Dealer Support November 2012 by Intelligent Media Solutions

November 2012 Issue 209

INSPIRING BUSINESS SOLUTIONS FOR DEALERS

DEALER SUPPORT NOVEMBER 2012 | ISSUE 209 DEALER GROUPS | FM GUIDE | MARGIN V. PROFIT

2012 DEALER GROUP REVIEW The latest and greatest from the buying groups this year FM GUIDE The latest tips on selling facilities management CASH MARGIN V. PROFIT Better to pursue percentages or put cash in the bank?

FROM THE EDITOR

A fast-track guide to facilities management FM GUIDE

DEALER INTERVIEW

Dovetailing sectors

Bates Office Supplies is one of many dealers trying to clean up in facilities

page 18

page 48

management. George Carey talks to the company’s chairman Carl Dovey about his experiences

There are some people – not that I know any of them – who might stifle a yawn when you mention you sell ‘office products’, but start talking biscuits, chocolates and baristastyle coffee and those yawns might stifle themselves. Indeed, as many of you know, what office dealers sell has progressed significantly since the days of the humble paperclip. But how many of your customers know that? Our biannual FM Guide appears in this issue (p35), and addresses all the trends, innovations and ideas you need to sell more facilities management – a category that has evolved significantly lately. Take catering: Where once amorphous tins of coffee and bulk-bought boxes of builders’ tea sufficed for any office, now there is a higher expectation. Emulating a trend in America, UK plc has taken to favouring espresso-based coffee that looks more like what you’d see in Starbucks than the staff room. The tea-drinkers have become no less fussy. In our office – one of 20 people on a good day – there is practically a different type of tea for every one person, and even then, some choose to bring in even posher varieties at eye-watering prices. However, eye-watering prices could well mean money in the pocket of your average office dealer. Speaking of water, the best coffee I’ve had a while was in a little hipster joint off St Christopher’s Place near London’s Selfridges. What made it so special? Filtered water, they said. So, We’re looking to bring in specific dealers: You can provide the high-end coffee; you can source people, because in my eyes that’s the only way that you the machines, cups, sugar and even milk; and, now, working in can do it properly conjunction with a water cooler company, you can provide the posh water too. The dealer groups and wholesalers are clued 49 into this too – Integra and VOW are just two who have recently partnered with water cooler companies to offer services to dealers. Because, like MPS, water coolers are a service that keep those customers in your reach. But of course catering is only one very small part of facilities management – and facilities management is only one very small part of what you, as an independent dealer, can offer end-users. Just make sure you’re offering as much as you can. And if they don’t know you offer it, then, really, you don’t. DEALER INTERVEIW

t Bates Office they know a fair bit about the industry, and they should do, the company has been trading since 1962. Back in those days it was typewriter sales and repairs, a trade that you suspect wouldn’t prove particularly profitable these days. As with any business that has been around since the days of the fab four and the Cuban missile crisis, it’s had to adapt over the years to stay relevant and attractive to an increasingly different office environment. In 2011, the company added to its considerable expertise with the acquisition of Doveys Office. Doveys’s owner Carl Dovey is now the chairman of Bates and is currently enjoying his second stint as chairman of Integra. One of those changes the company has embraced in more recent years has been to become more of a one-stop shop for their customers, and this has included supplying them with everything they need for facilities management. From coffee to cleaning products, FM represents a huge increase in product offering and turnover and Bates is one of many dealers looking to take full advantage. Specialising While the move into supplying these products has been profitable, it hasn’t all been plain sailing, as Dovey explains: “I think all the new opportunities we have are specialist areas and, contrary to what we’ve been told by the wholesalers and some of the gurus in the industry, it’s not that easy to break into the marketplace. You need the expertise to do it.” That’s something that Bates is looking to remedy by bringing in some fresh blood. “We’re looking to bring in specific people, because in my eyes that’s the only way that you can do it properly. We want to bring in people from those industries that are already selling into those markets, I think you need people with that expertise on the ground.” The company’s relative inexperience in FM sales is reflected in the fact that Dovey thinks these products only account for between seven and 10% of its total sales. It’s an encouraging base from which to build though, and growth in this sector and other new areas is what everyone at the company is intent on achieving. Dovey expands on the problems of breaking into new markets, and particularly FM: “The issue is that I think we were led to believe it was a very soft market but I think it’s actually quite a mature market that’s been around for a long time with an existing structure that’s quite well supported.” There are also challenges around the different contacts that need to be made at companies and the new approach required to sell these goods which are, relatively speaking, still quite new to dealers: “Although this channel is linked to our customer base, it is usually a different purchasing

NOVEMBER 2012 www.dealersupport.co.uk

stream and personnel that we have to engage with. The market also already has a supply chain very experienced in the art of selling this type of product.”

Product gap He does believe, though, that with time and experience, dealers can gain the expertise necessary to overcome these issues and do a lot of business with these products: “I think it’s the same as the traditional office products, you go in with a few loss-leaders and then build on those relationships. They need exactly the same selling scenario but I don’t think we’ve yet nailed how to manipulate these products as well as we do others.” Dovey is of the opinion that changes from all of those involved in the process are required, if FM sales are really going to take off. “I think the wholesalers have done quite a decent job on the range of products but it’s still not quite as good as it could be. Where stock’s concerned, it’s difficult to join up the dots because at the moment we’ve got gaping holes in the range of products that we’re able to offer. At the moment, some products are just not in the ranges that are available from the traditional wholesalers.” He continues: “So we then have to look for existing suppliers in the marketplace and that’s when you find out the gaps that are missing, like paper rolls and some cleaning products.” When pressed for advice for other dealers looking into supplying these products, Dovey preaches caution to those thinking they are in for an easy ride: “It’s not as easy as some want us to believe. It is a very specific sell with expert suppliers already active in the market.” He concludes by pointing out that some have looked at this market already and decided that it’s not for them: “It’s always been competitive. Lots of dealers never tried this market and some tried it and came away from it.” His caution is based on years of experience so is clearly worth heading, but the fact that Bates is pursuing this line of sales, shows that there is clearly money to be made with these products. DS

www.dealersupport.co.uk NOVEMBER 2012

“Margin management is the most important thing a business can do” MANAGING EDITOR Julia Dennison julia.dennison@intelligentmedia.co.uk

DESIGNER/PRODUCTION Peter Hope-Parry peter.hope-parry@intelligentmedia.co.uk

REPORTER George Carey george.carey@intelligentmedia.co.uk

SUBSCRIPTIONS MANAGER Natalia Johnston natalia.johnston@intelligentmedia.co.uk

SENIOR ACCOUNT MANAGER – MEDIA SOLUTIONS Matthew Moore matthew.moore@intelligentmedia.co.uk

PUBLISHER Vicki Baloch vicki.baloch@intelligentmedia.co.uk

ACCOUNT MANAGER – MEDIA SOLUTIONS Krystle Davis krystle.davis@intelligentmedia.co.uk DESIGNER Sarah Chivers sarah.chivers@intelligentmedia.co.uk

managing editor

intelligent media solutions suite 223, business design centre 52 upper street, london N1 0QH tel: 020 7288 6833 fax: 020 7979 0089 email: info@intelligentmedia.co.uk web: www.dealersupport.co.uk web: www.uspmagazine.com

Annual subscriptions are ABC available at a cost of £68.00 for UK and overseas by surface mail, £90.00 for airmail. Subscription enquiries should be sent to the above address Dealer Support is the leading monthly publication for dealers in the business supplies industry. It provides information on the industry (both in the UK and overseas), information for and about the UK’s independent dealers, as well as information and advice on running a small business. The views expressed in this magazine are not necessarily the views of the publishers. Copyright of all the material published remains with Intelligent Media Solutions Limited. No part of this magazine may be reproduced, copied, stored in an electronic retrieval or transmitted, save with written permission or in accordance with provision of the copyright designs and patent act of 1988. Printed in the UK by Buxton Press www.buxtonpress.co.uk

INSPIRING BUSINESS SOLUTIONS FOR DEALERS

CONTENTS November 2012

52 INDUSTRY 6 NEWS AND VIEWS News and views from the dealer channel this month 10 DEALER GROUP REVIEW An update on the latest and greatest from buying groups this year 18 CASH MARGIN V. PROFIT Is it better to pursue percentages or get cash in the bank?

PEOPLE 26 BISHOP TO Q4 Simon Bishop from Tunbridge’s Bishops Office Products on the future of his business and the channel at large 30 IN THE COMPANY OF ONE One Office branches out to become Nectere’s Irish rep

FM GUIDE 35 GUIDE TO FACILITIES MANAGEMENT See inside for FM news, views and overviews

MANAGEMENT

50 GROW YOUR BUSINESS This month: Scanners and document management 52 CALLING IN YOUR DEBTS Top tips for debt recovery 56 MONEY TALKS The ins and outs of SME financing 60 FINAL WORD VOW’s FM expert, Debbie Nice

Flip over for the November edition of USP magazine

INDUSTRY

NEWS

NEWS Old Trafford plays host to Altodigital MPS drive Altodigital, a leading independent supplier of digital print and document solutions, hosted a technology expo earlier this month at Old Trafford to showcase its latest print management technology and demonstrate how businesses can save money, time and resources by adopting a managed print service (MPS). At the home of Manchester United, businesses discovered how they can save as much as 40%, streamline their business processes, increase efficiency and productivity, and achieve a greener carbon footprint by using MPS. Independent industry experts were also on the ground to offer advice and practical tips on how businesses can improve their document operations. Technology pods played host to live demonstrations of the latest print and document solutions and delegates were able to speak with independent industry experts to help measure the true cost of their printing. Altodigital also had its in-house security specialist on hand to conduct a demonstration of hacking a print device in real-time, highlighting the vulnerabilities across print networks and the potential breaches an organisation could be exposed to. To top it off, attendees were treated to a tour of the Theatre of Dreams and its museum. Altodigital’s Andy Hargreaves said the event was a “great opportunity for business professionals to see, first-hand, what a managed print service could do for them”. Research from analyst house Quocirca reveals that 73% of businesses want to reduce the cost of consumables, while 68% would like to improve tracking and visibility of print costs, “but,” says Hargreaves, “the issue is that most simply don’t know how to go about achieving this”. He continued: “The majority of organisations still operate a fragmented print infrastructure, with different devices, supplies, support and maintenance. “This can often make it difficult for them to maintain their printing fleet effectively, leading to uncontrolled spending on consumables and spiralling energy bills, leaving them exposed to unknown costs.”

