rigorous cost control, discipline and focus, which will give us an edge in future years. Running a business with few frills but delivering a fantastic product or level of service to a customer is a very very worthwhile objective to achieve at any time of the economic cycle.

Wish us luck – and if you, my reader, need an IT project manager, maybe we should talk? 🙂

Here is something that did not surprise me at all today.

The UK government, it appears, knew perfectly well that the Icelandic banking system was heading for a meltdown – as recently as March 08. But it did nothing to help out some of the UK savers.

Back then, the Icelandic government was seeking help for its banking system as the confidence was starting to collapse and it needed money. Mervyn King, the governor of the Bank of England, commissioned several reports to assess the state of the Icelandic banking sector, and refused to help out when the results that came back were – predictably – not very reassuring.

Failure to act: Discussions earlier on in 2008 on the possibility of turning UK operations of Landbanksi, the now-collapsed bank, into a UK subsidiary, did not reach any conclusions. This means that whilst the UK government was aware of the impending danger to Landbankski’s UK savers, it failed to negotiate a status change for this branch which would have meant savers would have been covered by the UK deposit protection scheme when the collapse inevitably happened. It failed to act to aleviate the inevitable fallout.

Liberal Democrat treasury Vince Cable is now calling for an inquiry to understand the extent of UK government’s knowledge about the forthcoming crisis.

The government has recently confirmed that it will back private investors’ money, but this leaves charities and local councils at risk of losing all their money.

The savings debacle: Now, a huge amount of charities and public sector bodies have their money locked in collapsed Icelandic banks. Here is the quick list of councils that caught out in the meltdown.

Some councils have been warned: It appears that many did have a prior warning about the impending danger. Landsbanki, Glitnir and Kaupthing bank were all downgraded in Feb – March 2008 by credit rating agencies. The confidential advice to move savings elsewhere was passed to many councils by their advisor, Sector Treasury Services.

Some acted on this advice and moved the investments; some could not, as money was locked in long term deposits. Others – and this is the shocking bit – continued ignoring financial advice and even increased deposits made. This, unfortunately, just confirms some council’s incompetence in financial management.

Read more details here.

So, tell me something I did not know? The UK government that is wilfully closing its eyes to the inevitable and refusing to act early, and UK councils that do not competently manage their money. What a shambles.

 

Copyright 2008 by CuriouslyInspired

The role of stratospheric banking bonuses in encouraging the culture of greed and excessive short-term risk-taking by bankers has now been fairly widely publicised in the context of the financial meltdown of 2008. Is this the full story, however? Should bonuses be reduced, controlled, set differently, or abolished altogether?

Conflicting interests: The biggest problem that massive remuneration packages cause is the misalignment between the interests of bank executives, who want to maximise their year-end cash reward by any means open to them, and the companies’ shareholders, who are interested in long-term growth and stability of their investments. There is thus a different appetite for risk between these groups: bankers are risk-takers as incentivised by their pay structure; shareholders are much more risk-averse.

Banks’ top management will say all the right things about the duty they have to responsibly manage their shareholders’ investments. The truth remains, that if one’s banking bonus is many times the basic salary, in the heat of daily deal-making and profit-chasing it seems all too easy to forget this duty to the ultimate investor. It seems that presently, there is no 100% effective mechanism ensuring bankers are fulfilling their responsibilities to look after this money.

Ultimately, if a banker messes up and loses their firm a lot of money, they tend to be able to find another job elsewhere. And they might not feel strong pangs of conscience – as the money they gambled never felt like it was their own, duty to the shareholder forgotten, and their own assets retained. However if shares become worthless, shareholders feel the pain immediately as it was their own money.

Fancy words: Whilst banks’ management will all say (in AGMs, on their mission statements, in the press, etc) that they aim to maximise shareholder value, effectively they often allow more junior staff to do this with risky strategies that take a short term view despite being long term in their execution. This can backfire like it did with sub-prime mortgage investments in America: bankers who packaged these very dubious loans and sold them on as over-rated investment bundles only wanted to earn a bigger bonus in that particular year.  

Internal compliance and risk control departments – here to give comfort to senior management that all is well – cannot have kept tabs on such activities effectively, otherwise banks would not have gotten into trouble.

