I have just put the phone down to a friend of mine, who has a business back in the UK.  Like most in his sector, he is suffering due to the economy and also, like most he is heavily dependent on bank finance.

We were talking and he was telling me how revenues have nearly halved over the last 12 months or so and that trading is extremely difficult and he can't see himself lasting another 6 months!

I asked him if he had tried negotiating with the bank and he said that he had, some months ago, but not now as he feared he may push them too hard and they will foreclose.

I told him first, that a hell of a lot has happened over the last few months and second, that he is probably in better financial shape than the bank!  I also told him that he absolutely MUST start negotiating, asking for his payments to be suspended for a period, to get the business back to a positive cash flow and ultimately to profit.

In my business career, I have faced recessions and serious cash flow problems, even in 'boom' periods.  What I have learned most as a entrepreneur, is how to survive.  My idea of survival is to make sure that every creditor is aware of the problem up front and then to devise a plan to pay them back, but the plan must be realistic and achievable for all.

I have been 'bust' in my career before and at that time, my creditors would not negotiate with me and I told them that I was sorry, but I could not meet my payment obligations, their attitude was simple - pay or we bust you, which they did.  This was during the recession of the late 80's/early90's and I think one of the reasons why it occurred, was because I told them of my problems too late and they had effectively lost trust in me.  the next time I had a problem, I addressed it immediately and I worked out a deal with my creditors to pay them back.  At that time, I could have easily 'busted' the business myself and started a new one the next day, but I wanted to honor my obligations to the creditors and not lose the business.

There is always a deal to be worked out to solve any problem in business, but you have to be open and honest with everybody and the plan must work for all the parties involved.  Trust is the most important part of the relationship with financial institutions and trust can and is built and maintained in both good and bad times!

~Neil

We must not disillusion ourselves that the current financial crisis is just another 'crash' and all will be well after the 'correction'.

It is true that the capitalist society works on a boom and bust principle but when I talk about 'correction' in the current crisis, I am not talking about simply letting the system 'work itself out', I am talking about the end of the present global financial system as we know it  We have an opportunity to re-build a better and fairer system of wealth distribution - the world has paid a heavy price, especially the millions of wage earners who have lost their homes and savings. 

Before I delve into the 'real story', I want to take you back to the times when owning a home was reserved for the privileged few, when even getting a Bank account was a privilege and more importantly, when lending was subject to strict criteria.  Banking in those days was the 'professionals profession'.

Banking and Stockbroking were the professions of the privileged few and it was a 'club'.

Now let's take a look at the last thirty years - we have seen a drastic change in the sheer amount of lending, to the point where the lending criteria is simply, 'do you have a pulse?'You see, it is not easy for Banks to make money any more - not in the traditional fashion anyway!  Also, think of the amount of 'day trading' that occurs today in the markets.  Now before you all go crazy and tell me that this is the removal of the 'club' system and that it is opening up opportunities for all - think of the motives behind the system that actually created these so called 'wonder' opportunities! 

In the good old days, customers were recommended, mortgages were recommended as of course were all loans and importantly, the people were far more more creditworthy.  My Grandfather said to me one day ( I was nine and raised by my Grandparents and  my Mother), "son,if all of us stopped paying our mortgages, what would the Banks do)?  He was not far from the truth, but of course, because lending was far more restricted, there would have been a far greater chance that they would have got their money back and of course, the stigma of bankruptcy was huge in those days.  But a very good question all of you should ask your Bank today is that if each depositor walked into the Bank at the same time and asked for their money, would the Bank be able to cover it? Think about that question when you next negotiate an interest rate for a loan!

Simply put, we are in an era of hyper competition and the Banking system is far from immune - just look at the deals that have been thrown your way, just to get you to borrow money.  think of the automotive industry, it is no longer about buying cars, but getting the right type of credit.  think of huge global corporations - General Electric for example - where does most of it's revenue come from?  Not from manufacturing, but from the GE Capital arm of it's business - finance.  the same can be said of General Motors and it's GMAC finance arm.

..continued

~Neil

So Joe Calzaghe did it! Beating Roy Jones Jr last night was an amazing victory for Joe - coming off the floor in the first round to produce a totally convincing points win, having cut Roy badly during the latter part of the fight.

I was at the famous South Fork Ranch, here in Dallas last night for a Dallas cast reunion.  Seeing the cast was amazing , as I was glued to each episode when living in the UK and still watch the DVD series today. Great entrepreneurial and business education!

Funnily enough, I got talking to some people about the boxing and the usual negative Calzaghe comments come out about how he only fights washed up fighters etc - I asked them if they boxed themselves and was not surprised to hear the answer 'no' and then tried to explain to them that any fighter has the capability to inflict serious damage to another with just one punch.  Roy Jones Jr was and still is, in my opinion and incredible fighter and although he is not going to be as fast as he was in his prime, nobody would want to be on the business end of any of his punches.  You have to respect anybody who steps into the ring and I don't care who it is, there is always a chance for either fighter to win.  Watching Roy last night showed me he was far from 'washed up' and gave a strong performance right to the end, but it was Joe who won through and it was totally deserved. Whether Joe will retire is now the question - certainly, he has nothing more to prove…but…like every fighter, it's in his blood!

So another good night for Wales and all that needs to be done now is to get the Rugby team ready for the Grand Slam and do it all again!!

~Neil