UK office consumables reseller OfficeScape Business Products was celebrating after hitting its first-year turnover target of £1.6m. Based in Harlow, Essex, the company employs over 30 people and recently sold to its 5,000th business customer after only 12 months in business. Launched in October 2011 by co-founders Andy Greening, ex-MD of Supplies Team, and Trevor Corrigan, ex-sales director of Supplies Team, Pitney Bowes and VOW, Officescape expects to more than double revenues to £3.5m next year. It will do this, it says, through product proliferation into newly acquired customers and a continued focus on new business acquisition.

Data Integration wins Reseller of the Year Xchanging, the business process, procurement and technology services provider and integrator, has won Palo Alto Networks’ Reseller of the Year UK award. The award was won by Xchanging’s network and systems integration company, Data Integration, as a result of raising sales by 350% over the last 12 months. Data Integration resells on behalf of leading network and security providers and has a long-standing relationship with Palo Alto Networks. It beat five other platinum partners to first place. Garath Lauder, sales director at Xchanging, commented: “We are delighted to be awarded Reseller of the Year again. There is a growing appetite for next-generation security and this year we’ve installed and supported Palo Alto Networks’ equipment at both existing and new customers.” Data Integration also partners with Extreme Networks, Juniper Networks, Infoblox, ForeScout, Aruba Networks, Entrust, Radware and A10 Networks.

85%

Photograph: naipung/Shutterstock.com

Ex-Supplies Team dealer proves the only way is Essex

of buyers research the web for reviews and feedback before making a purchase (Source: Gotjuice.co.uk)

NOVEMBER 2012 www.dealersupport.co.uk

NEWS

Two more indie dealers go for Spicers’s ‘Gold’ The winner of Spicers’s September Going for Gold incentive has been revealed as Hertford-based dealer JKL Solutions, which received a £10,000 Spicers credit, with Buckinghamshire’s Talking Business taking the runner-up prize of £5,000. The two award-winners were announced at a networking event at Spicers’s new premises in Heywood last month. Hosted by CEO Alan Ball, the highlight of the gathering, which had more than 40 people in attendance, was an address by Spicers’s board director, Lord Digby Jones. Ball gave the audience an update on the latest projects delivered by the wholesaler and invited questions from attendees. The team from Fellowes presented its latest trade promotion, exclusive to Spicers, where dealers can win tickets to a major sporting event of their choice and gift vouchers by growing their sales across storage and shredding products between October and December. Both Ball and Lord Jones picked the two winning dealers at random for the final prize draw of Spicers’s latest incentive. Gavin Smith, sales director at JKL Solutions, said Spicers’s Going for Gold promotion had been a great experience for him and his team, who used the extra incentive to grow, despite what he called “challenging summer months”. He continued: “We are thrilled to have won this latest event and having the opportunity to listen to key note speeches from Alan Ball, Spicers CEO, and Lord Digby Jones has also been a real treat. Thank you to Spicers for coming up with a great sales drive; we have had great fun delivering our increased growth on route to this victory.” MD for Talking Business, Chris Hills said he was also “thrilled” to hear his company had won the second prize of £ 5,000. “This really is the cherry on the cake for a sustained period of growth for Talking Business,” he commented. “We have majored with Spicers for around 20 years and in my opinion this was the best promotion they have ever run; we certainly used it as a source of motivation over all three months. The money will be invested wisely in sales and marketing. Thanks to Spicers for what was an excellent surprise.” Spicers has confirmed that off the back of this success, the wholesaler will be announcing shortly a new dealer-facing incentive scheme that rewards growth and business development.

WESTCOAST DEALERS DRIVE HOME £10K Westcoast presented two of its resellers with prizes of a lifetime for Microsoft incentives that ran over the summer. In September, Berkshire-based reseller Softcat was awarded £10K in prize money as part of the Microsoft ‘Wish you were here’ incentive. While last month, St Albans-based reseller, Viglen, was presented with a new Mini Copper for its efforts in the ‘Microsoft Drive your Renewals’ incentive. The ‘Wish you were here’ promotion ran for two months, during which resellers were mailed scratch cards for hitting their personalised Microsoft targets. Every scratch card was a winner for one of a whole range of prizes, from weekend breaks to spa days and the grand prize of £10,000. The team from winner Softcat was with presented a cheque by Westcoast sales and marketing director, Alex Tatham, who commented: “We are delighted to award Softcat with the money. I hope they enjoy spending it as I know they worked hard to hit their targets during the promotion.” During the ‘Microsoft Drive your Renewals’ promotion, of which Viglen was the winner, resellers were awarded tickets into the draw for the Mini each time they placed a Microsoft renewal through Westcoast.

The winning team from JKL accept their prize

www.dealersupport.co.uk NOVEMBER 2012

INDUSTRY

NEWS

Probrand scoops reseller award

BOSS WINNERS

The annual BOSS Awards took place in London last month. The winners of the 10 categories were: Technology services provider, Probrand, has been awarded the title of Reseller of the Year 2012 by Acer. The award follows a good year for Probrand, working closely with partners like Acer, including delivering a campaign with the worldwide partner of the Olympic movement, offering Olympic legacy ICT to schools. Acer partner account manager, Kath Slaughter, said: “Probrand is a shining example of how a tenacious reseller should work in partnership with a vendor, delivering mutual, tangible benefits with relevance to a bigger strategy. “Throughout the year, the team has demonstrated a ‘go to’ attitude, generating ideas and showing agility that has matched and often exceeded key deliverables as part of the Acer Partner Programme. “Importantly, the business can show sales success as a result of maximising of our working relationship.”

CATALOGUE OF THE YEAR Staples Advantage DEALER EXCELLENCE • Up to £5m turnover: Phillips Business Solutions • Over £5m turnover: Langstane Press ENTREPRENEUR OF THE YEAR Kiran Mistry, Colop UK ENVIRONMENT AWARD • Durable (Manufacturers) • Lyreco (Individual Dealer Group, Resellers and Distribution) E-TAILER OF THE YEAR Paperstone MANUFACTURER MARKETING EXCELLENCE Stabilo

news in brief...

PRODUCT OF THE YEAR Smartball, Stabilo

ARMOR NOW AVAILABLE FROM ROBINSON YOUNG

VOW TAKES A BITE OF THE OTHER BIG APPLE

Armor consumables will no longer

VOW has added Apple iPad, and a

be in the Spicers catalogue and will

range of accessories, to its

now be distributed by Robinson

technology category in response to

Young. Armor’s corporate sales

feedback from VOW+ partner

director, Bob Reynolds said

resellers. All 12 versions of the

Robinson Young had “an enviable

third generation Apple iPad are

reputation within the UK non-food

available from the wholesaler, as

market”. The distributor promises

well as the Apple Smart Covers

to deliver directly to end-users.

and a variety of other accessories,

“We are confident that with the

including chargers, headphones,

significant stocks of Armor product

stylus pens, security cases, docks

in the RY warehouses, and their

and stands, and compatible

expertise in logistics, this

keyboards. There is also a variety

partnership will provide a cost-

of cleaning products available from

effective means to meet the needs

AF specifically for use on mobile

of the UK market,” said Reynolds.

devices, like the iPad.

NOVEMBER 2012 www.dealersupport.co.uk

RESELLER MARKETING EXCELLENCE Office Friendly Dealer Association YOUNG PROFESSIONAL OF THE YEAR Michael Hanlon, Nectere BRAND OF THE YEAR: • Traditional Office Products: Post-it • Facilities Management: PG Tips • Furniture: Bisley • Technology (incorporating EOS): HP BOSS LIFETIME ACHIEVEMENT AWARD Stanley Vaughan

DIARY 22 November Integra’s national conference Cotswold Water Park Hotel, Gloucestershire Integra-Office.co.uk 13 December Spicers 2013 Business Experience Stoneleigh Park, Warwickshire Spicers.co.uk

MAXEPROMO: BUILD YOUR OWN CATALOGUE A marketing programme described as “the first of its kind” in the industry is promising to help resellers stand out from the crowd. Office Friendly Dealer Association has launched Maxepromo, an internet-based tool that allows customers to produce bespoke mailers, flyers and catalogues. Users have access to more than 20 templates – from ‘Bestsellers’ and ‘Back to School’ to ‘Dustbusters’ and ‘Mailroom’ – and more than 1,000 products from leading names such as Fellowes, Kimberly-Clark, Avery, Bic and Nestle, as well as the full Q-Connect range. Dealers can select personalised colour schemes and straplines, determine promotion timings, amend pricings and view their profit margins, before receiving their mailer within 48 hours in PDF, email or flick catalogue format. More than 60% of Office Friendly members are already using Maxepromo, but membership is not mandatory to take advantage. “I’ve been looking for more than 20 years for a product that would give each customer a distinct and personalised marketing platform,” said MD Steve Harrop. “No one has to be the same in look, content or price. “Whether you need a single page or a 16-page brochure, a traditional mailer or a full colour contract pricelist, Maxepromo is an incredibly versatile, low cost product – and available to everyone.”

For more information about Maxepromo contact Marilyn Caster at Office Friendly on 0114 2566300 or marilyn.caster@officefriendly.co.uk

INDUSTRY

REVIEW

Group therapy

NOVEMBER 2012 www.dealersupport.co.uk

REVIEW

It’s been an eventful year for dealer groups and they’ve got plenty of new services to shout about. George Carey gets the word from the groups on what they’ve been doing to improve their offering and your business

lthough government projections have recently shown that we are finally seeing some long-awaited growth in the economy, it has been an extremely difficult past 12 months and times are still tough for independent dealers. Lucky for you, then, that you can call on your dealer groups for help and advice, and what seems to be an ever-expanding list of services. So, what are they are doing to ensure that they stay competitive and earn their membership fees?