Thus we have a lack of accountability of the real deal-makers, plus a disconnect between senior management’s eloquent words of responsibility to shareholders and the reality. The few high-profile court cases where senior people were brought in before legislative bodies to answer for the negligent financial misdeeds of their firms are presently the exception, not the norm. And the real deal-makers are never being brought in to answer.

Banking bonuses in recent years: Let’s look at some recent numbers.

UK: In 2006, 4000 people earned more than £1m each in bonuses in the City of London.

In 2007, with the global credit crunch already in full swing, City million-pound bonuses seem to have been given to over 4200 people. In total, the City paid out about £14 billion in bonuses for 2007 to 1 million City employees – an increase of 30% on 2006 (2006 bonuses: $10.9bn. Source – Office for National Statistics (ONS) ).

Overall, bonus payments in the UK financial sector have more than trebled since 2003, when about £5bn was paid out (Source: ONS).

US: Wall Street bonuses were approximately $24 billion in New York City for 2006. In 2007, despite the credit crunch, mounting billion-dollar losses and write-downs on Wall Street, bonuses were $38 billion.

So, we can see that bonuses have been on the rise up until 2008, the year when the proverbial really hit the fan. Bankers have been heard justifying the increase in 2007 bonuses citing large profits of early 2007, before the credit crunch really hit. Yet again, it just shows bankers taking a short-term view of their activities.

Are bonuses to blame for the current crisis?  To some extent, yes, although there is a danger of over-focussing on bonuses themselves as THE only culprit.

We have seen how the promise of bonuses can encourage short term irresponsible risk-taking. But some trading strategies can yield large profits in a short space of time and not destabilise the bank.

What is really missing is the ability of management to assess the riskiness of activities of its deal-makers, and adjust their bonuses accordingly – not just look at the bottom line profit number earned in the current year.

For instance, if the effect of banker’s transaction can be felt over several years, rewards for its success should be deferred and spread over a number of years years and not paid immediately. So if a deal goes sour in the longer run, the individual will not get rewarded for it at all.

To encourage longer-term view of banking, more bonuses should be paid in shares or options rather than cash. Such share or option schemes can be sellable only several years down the line, encouraging the individual to stay with the firm, work hard and wait for their incentive schemes to come into force.

And I think that there needs to be more accountability by more layers of bankers – not just top CEOs and an odd rogue trader. Regulations should be watertight so that irresponsible behaviour is easier to spot and stop, and if need be taken to court.

Will bonuses be reduced? In the short term, definitely. 2008 bonuses are expected to fall 60% in the City.

However big bonuses are probably here to stay to some extent. This is partially because bankers make big investments to get top jobs (an MBA can set you back £100,000) – and give up their personal lives for their careers.

But crucially, I feel that the external regulators and internal risk controllers must step up their game and play a strong role in defining the guidelines and recommendations on how banking rewards should be set. The objective is to incentivise responsible risk-taking behaviour that takes a long term view.

If this line is taken and successfully implemented, then surely rewarding some exceptionally hard working bankers will not be such a big deal – as long as we know they are taking good care of our finances?

Then I would suggest the answer becomes – bonuses should to some extent be controlled through following new regulatory guidelines and should be set using different methods and types of incentive, but not abolished or reduced on a whim.  

… but the culprit goes unpunished today: What hurts most is that even as the global credit crunch is unravelling this year, bankers who caused it and earned their massive bonuses in recent years are currently in the Bahamas sunning themselves not knowing how to best spend their money.

Apparently there is a real shortage of luxury accomodation in exotic tropical destinations.

And that really shows that we are letting the real culprits get away with it today.

 

Copyright 2008 by CuriouslyInspired

As the global credit crunch and deterioration of confidence is starting to bite Russia harder, Russian banks are experiencing panic deposit withdrawals. Add to this the rapidly falling stock markets – and you have a dangerous cocktail of financial instability.

Customers want their money back: Last week, Russian bank Globex banned depositors from taking their money after a run on its deposits sparked by crumbling confidence. It is the first bank to suffer this problem in 2008 – but undoubtedly not the last. A number of other banks also experienced an unexpected rise in people withdrawing their money and closing their accounts. Long queues of investors desperate to have their cash back are starting to form outside smaller banks. Many failed to get their money as bank operations were suspended. So this crisis is not doing anything for the average consumer who is now seriously worried about losing their hard-earned money.