Marketing Far from their humble beginnings as buying groups, the modern dealer group offers a wealth of marketing experience to its members. The extremely Darwinian nature of the market in lean economic times means that these groups are having to improve upon their marketing services year-on-year to keep their members loyal and in business. The humble catalogue is an important weapon in the dealer’s arsenal and the groups are never far from their next catalogue innovation to keep things interesting or target a new sector. Catalogues can also be tweaked for added savings and convenience as Alex Dunn, sales director at Superstat, explains: “We’ve got a brand-new A5 catalogue that’s quite exciting and different from anything else that we’ve done before. We’ve just closed the book on it and we’ve sold more than we did last year. It was a bit controversial with a few people at first, but it’s more eco-friendly, cheaper and easier to produce and send out.” In addition to that, the group is launching a new marketing campaign aimed at hitting particular sectors at the most opportune times, as Dunn divulges: “There’s something different every month and aims to hit the right things at the right times throughout the year. It’s predominantly hard copy because we’ve found that it’s having more impact at the moment, because the amount of hardcopy mail that you get now is reduced.” While Superstat unveiled its new leaner, meaner catalogue, Office Friendly offered its members improved customisation options with its Build Your Own marketing suite, hosted on the cloud. Steve Harrop, Office Friendly’s MD, is enthusiastic about the services capabilities: “Our dealers can go online and make a virtual catalogue of up to 16 pages with any products that they want; any colour scheme; their own branding and their own pricing. It’s versatile, so you can have it as a PDF, DVD or flick catalogue and you link it into the e-marketing that we have.” Not content with that format, the group will introduce hard copy customisable catalogues as well. “We’re now going to move it on to the next step in the next six months and have a build-your-own catalogue. They can put products where they want and use it as a typical mailer or create a contract price list,” says Harrop. Nemo is using a new catalogue to target schools that Tim Beaumont, the group’s MD, expects will help its dealers to break into this extremely lucrative market. Beaumont says: “We’re having a big push on the education market this year. We’ve created a 32-page specialist education catalogue and another mini, eight-page catalogue for our members to give them an enhanced presence. To ensure that the catalogues have maximum effect, we’re backing them up with telemarketing.” Office Club is also trying to capitalise on the potential business that schools offer to its members, as its merchandising manager, Allison Fishlock, explains:

www.dealersupport.co.uk NOVEMBER 2012

INDUSTRY

REVIEW

“The back-to-school market remains an important period in the calendar for retailers; despite changes in purchasing habits our retail members still see a considerable upturn in footfall during this period – our back-to-school marketing and purchasing programme enables dealers to turn this opportunity into increased sales and margin on traditional school products, as well as the new and seasonal items that are on offer via arrangements with our approved suppliers.”

Web wizardry Regardless of whether individual dealers are looking to emulate Euroffice or haven’t quite got around to getting a website made yet, it’s important that dealer groups can offer their members help in this sometimes daunting route to their customers. Aidan McDonaugh, MD of Integra, recognises the importance of this type of service for the dealer groups and says that it is something they are always looking to evolve: “We’re working internally to improve our ecommerce data, in terms of data management, image management, descriptions and attributes for each product, just to make it a better consumer experience. We’ve also invested in new servers to make sure that everything runs as smoothly as possible.” Beaumont says that Nemo is trying to help its members out in their online endeavours as well: “Compare My Office has been very successful and then another 47 of our members have got an ecommerce solution, which facilitates outward sales for the customers. It’s going well, all the sites are up

NOVEMBER 2012 www.dealersupport.co.uk

“We’re working internally to improve our ecommerce data”

and we’re getting regular orders. It’s more about creating leads. We want very warm leads that we can pass on to the local dealer. They then go and try to convert that interest into a regular account customer.” Superstat has opted for a personal approach to helping its dealers out their what they want to do with ecommerce, regardless of what that is. It’s a clearly defined approach to this issue that the group feels is the most important thing. Dunn elaborates: “We’re trying to help them define their strategy. Do they want to be the next Euroffice or do they just want a simple web presence. We try to help them negotiate that minefield without wasting money, because if you’re not sure what you’re doing, it’s very easy to plough lots of money into a new site with very disappointing results.” For those of its members looking to do business on the information super-highway, the group has an offering to help. “Supermarketonline is a national web presence that delivers orders to dealers, and then they deliver the last mile to the customer,” says Dunn. “So rather than them spending loads of money on SEO individually, we’ve pooled those marketing budgets to promote one national website. It’s pushing £1.5m turnover. Getting more repeat orders from the site is the challenging part.”

Innovations Without doubt, the group that has undergone the biggest face lift is Advantia, which has changed its entire business

INDUSTRY

REVIEW

model. The group and its members entered a partnership agreement with Office2office, moving away from the traditional wholesale model and outsourcing logistics to them and running the Banner brand. CEO Bob Geens is pleased with the results after enduring a predictably testing start to such seismic changes: “It’s a huge change for us, January was very challenging for lots of reasons. It was a phenomenal month for sales, so that combined with the new business model caused us some service issues but it’s settled down now and is working very well.” While he says that members have generally seen some improvement in profits, it is convenience and reduced stress from the dealers’ working days that Geens sites as the predominant advantage: “Our members are really starting to see the benefits. Although the increased margin and product ranges are great, the biggest difference is that now they don’t have to worry about the logistics. It’s taken a lot of noise out of their business and they’ve got more time to concentrate on their biggest strength, which is sales. It was always part of the plan to make them more profitable and we appear to be doing that with the cost savings and improved margins but in this day and age, time is priceless.” With most dealers falling into the small- and mediumsized business category, it is rare that they are able to afford an in-house PR team or expensive agency fees and this is something that Integra has sought to address with its latest offering, as McDonough explains: “We’ve got a new PR service and we’ll help dealers with email marketing. If you want us to raise your profile within the industry or regionally, we’ll draft PR releases and send them to the press. We

NOVEMBER 2012 www.dealersupport.co.uk

“It’s taken a lot of noise out of their business and they’ve got more time to concentrate on their biggest strength, which is sales”

charge that on a monthly basis, based on the time required. We’re also launching some very high-end print solution software to help the dealers supply print.” Quality salespeople are, of course, hugely important to keep dealers businesses prosperous and Superstat has focused on the next generation with its latest innovation. “We’re doing an exclusive NTA training programme with P1. We’re the only dealer group that’s doing a dealer group version and the benefit is that they’ll be trained with our sales and marketing tools,” says Dunn. For those who need a rather speedier improvement in their sales capabilities, Office Friendly’s latest service, Call2Action, may be of interest. Harrop has high hopes for the initiative: “We’ve created a telemarketing team. There are big costs involved with bringing on a telemarketing person, so our members can outsource that at a very competitive price. We have a team of three people who have a full day of training every week, with a professional trainer.” While members get a discount, other companies can use the service and Harrop has some impressive examples of clients who have already used the service: “Newell Rubbermaid, Fellowes and Rico have used it, so it’s going down well. We can cleanse someone’s database or create one from scratch and we charge them half the price of any other telemarketing service.” Far from resting on their laurels, it appears that the dealer groups have been hard at work, improving their existing services and expanding into some different areas, which promise to offer their dealers even greater value for money.

16 Integra Office Solutions Ltd www.integra-office.co.uk

Integra House, Vaughan Court, Celtic Springs, Newport, South Wales NP10 8BD Aidan McDonough, MD

1997

36 280 From £70 per month

£600m

Yes 496 8,700

N/A

www.advantia.co.uk

64 Albion Court, Attleborough Road, Nuneaton, Warwickshire CV11 4JJ

Bob Geens, CEO

1989

£2,500

£120m

Yes

440

7,294

WEBSITE

FULL POSTAL ADDRESS

BEST CONTACT

ESTABLISHED

PAID STAFF

NUMBER OF MEMBERS

ANNUAL COST OF MEMBERSHIP

COMBINED MEMBERS’ TOTAL SALES

GROUP CATALOGUE

NUMBER OF PAGES

NUMBER OF SKUS

INTEGRA

HOLDING COMPANY

ADVANTIA

Vital statistics

NOVEMBER 2012 www.dealersupport.co.uk

8,000

444

Yes

£687m

From £30 per month

59 members, 180 associate members

1986

Kath Slattery, business development manager

125b Long Street, Atherstone, Warwickshire CV9 1AB

www.nemogroup.co.uk

N/A

NEMO

Approx 5,000

416

Yes

£240m

Varies

260

1992

Keith Lacey, business development manager

31-33 Chapel Hill Huddersfield West Yorkshire HD1 3ED

www.officeclub.co.uk

N/A

OFFICE CLUB

Approx 9,000

356

Several

£350m

Varies

273

SO – 2006

OS – 1996

OP – 1994

Kim Gladstone, head of business development

Northumberland House, Drake Avenue, Staines, Middlesex, TW18 2AP

www.xpd.co.uk www.officepoint.co.uk www.officestar.co.uk www.simplyoffice.com

XPD Ltd

SIMPLYOFFICE

OFFICE STAR

OFFICEPOINT

10,000

400

Yes

£405m

Available on request

172

1994

Steve Harrop, MD

K House Europa Link Sheffield Business Park S9 1XU

www.sogoeco.co.uk

www.officefriendly.co.uk

N/A

OFFICE FRIENDLY DEALER ASSOCIATION

7,700

448

Yes

£300m

From £399

351

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Chris Collinson, MD

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INDUSTRY REVIEW

INDUSTRY

MARGIN V. PROFIT

MARGINAL ERROR

What’s the difference between cash margin and gross profit? For independent dealers, the difference can matter. Nina Rosandic spea ks to industry experts abou t the importance of marg in management

ut simply: “Cash is the amount of money you make and gross profit is the margin percentage,” says Spicers’s sales and marketing director, Tom Rodda. It seems obvious, however, it is not always as straightforward as it sounds and there can be some confusion when it comes down to the maths. Rodda explains: “It’s imperative that dealers know the difference. I often see dealers – and occasionally our sales force – thinking it’s better to sell a £10 item and make 30% margin – three pounds cash, than sell a £20 item and make 20% margin – four pounds cash. Clearly option two is better.” Michelle Naphtali, director at P1 Training and Development, works closely with dealers to implement profit management strategies, and a commonly asked question at their training workshops is: “Do you take percentage or pounds to the bank?” She goes on to explain that often the dealers they work with are “so focused on chasing the percentage, they ignore the often easily attainable extra cash margin available from their customer base”. Integra MD Aidan McDonough sums it up: “Cash is king, especially in this market.”

NOVEMBER 2012 www.dealersupport.co.uk

“If you are milking your major accounts as cash cows expect for your competitors to take them away”

Game planning Keeping a hold on profit margins, in order to maximise potential cash profits, should be the top of any dealer’s list. P1’s Naphtali says: “In our opinion, margin management is the most important thing a business can do outside of winning new business. Equally, if the business manages margin well, it makes the winning of new business easier as they will already have a clear plan as to how to maximise the margin once the business is won.” McDonough agrees that it is essential, particularly if dealing with large accounts with contracted price lists and cites cost-plus pricing models that follow price decreases as a key pitfall for dealers. Similarly, Rodda sees margin management as vital and uses some basic workings to illustrate how “every point of margin gain drops through to the bottom line. Imagine a dealer making 30% margin who has 25% operating costs leaving five per cent net profit. Grow your margin to 35% and operating profit doubles. How much turnover would you need to bolt on to get the same result?” Rodda also suggests that margin management is the only part of the sales process where the salesperson has complete

INDUSTRY

MARGIN V. PROFIT

control. Simply put: “The salesperson sets the price and the customer chooses whether they buy it from them.”

Bridging the sales and finance gap It’s all very well that finance and management have a strategy in place for maximising profit and margins, however, it’s of little use if it is not regularly fed through to the sales team. According to Naphtali, there is a lack of awareness and understanding among sales staff when it comes to financial jargon. “At every dealer, we always ask the salespeople the difference between gross profit and mark up – you would be amazed how many do not know.” She suggests that: “Every dealer should regularly train their salespeople on commercial skills and, if nothing else, buy all their salespeople margin calculators.” Integra holds sales conferences and training sessions, and McDonough says that many of the members’ sales teams have benefitted, specifically when it comes to margin management. “It is important for those responsible for establishing pricing strategies to communicate with sales,” he says. For those dealers who are mentored by P1, their salespeople are reviewed every month using a balanced scorecard. “It keeps the focus on margin overall and

NOVEMBER 2012 www.dealersupport.co.uk

“It is important for those responsible for establishing pricing strategies to communicate with sales”

highlights margin opportunity by product categories and customer segments,” says Naphtali. According to Rodda, it is the salesperson’s approach and tenacity that is intrinsic for driving profit margins. “In my experience the main difficulty is [that] most salespeople shy away from delivering tough messages. The reality is some dealers make 45% margin, so it is possible.”

Pricing customers For those on the front line, the key driver is to make money, whether you look in terms of margins or cold, hard cash profit. However, in a market where everyone is looking for the best deal, how can dealer salespeople increase profits and margins while retaining customers? Naphtali says: “Firstly, selling more products to existing customers, even at a low margin is a good idea, they already have the distribution costs, and it better serves the customer and stops your competitors getting an ‘in’. Low margin business still generates pounds and this is what you take to the bank.” Rodda suggests taking a consultative approach to what an end-user buys. “Do you show them where there are similar products – own brand for branded, for example – which

INDUSTRY

MARGIN V. PROFIT

would be cheaper for the end-user but make the dealer more cash?” He suggests that the relationship is key, and that the pricing will follow. “If you lose an account, unless it’s corporate and had gone out to tender, it’s because the relationship has not been strong enough. Salespeople will always says it’s the service or it’s the price – they will never say: ‘It’s because I have not had any contact with that account for a year.’ If the relationship is good they will come back to you and give you a chance to improve the service, and to match pricing.” McDonough suggests structured reviews with key customers, to look at pricing and gap analysis, which enables a dealer to identify any pricing issues, new opportunities and keep a dialogue going to keep competitors at bay. “Segmenting customers will help to focus sales activities and effort,” he says. Naphtali also sees customer segmentation as a major focus point. “When we look at the margins within customer segments we often find that smaller less loyal customers enjoy much better pricing than major accounts; this is wrong on many levels. If you are milking your major accounts as cash cows expect for your competitors to take them away. You can get great margin out of major accounts by reverse pricing, using alternatives, reducing deliveries, and increasing AOVs [average order values], but you have to continually review the hot spots, like paper and EOS. Equally, small customers should be paying more, they still have the same cost to serve costs and you haven’t got the volume to make it worthwhile otherwise.” McDonough suggests implementing sales techniques such as upselling, link selling, adding a line and switching to own-brand to increase average order values: “Introduce new products and services and make sales teams focus on account management by looking at gap analysis, gaining new contacts, and regular pricing reviews.”

“Do you take percentage or pounds to the bank?” Plan of attack At the end of the day, accelerating margins and profit boils down to two things: buying better and selling better – “both however are art forms,” says Naphtali. Overhead management is also imperative and there are ways to improve the bottom line by taking cost out. “So often we see dealers selling the benefits of single source whilst buying from several different sources themselves to save pennies. Dealers should be using the wholesaler more and taking cost out of back office,” says Naphtali. Rodda suggests a few key questions dealers should be asking themselves: “Do you know the profit-per-customer after cost to serve? Do you know what soft costs are in the business by using multiple suppliers? Do you drive your sales force in the correct areas and is there retribution if you don’t? Ask yourself: ‘How many new accounts did my sales force open last month?’ If is it not at least five per salesperson, that would be a great place to start.” It’s a balancing act but by regularly reviewing your costs and approaching your pricing smartly, you can drive up both your gross profits and margins. McDonough concludes that by monitoring trends in margins, closely monitoring sales activity, increasing average order values, driving new product take-up and passing on price increases, you can see your business reach it’s full capacity. Pricing and margin reviews on a monthly basis are the best place to start and by getting the whole team educated and involved will bring results. DS

NOVEMBER 2012 www.dealersupport.co.uk

PEOPLE

DEALER INTERVIEW Bishops Office Products

Bishop’s mass appeal 26

NOVEMBER 2012 www.dealersupport.co.uk

DEALER INTERVIEW Bishops Office Products

people because that’s not how we go after our business. We network at every opportuity in the local area and go after the customers we want. Our business is all in a 25-mile radius and we do all our own deliveries, that’s the service we offer our customers. We do it properly, they know they can rely on us to get the goods to them when they want it. Has the online ordering been beneficial? From our point of view, it’s an efficiency, because I’m not paying someone to take the sales call. There are pros and cons, because we believe in talking to our customers and that’s how we make the maximum out of them. You lose that if they only order online. We have some customers that order exclusively online, but I’m very aware that we have to talk to those people even more, so we don’t lose contact.

After starting his business in a recession of biblical proportions, Simon Bishop of Bishops Office Products has learned some valuable lessons about keeping the faith through tough times. He tells George Carey the secret to his longevity and the importance of practising what you preach So, how did you get started in the industry? I worked for a furniture dealer and got fed up with them not delivering. I’m a big believer in doing what you say you’re going to do, when you say you’ll do it. The company used to constantly fail on their promises. So I started my own office furniture business; that was just over 21 years ago, in the last recession. It was just me; I was taking orders, delivering, installing furniture, and everything else. How did that develop into office supplies? I went to a Stat Index conference and bumped into the Neville and Gladstone rep for our area, Gene Willis, and she said that I should try selling office supplies to my furniture customers. No one was buying any furniture anyway, so I thought it was a good idea. We started selling pen pots and waste paper bins to go with the desks, and moved on from there. Were those first years tough? Yes, the climate was similar to what we’re in now; people were hardly buying capital goods, so the only way to survive was to start selling consumables. We also started selling second-hand furniture, which was abundant because of all the liquidations occurring. It was those two things that helped us survive, early on. Were there any lessons you learned then that have been useful in this recession? Keep control of your costs. Running a business

isn’t all about sales, you’ve got to get it out of the front door but also keep an eye on what’s going out of the backdoor. There are a lot of businesses who’ve struggled when times are tough because they’ve let costs get out of hand in the good times. You’ve got to make as much as you can in the good times but don’t spend it all. Financial climates are cyclical, so keep a bit in the bank. Did you ever consider mergers or acquisitions? We’ve never considered selling, but this year alone we’ve had three different firms approach us for us to buy them. The problem is, there [are] a lot of small businesses out there that have a vastly inflated idea of what they’re worth. We’re a good, profitable copmpany and our balance sheet is better than a lot of dealers who are eight or ten times our size. A lot of these small dealers approach you and they’ve got absolutely nothing to sell, but they want a lot of money for it. I think you’ve always got to keep your options open, because there are benefits to size. What are your opinions on ecommerce? We do about 20% of our business online and they’re all existing customers. We’re not trying to be the next Euroffice, there are enough people out there doing that. If you want to trade with us online, you have to be registered with us. We’ve spent almost nothing on advertising and we don’t have a fancy website to attract

Are you part of a dealer group? We were a founder member of Integra. We set up in ‘91 and joined them in ‘95, and we’ve stuck with them ever since; I’m a non-executive board member of Integra now. I can’t see how dealers can survive in this marketplace without them, unless they are very big. They were initially a buying group but now they add so much more to a dealer’s business, they’re marketing groups and that’s the only marketing we use. We heavily support their Initiative brand and there are all sorts of ecommerce tools that we can use for marketing to or customers. The membership fee is insignificant, really, compared to what you actually get back. Do you do well with FM products? We are increasingly. I wouldn’t have thought 21 years ago that we’d be selling toilet rolls and coffee, but coffee is one of our top lines now. If you’re going to keep talking to your customers, you need to come up with new things to talk about, so we start talking to them about FM. I believe that when you get a new customer, you don’t look at them for a one-off deal, it’s about the whole life of a customer. We’ve still got about 25% of our original customers from our first year of business. Although that means 75% aren’t, I think that’s mainly because people have moved or merged or gone out of business. We talk to them and do whatever we can, not to have issues with them. FM is just another new thing to talk about. Nowadays we’re talking about shredding and print management, letterheads, brochures, cards etc. What about MPS? It’s not new; if you think back to the copier industry in the ‘80s and ‘90s, everything was done pay-per-click, it’s all gone full circle. Those established machines dealers out there just take it as second nature. Integra have got an offering for us and when I go to our regional meetings and talk to other dealers, a lot of them seem scared of MPS, because it’s the

www.dealersupport.co.uk NOVEMBER 2012

PEOPLE

DEALER INTERVIEW Bishops Office Products

Owners Simon and Rachael Bishop

unknown. That’s another benefit of the dealer group because they’ve done the leg work. It’s still big and new and it’s getting your head around how it works. It’s a bit like furniture, a lot of dealers are nervous about tackling it, until they give it a go. How much of your business is furniture these days? Not as much as we’d like. Three or four years ago, it was about a third of our business but when we hit this recession furniture sales just stopped. Things have picked up well and this week we’ve been flat-out installing furniture. I think it’s a bit of a barometer. If people start buying furniture, they’re moving, expanding or refurbishing, which you only do if you’re confident in your business. I think we’re getting back to it being around 30% of the business again.