In the last couple of months, three banks have been forced into mergers because of the liquidity crisis brought on by the global credit crunch. There is anecdotal evidence that banks are being bought for nominal sums, one of them quoted to have been sold for $5,000.

Bailout Russian style: The Russian government’s financial bailout package of $120bn is aimed primarily at large captive state-controlled institutions such as Vneshtorgbank (VTB – the Bank for Foreign trade) and Sberbank (the Savings bank). The government also intended to spend a portion of it on shares purchase to support the tumbling stock market, but not so much at lending activities. Overall however, there seemed to be insufficient detail and transparency about the total package which caused the market a lot of concern.

The package itself is an astronomic size of money in terms of its size relative to Russia’s GDP. For comparison, US’s $700bn bailout is around 5.5% of its GDP (US GDP is approx $14trillion), whereas Russia’s bailout is about 10% of its GDP (Russia’s GDP is approx $1.2trillion). Since the bailout has been announced in September, it has had little impact on the Russian stock market, which fell down around 60% from its high in May 2008.

The crash of Russian stock market has been the most dramatic event of all the world’s stock markets collapses in 2008.

Market correction: In itself, the Russian crash is a huge adjustment back to the shaky economic fundamentals. Russian economy is still set to grow by about 7% in 2008 according to the IMF. However, the foreign investors who were attracted by speculative expectations of high returns in Russia are all gone and the money is gone with them, making the huge market bubble go “pop” spectacularly quickly.

Financial outlook: This is tricky as there are a few moving parts. Oil is a key one, but I am not going to touch upon it today, only noting that a fall in world oil prices is causing major concern to Russia. 

From the point of view of banking, we are seeing the start of consolidation of the Russian banking sphere, and there is a fear, which the government will strongly deny, that the financial situation is pretty grim: the major concern is that widespread bank failures will spark panic. Still, the population is pretty pleased about one thing – that a bunch of super-rich Russian oligarchs will lose their ill-gotten money in the stock market crash. That’s some consolation, isn’t it?

 
Copyright 2008 by CuriouslyInspired

The euphoria of earlier this week, which followed an announcement of the UK bailout by Gordon Brown, has seemingly finished – as it was feared to. Shares have yet again collapsed. Asia showed probably the worst results today, with the Nikkei dropping 11% on the 16th October. As I am writing this, the FTSE has fallen below 4,000 again. And Dow will be perilously close to its 8,000 mark.

Shifting sands: Investor sentiment, similar to voter sentiment, is a funny thing. Markets are driven by it, same as elections are won on the strength of popular feeling. However stock market sentiment is also fickle and impermanent, and prone to wild swings especially in troubled times such as now. We are nowhere close to being out of the woods yet. In the weeks to come, there will be significant market volatility, and the market will trend downwards. Perhaps my fears of FTSE at 3,000 have yet to be realised.

Credit crunch biting hard: Interbank lending is still pretty frozen, although short term rates have fallen a little – with banks still not keen to do any longer term lending. Despite all government intentions and declarations, banks cannot be forced to start lending against their will if they do not have confidence in their financial partners. Somebody compared this to “asking water to flow upstream” – just is not going to happen. The impact of this has already spilt out into the real economy: businesses are finding it very hard to refinance their existing loans. This will have a negative impact on the whole economy, reducing business activity and forcing some to cease trading altogether.

Recession: What is driving the stock markets plunges at this very moment are investors realising that we are heading full steam into a global recession – and the existing bailout funds will not be enough to prevent it. A lot of government money is being pumped into the banking system – yet as long as investors think we are heading for a recession, they will keep on selling, and the money will keep on burning up and vanishing into the bottomless pit. It’s a vicious circle which under the current financial system, only restored consumer confidence can stop – and we just are not getting any positive economic news for this to happen. Read the rest of this entry »

Pages

October 2017
M T W T F S S
« Nov    
 1
2345678
9101112131415
16171819202122
23242526272829
3031  
Bookmark and Share