CV ANNUAL TURNOVER: £1.25m GROSS MARGIN: 40% NUMBER OF VANS: 2 NUMBER OF STAFF: 8 BUSINESS SOFTWARE: Progress Online

NOVEMBER 2012 www.dealersupport.co.uk

What about education? A lot of the furniture we’re installing at the moment is going into schools. We’ve just started with the new Integra education brochure. We haven’t done much with schools in the past but this year we put the mailer out for the first time in late spring. We’ve got Kent County Supplies, a big not-for-profit supplier for schools in our area. With a lot of the products that they supply, there’s no point in us trying because there’s just not the margin but if there’s something a little bit quirky then we’ve got things to offer them and we’re obviously competitive on furniture. We do all

our own fitting and deliveries, so we’re in a position to be much more flexible than some of the big organisations. How do you train your staff? We use P1 and have done for about four years. They come in every month and train the salespeople. We’ve just taken on a new rep who’s been on their induction programme. I think they’re fantastic, they’ve done a tremendous amount of good for our business. They help motivate the staff and us as dealer principals. They come in and talk with the sales team to identify gaps or areas that might be falling behind and praise them when they’re doing well. It’s expensive but it’s money well spent. I was always scared of training in the past because of the cost, but it’s an investment. We spend on training where we don’t spend on advertising I suppose. I think my staff appreciate it as well. What are your plans for the future? Keep doing what we’re doing. We’ve got figures that we’re aiming for, but it’s difficult to plan in the current climate. We broke one million pounds a couple of years ago, which was a big benchmark. Once you’ve done that, you just need to start aiming for the next target. We are slowly expanding our area of business and we’ve got a fair market share in our area, but there are still masses that we’re not dealing with. We’re always looking to grow and we’re always talking to people. DS

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PEOPLE

DEALER INTERVIEW One Office

In the company of One David Martin of One Office in Belfast has recently become Nectere’s representative in Ireland. Julia Dennison catches up with MD David Martin to find out what membership means for one of the largest dealers in Northern Ireland

CV DEALER: One Office MD: David Martin TURNOVER: £2m GROSS MARGIN: 30% MEMBERSHIP: Nectere

NOVEMBER 2012 www.dealersupport.co.uk

elfast’s One Office has been on Dealer Support’s radar before. MD David Martin is well known in the Northern Ireland dealer circuit for running a successful business, evidenced in the company’s £2m turnover. The firm has diversified significantly, trying its hand at everything from business gifts to furniture, and is popular with its customers – treating them to an annual golf day at the prestigious Fort William Golf Club in Belfast. Martin knows his turf, and will show you the way to a pint of Guinness and some great Irish stew at the city’s famous Crown pub if you take his Belfast tour. But the recession is biting hard in Northern Ireland, having crept up from the Republic, and even a dealer doing remarkably well in this city will feel the pinch. “Just this morning we’ve heard one of our customers has gone under and over the last four weeks we’ve had six customers who have gone under owing us money – ranging from £600 to £1,500,” he says. “That’s a lot of money when we’ve paid that out. This is happening at the minute and that’s what’s hurting dealers.” His furniture business, once booming enough to warrant a showroom, has been heavily depleted. His margins have gone the same way as a result of other companies slashing prices. “We got a letter last week from a company that was inviting tenders for their office supplies and there were only four people who worked there,” Martin

comments. “What has happened with the whole recession and how the corporate [stationers] act has opened up the doors for very small companies to demand prices that they shouldn’t be having.” He generally doesn’t bother with demands like this. “We don’t lose customers to them,” Martin says of the contract stationers, “but we do lose margin.” He’s even heard of customers in Belfast buying their stationery from Poundland. As a result of all this turmoil, One Office has seen its turnover drop and Martin imagines other dealers in his area are feeling it just as badly, if not worse, considering One Office’s already prominent position. A new deal It is within this context that, six months ago, Martin approached Nectere MD Paul Musgrove about starting a similar service model in Ireland. “I knew him and I thought about managed services in a very basic way – in other words, we would do [dealers’] customer service, etc. [on their behalf],” he comments. “Then I went to see [Paul Musgrove] and had my eyes opened.” His eyes were so opened, he decided to become a Nectere partner, which wasn’t planned: “That wasn’t what we were doing it for. But once we saw what it was – on my second visit – and saw what Nectere had to offer, then we did get involved.” He was impressed by the prospecting

DEALER INTERVIEW One Office

packages, new systems and shared resources the membership offered, as well as the reduced overheads and marketing support that came along with it. As such, One Office became the first Irish dealer to sign up to the dealer services provider and its first distribution hub in Ireland. Since DS visited One Office a couple of years ago, the dealership has developed significantly, thanks, it seems, in part to the Nectere partnership. “Our company’s been turned upside down,” says Martin. “The sales team is now very structured and everything about their customers is given to them. In other words, if one of the customers has stopped buying suspension files, they’ll know it through the software. The difference being, that it’s all done for them.” The One Office team is focusing on increasing accounts and broadening its customer reach. They hold more promotions to help fill procurement gaps; for example business gifts is a new focus. As part of this, every Tuesday is a blitz day, whether it’s for a product, category or prospecting. “The Monday before the blitz, everything is prepared for them through the software,” adds Martin. “So they just have to lift up the phone. [Preparing them like this] makes salespeople do what they do best and sell, without having to do anything else.” Since they’ve started these prospecting

www.dealersupport.co.uk NOVEMBER 2012

AB Copyright Ltd Supplies is powered by...

DEALER INTERVIEW One Office

DEALER BOOKMARK

Sonia Armstrong Customer Services Team Leader AB Copyright Ltd Halifax

SPECIALITY

drives, they’ve put an average of 15 new customers per month on the list, which helps when other customers are going out of business on the other side of it. Apart from those Tuesday blitz days, Monday and Thursday afternoon, the sales team is out on the road, armed with prospects and information to help them do what they need to land sales and centralised customer service reps do the paperwork. Changes ahead One Office has reduced the stock in its warehouse right down to the bare minimum, as everything is now delivered as picked, wrapped and labelled from Spicers. “It was a culture shock,” he remembers of when this started. “The first morning, our guys were scratching their heads wondering what they’re going to do.” Despite this, he hasn’t had to reduce staff numbers yet, since he needs the van drivers – but it may be something Martin has to consider in future. He is looking for a smaller premises without a warehouse since he no longer needs as much stock. Part of being organised like this is being able to sell more product categories to your existing customers. “We’re putting more contact names with our customers than we ever have,” says Martin. “We were pretty poor in that respect. Our customers had maybe one contact name per customer. Now our target is to have three or four per customer – unless it’s a really small one.” Contrary to what might be believed, Martin thinks there are more people

in companies diversifying what they do since the recession. “Different people are doing different things,” he says. “It used to be that everyone just did everything, but now you do find people are in different sectors. The dealers look at it and think with the recession surely one person buys everything, but I think it’s the opposite.” One Office now gets its catalogue produced for it, however, it is still bespoke with its own branding and images of its staff on the inside front cover. In short, with this kind of structure in place, a business owner like Martin doesn’t have to think about every detail anymore. Starting out as the only Nectere distribution hub in Ireland, One Office is currently on the lookout for other dealers in Belfast and hope to develop further distribution hubs in Derry, Dublin, Cork and Limerick. Martin is already in conversation with the wholesalers in the Republic to set up a Nectere Ireland where he believes they could use the support. “I think there’s a lot of difficulty down there,” he says. “No matter how well you do your marketing – and we were fairly proud of how we did it – you don’t do it every day,” he comments. “It takes up too much time. So these guys would be offered a package that would do all that for them.” Of course, everything comes at a cost – and dealers have to sacrifice a portion of their profit to become part of the Nectere brand. But for dealers who are suffering, like those in Ireland, it may offer a realistic way to expand their business. DS

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NOVEMBER 2012

JAVA JIVE Offices move upmarket in their hot beverage preferences

CONTENTS 36 NEWS AND INTRODUCTION

A look at the facilities management market

38 BIG ASK

How, specifically, can office dealers compete in the FM market?

44 JAVA JIVE

Trends from America point to offices moving upmarket in their hot beverage preferences

46 COOL RUNNINGS

The water cooler market is growing â€“ are you on board?

48 DEALER INTERVIEW

We speak to a dealer succeeding in the FM market

FM GUIDE

NEWS

NEWS Welcome to November’s FM Guide. In this issue, we focus on how to set yourself out as a venerable facilities management supplier – putting the question to the experts as to whether office dealers stand a chance at competing, and if so, how. We hope this is a helpful and informative guide and would encourage you to get in touch with any of your FM news via editor@dealersupport.co.uk

Durable expands production into Poland Office product and computer cleaning firm, Durable, is doubling its production capacity thanks to an increased demand for its product ranges. The company says the design of the new building reflects its keen interest that its operations have a minimal impact on the environment. One major challenge was finding innovative ways to save energy, so a combined heat and power generation system has been installed. A cogeneration unit fuelled by natural gas is a design feature that produces simultaneous generation of heat and electricity and ultimately reduces the amount of power which needs to be used. This, combined with heat recovery from compressed air generation and the installation of a modern lighting system, provides increased manufacturing capacity whilst maintaining the company philosophy of environmental responsibility.

1/3 of employers report an increase in the number of people going into work ill (Source: CIPD)

NOVEMBER 2012 www.dealersupport.co.uk

Systemcare unveils new corporate website Systemcare, specialist supplier of private label equipment, hygiene and workspace cleaning products, has announced a revamp to its corporate website. The new and improved Systemcare.co.uk includes user-friendly key product information, the latest news and information from the cleaning and hygiene market as well as an interactive version of the product catalogue with hints and tips from the Systemcare expert ‘Cleaning Clive’. Kasia Holland, product and marketing manager, commented: “We have seen many positive changes at Systemcare during 2011 and 2012 with a new management team, lots of new products and a brand new product catalogue. “Our new customer-focused website reflects Systemcare with a fresh, modern feel to assist customers with their private label cleaning products requirements.”

WHAT THEY SAID There is a clear expectation that facilities provision should now be delivering much more than cost savings alone; meaning that our industry must ensure it continues to adapt by providing a service that adds value to the client’s brand, business performance and reputation” Bruce Melizan, executive director of international support services firm Interserve, introducing a report on facilities management

FM GUIDE

BIG ASK

FFI O N A C HOW DEALERS

IN T E T E P M CO ET?

K FM MAR

As facilities management promises to be an additional source of income for independent office dealers, Dealer Support asks a panel of experts whether dealers actually stand a chance competing against the FM firms and if so, how DEBBIE NICE Category head of facilities management products, Vasanta Group “We have found that dealers who are successfully competing in the FM market are selling the service and convenience angle, as well as trying to understand the price that their customer is paying. There are some lines that are price sensitive and the end-user will expect their supplier to be competitive on these; the dealer needs to be prepared to make a bit less margin – paper disposables are the copier paper of the janitorial world! “In the main, the incumbent suppliers are making healthy margins and don’t offer next-day delivery, as well as having a much smaller range of products than the traditional office products resellers. “As wholesalers we have a responsibility to ensure that we are buying FM products from the right sources to enable to the dealers to compete. This has involved us looking carefully at the commodity lines, whilst also stocking a much larger range to give the dealer an opportunity to sell products that are less price sensitive. “Catering and cleaning manufacturers are very supportive of the office products channel and we are seeing more promotional activity and interest in them meeting the dealer sales forces at wholesaler and dealer group training events, this is critical if dealers are going gain knowledge.”

NOVEMBER 2012 www.dealersupport.co.uk

ZENA GODDARD Key accounts manager, CPD “Dealers can compete within the FM market by knowing their customers and providing a service tailored to the individual customer’s needs. “Office dealers offer an incredible level of service to their customers – encouraging relationships built on trust and understanding. “This service level ensures that enduser customers only need to order the level of FM products they need to use at any one time – rather than using valuable space and cash to store what can be large bulky items such as toilet rolls. Also – this consistent level of service sets the office dealer up as a partner with their customer – ensuring the free flow of information – e.g. where the end-user is currently buying products from if this business isn’t going to the OP dealer. Asking for the ability to audit end-user customers’ janitorial provisions will throw up areas of expense – where cost savings can be demonstrated by the OP dealer – either by the overall service provision the OP dealer can provide, or cutting down the number of skus a customer may be buying – why buy an anti-bacterial cleaner, a glass cleaner and a multi-surface cleaner – when one all-purpose cleaner will do it all? – or moving from a branded line to an own-brand like Maxima, or even a white box alternative.”

FM GUIDE

BIG ASK

CAMPBELL MCLEAN Distributor account manager, Diversey “The real question is how to win when you are against the big well-established players in a new market. Big players may pack a strong punch but [are] slow to react. As an independent dealer, you can be fast to react to customer needs and need to capitalise on your strengths of local customer insight, safe in the knowledge that you are backed by your wholesaler team and supported by market leading manufacturers. “The key to getting into facilities management is understanding what the facilities are that are being managed. You have a list of customers that you currently supply and they all have FM needs; wherever there are walls, floors, toilets, sinks, kitchens/staff rooms etc. there is a need for FM products. Your customers are being supplied these products from somewhere, be that from a national distributor or a supermarket/cash and carry. What you can offer is an easy, convenient, one-stop supply for all their needs. You already have the contacts, the relationships, the market knowledge, the marketing capabilities and, with assistance from Diversey, the means to open up a new lucrative channel that will benefit your customers. “You can tailor the extensive and complicated portfolio of products available to your specific client group making the process of selecting products that they are comfortable using and with a brand identity they can trust much simpler and less daunting.”

MARTYN BELL Trade marketing manager, Douwe Egberts

“Lots of products within FM are highly price sensitive – they are functional products and the price has to be spot-on to compete. However there are some products that have a more emotional edge to them, for example, people really care about the quality of the soap in the lavatories, and the quality of the hot drinks in the kitchen. “Within the current economic climate, businesses are increasingly asking more and more of their staff. A small concession on the quality of these slightly more emotional items can pay dividends in staff morale, and ultimately shift the emphasis in your discussion away from price and more towards offering a holistic business benefit. Key to this is understanding which products their employees care about and proposing a brand that their employees will instantly recognise as high quality. “I’d recommend trying to engage the staff directly, by running sampling sessions. This gives you a chance to show you have a deep understanding of the product and will position you as an expert in the field – which is important when appealing to these more emotional lines. Make sure you offer the highest quality brand suitable to that business – backed up by your expertise – to really add benefit to your customer.”

NOVEMBER 2012 www.dealersupport.co.uk

TOM FARRICKER Sales director, North West Tea Service “I think dealers compete very well at the moment, they need to give themselves a pat on the back for developing and continuing to focus on this sector. Dealers face stiff completion from the cash and carry sector... “We all know the advantages dealers have over a cash and carry, credit, delivery and customer relationships. The disadvantages will be over pricing and lack of range, but with OP wholesalers constantly increasing offerings in this sector the later should improve… “I have spoken before about dealers going after vending business and machine business... All our talks with manufacturers are about developing machine systems for the OP sector, as people want the coffee shop experience at work.”

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FM GUIDE

BIG ASK

SUSAN NASH Trade communications manager, Kraft Foods

People want the coffee shop experience at work

“Office dealers can compete in the FM market by keeping abreast of trends which are having a direct impact on the services their customers require. For example with the rise in coffee shop culture, consumers’ taste expectations have changed, and people are now looking for a better quality hot beverage when out of home. “We recommend dealers suggest to their FM clients that workplaces may be able to learn from these changing coffee-drinking habits, and providing a quality hot beverage offering may help to improve workplace morale by making staff feel more valued. However, with budgets tightening and workloads increasing, cost and convenience of service are important considerations to take into account when choosing a hot beverage solution.”

KAREN HARRISON Group marketing manager, AF International “Deliver the right safety solution for the customers’ needs. The customers’ risk assessment should identify the hazards present and their risk levels. Where personal protective equipment [PPE] is required to reduce the level of risk…advise your customer to consider the personal preferences of their PPE wearers, because if equipment is not useable or comfortable they may resist wearing it.”

ANJA BUCHAN 3M product manager, disposable and reusable respirators “Office product dealers have a wide customer base and with effective marketing they should be able to compete within the FM market. There is a great deal of expertise in the marketplace which they could tap into; I’m sure manufacturers would also be willing to improve their product knowledge by way of training. Perhaps they can talk to their current customer base about invoice consolidation, buying through one supplier and having less paperwork to deal with, less time therefore less money.” DS

NOVEMBER 2012 www.dealersupport.co.uk

FM GUIDE

CATERING

HOT TRENDS AND COOL BEVERAGES Trends from America point to offices moving upmarket in their hot beverage preferences. Bryony Taylor looks at what this means for tea and coffee in the UK dealer channel

opular television shows such as Friends have had a significant impact on the UK’s coffee industry. ‘Going for coffee’ has become a daily activity, and not just at home. Nearly a decade ago, vending machines throughout office blocks were piled high with cold canned drinks, and tea or instant coffee. Today, trends have shifted. Specialty coffees and machines like the George Clooney-sponsored Nespresso, or Senseo, are commonplace in offices and homes around the country. Figures released in 2011 by Nestlé, Nespresso’s parent company, showed global business growth of 22%, and more impressively by 35.5 % in the UK market. According to Mintel, the at-home coffee market has grown by 17% in value over the past five years. The market is set to grow a further 25% by 2014, the research firm says, and will be worth around £976m. So why are consumers trading up to more expensive options in the world of coffee? “With the rise in coffee shop culture, consumers’ taste expectations have changed, and people are now looking for a better quality hot beverage when out of home,” explains Jodie Bates, marketing manager at Kenco Professional. “Retail figures support this trend showing that customers have been trading up to premium and super premium brands over the last 12 months.”

With the rise in coffee shop culture, consumers’ taste expectations have changed, and people are now looking for a better quality hot beverage when out of home

NOVEMBER 2012 www.dealersupport.co.uk

There are a number of new products on the market that combine the need for premium coffee with the taste of the best roast and ground coffee, in an instant, adds Bates: “These are designed for operators who want to provide something a bit different to the standard hot beverage range, without compromising on convenience.” Martyn Bell, trade marketing manager at Douwe Egberts, agrees, adding: “Although speciality espressobased coffee is going from strength to strength on the high street, instant coffee continues to be the major force in the marketplace when it comes to SMEs.” “We are seeing a trend towards a lucrative ‘premium’ coffee market opening up in the office arena,” Bell adds. “The availability of pod style systems and the emergence of bean to cup espresso machines mean – where beans are placed into a hopper and at the touch of a button they are ground and brewed – it’s now very easy for businesses to offer high street quality coffee in the workplace.” How can dealers capitalise on this trend? Very few people turn down free coffees. And the sell of these premium machines is the better taste, so running tasting sessions with customers showcasing the different types of coffee on offer, and the different ways to brew it can engage consumers the right way. “Businesses are asking fewer people to work harder, complete longer hours and be more flexible,” says Bell. “Coffee is a commodity that is highly valued by employees in the workplace. Choice is everything when employers provide a higher quality of coffee; it plays a part in the overall working environment. And as it’s such an emotive subject, it can provide a great way to begin discussions across a customer’s whole FM requirements.” DS

FM GUIDE

WATER

Water for profit John Manning looks at the supply of water and water coolers into modern workplaces – what are the options and trends? And what can dealers do to compete in a saturated market? Is it even possible or worth the effort?

ater is the source of life. But it is also frequently a source of frustration for facilities managers in offices up and down the country. Employee health and well-being sits high on the agenda for most businesses, and provision of a suitable workplace water supply can be a challenge. A common solution to the conundrum is a water cooler, and dealers looking to add value to existing accounts and win new customers can now add unit supply and maintenance to their service offering. Both wholesaler VOW and dealer group Integra have made this possible, recently launching water cooler services for their resellers. “There are already around 600,000 water coolers installed in the UK, and this market will continue to grow as businesses focus more on the health and well-being of their employees,” says VOW business development director Helen Beckett. With water coolers already so prevalent in UK offices, dealers would be forgiven for thinking they have missed the boat. But far from forecasting the drying up of demand, the industry is predicting the number of coolers in use will grow to more than 750,000 in the next four years. On top of winning business from new water cooler converts, dealers can benefit from a trend for favouring the new technology of plumbed-in units. Old-fashioned bottled coolers account for 70% of the units in use today, but it is predicted that by 2016 half of all units will be plumbed-in – meaning many businesses are likely to be in the market for an upgrade. This trend for replacing older bottled coolers is largely being driven by cost savings of 60% for end-users. Despite a possible end in sight for this economic drought, cost reductions of this nature are a refreshing prospect. “There is no contract and with over two billion litres of bottled water being consumed every year in the UK it really is a simple sell,” says Alan Fish, Integra account manager at Cool Water Direct, on the benefits of their plumbed-in offering. For dealers moving into this space the advantages are numerous. “This is another great opportunity for our members to expand their product and service offering,” says Integra purchasing director Neil Basham. “It is essential for dealers to tap in to – no pun intended – added value services not only for their existing customers but also to use as an opportunity to open new accounts.” A unique selling point can also help tip the balance in your favour and blow your competition out of the water. The VOW partnership with Water Cooler Direct allows dealers to offer businesses coolers branded with their company logo. Water coolers are not a new product and market competition is fierce. Dealers must find ways to differentiate themselves from their rivals. Highlighting other services on offer, and the ability to act as a total business solutions provider, can help distinguish dealers from the specialists. DS

There is no contract and with over two billion litres of bottled water being consumed every year in the UK it really is a simple sell

NOVEMBER 2012 www.dealersupport.co.uk

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FM GUIDE

DEALER INTERVIEW

Dovetailing sectors

Bates Office Supplies is one of many dealers trying to clean up in facilities management. George Carey talks to the companyâ€™s chairman Carl Dovey about his experiences

NOVEMBER 2012 www.dealersupport.co.uk

DEALER INTERVEIW

stream and personnel that we have to engage with. The market also already has a supply chain very experienced in the art of selling this type of product.” Product gap He does believe, though, that with time and experience, dealers can gain the expertise necessary to overcome these issues and do a lot of business with these products: “I think it’s the same as the traditional office products, you go in with a few loss-leaders and then build on those relationships. They need exactly the same selling scenario but I don’t think we’ve yet nailed how to manipulate these products as well as we do others.” Dovey is of the opinion that changes from all of those involved in the process are required, if FM sales are really going to take off. “I think the wholesalers have done quite a decent job on the range of products but it’s still not quite as good as it could be. Where stock’s concerned, it’s difficult to join up the dots because at the moment we’ve got gaping holes in the range of products that we’re able to offer. At the moment, some products are just not in the ranges that are available from the traditional wholesalers.” He continues: “So we then have to look for existing suppliers in the marketplace and that’s when you find out the gaps that are missing, like paper rolls and some cleaning products.” When pressed for advice for other dealers looking into supplying these products, Dovey preaches caution to those thinking they are in for an easy ride: “It’s not as easy as some want us to believe. It is a very specific sell with expert suppliers already active in the market.” He concludes by pointing out that some have looked at this market already and decided that it’s not for them: “It’s always been competitive. Lots of dealers never tried this market and some tried it and came away from it.” His caution is based on years of experience so is clearly worth heading, but the fact that Bates is pursuing this line of sales, shows that there is clearly money to be made with these products. DS

We’re looking to bring in specific people, because in my eyes that’s the only way that you can do it properly

www.dealersupport.co.uk NOVEMBER 2012

MANAGEMENT

GROW YOUR BUSINESS

With the uptake of digitisation increasing apace, there are more opportunities than ever for dealers to sell scanners and document management systems. George Carey gets the latest on the paperless revolution

NOVEMBER 2012 www.dealersupport.co.uk

GROW YOUR BUSINESS

he recession has provided many businesses with the opportunity to sell document management solutions to companies looking to reduce the costs associated with printing and consumables. It may still be a few more years, even decades, before the much-cited ‘paperless office’ becomes reality, but dealers still need to be aware of the transition taking place within businesses and their methods of storing and archiving data. The market is doing well, according to Peter Butler, product manager for business imaging, Epson: “Data from InfoSource has shown that the business scanning and document management market has been growing consistently – approximately 11% per year – and we are expecting and hoping this to continue in the future.” Document management can be the perfect answer to many problems facing modern companies. “Today’s businesses face a relentless torrent of both paper and electronic files. Most companies want to simplify how they acquire, manage, and distribute these documents,” says Matthew Searle, director of partner channel, Canon. “But solutions can be elusive.” Document management (DM) provides a great opportunity to expand into a new and reliable office supplies sector, and dealers should ensure that they and their clients stay in-the-know when it comes to innovations within the sector. “Document management systems provide improved business processes, automated document workflows, faster access to critical business information and reduced need for physical storage space,” says Dexter Harriss, HP marketing manager, UK and Ireland. Dealers should present document management as the future for business data storage to clients and emphasise the levels of convenience, security and capital it entails. Resellers should assimilate the sale of DM into their common vernacular with their customers so that whenever they talk about scanners, archiving or digital storage, it is already part of that product family.

Today’s businesses face a relentless torrent of both paper and electronic files. Most companies want to simplify how they manage these documents

A NEW SKILL SET

In order to present DM to clients, dealers must familiarise themselves with the industry, its potential and limitations, its cost and which of their customers could benefit the most from its implementation. One of the first steps when moving into DM is to ensure that you have the backing of a trusted and respected technology supplier. Dean Woolliscroft, marketing manager, ImagingXtra says: “Working with a good document management company is essential. Diagnosis, negotiation and implementation is time-consuming but the potential for up-selling and enhancing customer loyalty more than make it worthwhile.” Ask around and use your contacts to ensure you are getting all the support they need; talk to other dealers that you know already have some experience in the area; and, if you don’t know any, ask document management providers to recommend some. From the point of view of

manufacturers and distributors, dealers can generally rely upon their support due to the reciprocal advantages of both parties involved. REWARDS

There are great financial incentives for dealers in the long-run, as systems often leave scope for upgrading or expansion into other departments within the same company. The financial incentive for the buyer is also very appealing and financially stable. Offering a client a DM solution for a section of their business is a good way to give your product a ‘soft-landing’, as they are given the chance to see how effective it is before deciding whether to roll it out to the rest of their business. One of the best aspects of sales of this technology is the large margins that it can offer and the additional equipment that can be sold as part of the package. Not only are the initial benefits extremely inviting, but dealers can sell scanners and archiving products alongside software to their clients who wish to ‘go digital’ with their documents. “Dependent on referrals or direct sales, margins can be up to 30%,” says Woolliscroft. “They can, and in general do, start small in one department and then grow organically from there, so from the dealer’s point of view you are talking about an initial £5,000 and then this is rolled on depending on the size of the company and the number of modules they need,” he adds. DOUBLE-UP

Another upside to selling DM is the sale of affiliated equipment it opens up. Sales of document management systems and scanners go hand in hand and many dealers, already well acquainted with scanners from existing clients can use this to sell DM to businesses. The trick to selling document management and scanners to clients is to bounce the two off of each other – if you have a client that is looking to purchase a document management system, then ask if they have sufficient scanners to carry out the task or alternatively present them with a higher quality, faster and more efficient machine. Not all companies will require the same level or speed of archiving and dealers should be looking to sell and educate accordingly, in fact one of the great benefits of DM is that it offers such versatility for selling add-ons. Similarly if you are selling scanners to a client, this offers the perfect opportunity to introduce them to DM, as they already have the means to implement a document management system, they just require the software and perhaps some digital storage space. If addressed properly, scanners can act as ‘door opener’ for additional sales and service activities in the fields of document and enterprise content management. When talking with customers, dealers should be asking the right questions: What happens with the data once files are digitised? In which departments or branches of your business is the data being used? What are your specific requirements? Raising questions like these can lead to a discussion about the business benefits of document and enterprise content management and links them to the customer’s actual process routines. DS

www.dealersupport.co.uk NOVEMBER 2012

MANAGEMENT

FINANCING

CALLING IN YOUR DEBTS In this tough economic climate, many individuals or companies are finding their bad debtors list growing. It can be a balancing act between the time and cost of recovering the funds. This is especially difficult for small companies who do not have resources for chasing debts. Solicitor Freya Zaiwalla discusses debt recovery

n this tough economic climate, many individuals or companies are finding their bad debtors list growing. It can become a tricky balancing act to avoid spending more time and cost on recovery than the debt itself is worth. This is especially difficult for small companies who don’t have huge resources for chasing debts. Unless dealing with a long-established client or business partner, before entering into a deal it is always good to do your due diligence in order to check out their financial ability to pay. If it is a company you are contracting with, ask for their last-filed accounts or check on the Companies House website that no winding up petitions have been filed against the company. For a few pounds you can also print off the company’s accounts. If it is an individual, subject to your discretion, you can ask for copies of their redacted bank statements for the last few months, or alternatively do a credit-check on the person, a service provided by a host of websites found on Google. Needless to say, your contract must be in writing. Make sure it’s signed by the other party. We often see clients

NOVEMBER 2012 www.dealersupport.co.uk

MANAGEMENT

FINANCING

coming in to see us with draft contracts that were never signed. Although in English law an unsigned contract or a verbal agreement can be recognised, it is a lot more difficult to establish than a clearly drafted written agreement. A properly drafted and signed contract is always best, but even an email agreement or a handwritten note is better than nothing. Make the payment date(s) clear in the contract. Put in a clause that says you will charge interest on the amounts due if payment is received late.

If it does not, you should consider whether you do actually intend to wind-up or bankrupt the debtor, as you will need to foot the costs of the necessary applications to the court and you may only end at the back of a queue of creditors. The fact that you have served a statutory demand does not oblige you to commence insolvency proceedings against the debtor. ISSUE IN COURT

WHAT TO DO IF DEBTORS WON’T PAY

Assuming you have sent reminders to the debtor and they have not responded, you need to consider how far you are willing to go to pursue the debt in terms of your time and costs. Most importantly, is the debtor worth pursuing, i.e. even if you spend time and money pursuing them, are they capable of paying? You might also need to consider your relationship with the debtor, and your options should you wish to maintain that relationship. You may also not wish to get into a spat for risk of potential damage to your reputation in the market. SOLICITOR’S LETTER

A letter from a solicitor is a good way to put pressure on your debtor. It shows that you are serious about pursuing your dues and it often takes just one letter to get the debtor to pay up. Arrange a fixed fee with your solicitor to pursue the matter stage by stage. At this stage it is worth thinking about how far you would be willing to go in terms of legal recourse to recover the monies. Although making threats to issue court claims against a debtor may do the trick in some circumstances, some may call your bluff. If you do not deliver on your promises, you may be viewed as making empty threats, which would weaken your position. If the debtor engages in correspondence with your solicitor, then it may be wise to consider writing a ‘without prejudice’ letter to the other side with an offer of an amount you will accept in place of the debt, or an offer to meet to try and resolve the issues. Genuine ‘without prejudice’ correspondence cannot later be shown to the court. The hope is that parties will settle if they are free to make admission and offers in the knowledge that, if they can’t settle, those offers will not be used against them in court. Make sure you refer in open correspondence to the fact that without prejudice dialogue is happening, so if the matter goes to court the judge knows that an apparent lapse in communication is in fact down to the existence of a without-prejudice dialogue. STATUTORY DEMAND

An alternative to issuing a claim in the court is to issue a statutory demand on the debtor. This is a legal notice used in cases of undisputed debts, which require the debtor to pay up within 21 days. If they do not, you can apply for a bankruptcy/winding-up order against them. It is relatively easy to complete a statutory demand and send it to the debtor. However, it is imperative that you do not send a statutory demand when you are aware that the debtor has disputed the amount or liability. If you do so the debtor can apply to the court to have the statutory demand set aside and you may be liable for the costs. A statutory demand often does the trick and gets the debtor to cough up.

NOVEMBER 2012 www.dealersupport.co.uk

A statutory demand often does the trick and gets the debtor to cough up

It is a matter of time and costs. Talk to your solicitors and ask for their fee estimate for handling the case. If it is a straightforward claim you may get judgment easily, which you can then enforce in various ways. Similarly, once you issue your court claim the debtor may make you an offer to settle. DEBT RECOVERY AGENCIES

The internet boasts a ton of debt recovery agencies working on a ‘no recovery, no fee’ basis. While not the method of choice for all, perhaps a barrage of calls, texts and other forms of harassment might prove effective for some. However, these agencies will be limited by law to much the same options as above and you may have to give over a hefty chunk of the recovered amount as fees. The advantage is that it frees up your time and, if they are polite, takes the heat off you directly, which potentially allows you to maintain relationships with the debtor. Make sure the agency is registered with the Credit Services Association. DS Freya Zaiwalla is a solicitor at Zaiwalla & Co

MANAGEMENT

FINANCING

Finance can be hard to come by for small businesses, particularly for those that lack collateral or track record. Nina Rosandic looks at the current state of bank lending, and the funding schemes available to SMEs on the hunt for a loan.

Lending state

inance for small and medium-sized enterprises (SMEs) is considered as one of the worst casualties of the recession. SMEs play a vital part in the UK economy and the double edged-sword is such that less funding means less business growth, which is central to building a new economy. According to the FSB’s Voice of Small Business Panel survey in June 2011, of the 1,594 small businesses that were surveyed, 20% had applied for a loan from a financial institution in the last 12 months. A third of those who applied had been refused. According to the Department for Business Innovation and Skills (BIS), around half of businesses use external finance and of those who have used external finance in the last year, bank finance is still the primary source. Between January 2011 and 2012, 28% of all SMEs used an overdraft and 11% used a bank loan. One advantage bank loans and overdrafts have over some other methods of raising extra capital is that neither involves relinquishing any control of the business. STRIKE WHILE IT’S HOT?

There is a widespread perception that businesses are now paying more for finance than previously. Despite an increase in margins charged, most SMEs are infact now paying less for finance overall due to the decline in the Bank of England interest rate. For instance, average interest rates on variable rate lending were 5.39% in

NOVEMBER 2012 www.dealersupport.co.uk

November 2008 compared to 3.5% in November 2011. This increase in margins has been particularly evident in loans for smaller SMEs, with less than £1m turnover. Although statistics suggest that the majority of firms seeking finance do get it, there are still a number of market failures restricting viable SMEs from accessing funds. Despite interest rates being lower, suggesting a ‘good time to borrow’ there is a debt funding gap affecting businesses that lack collateral or track record, and for those SMEs seeking between £250,000 to £5m of equity finance. The problem for struggling SMEs is not so much the cost of lending, but the ability to meet the terms and conditions of the bank lender and secure a loan in the first place. GETTING APPROVED

There have been various government-backed schemes introduced to assist small businesses in accessing finance. John Walker, national chairman of the Federation of Small Businesses, says: “The main objective for any government-backed scheme should be to ensure that the finance actually gets through to small firms. Four in ten small firms were refused in the second quarter and this needs to change if the economy is to grow.” The Enterprise Finance Guarantee Scheme (EFGS) was launched in January 2009 to facilitate additional lending to viable businesses lacking adequate security or proven

MANAGEMENT

FINANCING

track record for a standard commercial loan. Under this scheme, BIS will guarantee 75% of your loan. The EFGS currently accounts for one to two per cent of total SME lending and is supported by over 40 banking institutions, including HSBC, RBS, The Co-operative Bank, Barclays, Lloyds TSB, Natwest, Barclays and Santander. The latest government figures show the value of loans offered by the scheme between 1 January and 30 June 2012 fell to just £170m, down 10% on the £189m for the same six-month period in 2011. IF AT FIRST YOU DON’T SUCCEED

Beyond government security backing, the Forum of Private Business is urging small firms to appeal against ‘unfair’ lending decisions by banks after a recent report on behalf of the British Bankers’ Association showed that more than 2,000 small businesses that had been turned down by their banks have secured the funding they needed after appealing – representing almost 40% of appeals. Phil Orford, chief executive of the FPB, said: “As of May 2012, almost 40% of lending appeals had been completely overturned – or 2,177 small businesses initially denied finance – but this is clearly just the tip of the iceberg of business owners who believe their banks have unreasonably turned them down for finance. It is important to shout from the rooftops that there is an appeals process, that it works, and that small businesses who feel aggrieved should use it.” NEW MONEY

Most recently, the buzz has been focused on the Bank of England’s Funding for Lending Scheme (FLS), which opened to applications 1 August this year. Following on the heels of the National Loan Guarantee Scheme, the initiative allows banks and building societies to borrow at cheaper rates from the Bank of England for periods of up to four years. As security against that lending, banks will provide assets, such as business or mortgage loans, to the Bank of England. According to

Four in ten small firms were refused finance in the second quarter. This needs to change if the economy is to grow

the HM Treasury, “banks will have strong incentives to boost lending, by lowering interest rates and increasing the availability of business loans and mortgages. The more that they lend, the more they can borrow from the Bank of England. Banks that are increasing their lending will pay the lowest fee on their borrowing while those that reduce their lending they will pay a higher fee.” Halted as prompting the ‘best ever lending terms for SMEs’ the leading banks have got onboard. The hope is that this will create one of the most competitive loan markets in recent history and expects the UK’s leading banks to offer different cheaper lending products, which will help fuel demand and competition. The banks and building societies that have signed up so far are Aldermore, Barclays, Hinckley and Rugby Building Society, Ipswich Building Society, Kleinwort Benson, Leeds Building Society, Lloyds Banking Group, Monmouthshire Building Society, Nationwide Building Society, Principality Building Society, RBS Group, Santander and Virgin Money. ONWARDS AND UPWARDS

Reactions to the launch of FLS from the small business community has been broadly positive, although there are still deep concerns about funding for SMEs. However, it appears that these concerns are not going unheard. Just in September, business secretary Vince Cable proposed plans for a state-led British business bank, designed on a wholesale model, specifically to help SMEs struggling to find funds from high street banks. Cable hopes that a state investment of £1bn, matched by £1bn of private sector funds, will leverage a total of £10bn to help small firms. There are a number of schemes out there, lobby groups, information hubs and alternative lending outlets for those on the hunt for funds, and dedicated research is likely to be more fruitful than you may expect. However, with an unstable and uncertain economy still reeling from 2008, it is not surprising that, for many business owners, confidence in borrowing to facilitate growth is yet to pick up again. DS

Securing the best deal u Make sure you do your research and shop around and compare interest rates carefully, as they can vary significantly. u The key figure to consider is Annual Percentage Rate (APR), but also consider how a fixed or variable interest rate might affect your repayments, considering the changing climate. u If you are able to negotiate better terms, make sure you get it in writing. u It may be worth getting an accountant to help track down a good deal. u It’s a good idea to get a finance expert or solicitor to check over loan documents before you confirm. Are there any hidden costs i.e. set-up fees or penalty charges for early repayment? u You may also be asked to give a personal guarantee. You should always take advice prior to agreeing to this as again your personal assets will be at risk. u If you do decide to borrow money personally and invest it in your company, tax relief on the interest might not be available. This can make a cheap loan quite expensive after tax.

NOVEMBER 2012 www.dealersupport.co.uk

FINAL WORD

Embracing change Debbie Nice, category head of FM products, Vasanta Group

Most office products businesses are willing and well-placed to change with the times

NOVEMBER 2012 www.dealersupport.co.uk

s we’re hurtling toward the end of 2012, it’s a good time to review how the office products world is evolving and ask ourselves if we are embracing these changes. With declining demand for traditional office products and constant improvements in technology, making the most of the opportunity to sell new products to existing customers is critical. My first experience of the office product industry was 25 years ago – when bestsellers were typewriter ribbons and Tipp-ex; telex was more popular than fax; office coffee was bought from supermarkets; Post-it notes were a new innovation; and the term EOS hadn’t been invented. On top of all this, office products dealers had large warehouses full of stock, Viking’s direct mail programme hadn’t arrived and the supermarkets weren’t the superpower that they are today. Communication has probably seen one of the biggest changes, and yes, I am one of the people who can remember life before mobile phones, PCs and tablets. Things have changed dramatically, but the good news is that most office products businesses are willing and well-placed to change with the times. My experience of working with resellers has taught me that those businesses who offer a great service and listen to their customers will know where the opportunities are. The manufacturers, distributors and wholesalers need to make sure that they are producing and stocking a wide range of relevant products at the right price. We’ve seen a distinct change in products selected for catalogues in the last two years – with more emphasis on business-critical products – e.g. catering, cleaning and hygiene, security, health and safety – and a reduction in ‘me too’ items. Changes to the ways of communicating with customers and suppliers remains one of the biggest opportunities and challenges. We’ve seen an explosion of social media in the last two years and expect 15% more people likely to be shopping online in the next five years. Twitter use has doubled in the last year and over 10% of the UK business population is now using LinkedIn. So as we make our plans for 2013, we can be absolutely sure that the requirements of the business world will continue to change and standing still is not an option. Here are five things we can be sure will have a big influence on us in 2013:  Product ranges and categories will evolve – we all need to understand the areas that can help our businesses to grow and focus on items needed to run the workplace  Social media is here to stay, and if you’re not using it to communicate and network with you customers someone else will be  The recession has made businesses ‘leaner’ than ever and they are looking to their suppliers for solutions – find ways of saving your customers time as well as money  Information overload is becoming more challenging – it’s easy and cheap to send out an e-shot of your latest promotion, but is anyone reading it? Make sure that you have some way of measuring your results or evaluate whether there are better ways of getting your message across  An ecommerce strategy is critical – make it easy for your customers to order from you so that they can get on with running their business. DS

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Dealer Support November 2012

Published on Nov 16, 2012

Dealer Support November 2012

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