I was fortunate enough to be invited to a private dinner with Dr. Andrew Sentance - who sits on the Bank of Englands monetary policy committee (MPC) – on a visit he made to Manchester earlier this week.

Meeting business leaders as part of his visit to the North West, he was interested to understand feedback about life on the street and hear directly how we felt the economy was doing, our outlook and perspective for the future. 

Articulate and brainy (why wouldn’t he be with a name like Sentance), he opened with a macro view on the global and UK economies. I’ve captured some of his key commentary in no particular order: -

• Commodity pricing remains a key issue (oil+gas).
• Interest rates do have to go up soon and “how to deploy the exit strategy” remains the key consideration without damage to the economy.  Perhaps in steps of 0.25%, travelling to 1% sometime over the next 12 months.
• The world is truly globalised now and it is difficult to act independently with so many chain reactions now built into the system.
• UK is in a recovery phase (as detailed by yesterday’s 0.5% rise in GDP) however the recovery is at different speeds, in different sectors.
• The 2.5% VAT rise is equal to a 1% reduction in wallet spend for the average consumer.
• Inflation remains a key long term concern for the economy.
• Exports continue to be in good shape with the weak £.  However, he did ask the views of the group about if the pound went up to the 1.25-1.30 range, would we see that as “damaging” – conclusion was no.
• Wage settlements continue to be inconsistent across sectors.  Some businesses opting to not offer increases, others awarding at RPI/CPI rate (up to 5%).

I asked whether the MPC took into account “natural disasters” in their forecasting.  It’s become clear now that a great deal of worldwide production is going to be impacted due to a lack of things following the disaster in Japan, such as micro-chips.  This inevitably may lead to a shortage of some goods in developed economies and therefore a potential to impact growth.  Sentace said the short supply may push prices up, therefore lifting selling prices, so my advice is ”buy it now” – for anything electronic!!

It also became apparent as there were a few businesses there which sold multi-nationally, that production by some major brands for developed economies is being capped in favour of developing economies like Russia, India and China (where there is a huge appetite for western goods and brands).  This is impacting on some of these goods entering the European supply chain.  For example, I didn’t realise that there was a shortage of pigment which car manufacturers use for painting cars, seems that one luxury car brand could only supply their cars in white for the forseeable future.  Interesting thought (guess what colour my new car is – that explains a lot).

It’s good to get these “think tank types” out.  Hearing real feedback from real businesses.  Having debate.  Listening to opinion and it’s a real value to meet other businesses from non-competing sectors to hear their view of the economy.  In a “sentance” – well worth the time investment.

Many of you may have recently ended your financial years and now be busy with auditors putting all the bits in the right boxes.  It’s a busy time.  The first couple of weeks of April are one of my busiest as new plan implementation starts and previous year closing ends.

It’s good to reflect though.  I find the process of writing the comments of the statutory accounts very worthwhile.  It really makes you look at the figures, dive into the detail and get a firm story in your head about your prior year performance, in order to not repeat any of the mistakes and to focus yourself down on the things that matter.

A difficult seven days. It started with my son being admitted to hospital for an unexpected appendix removal and as events unfolded also resulted in my wife being admitted into the same hospital for severe neuralgia.  Seven days on, my son is out of hospital and my wife is still in hospital.

For the first four days, I slept on the ward by my sons bed on a mattress, getting on average 3-4 hours of interrupted sleep per night.  During that time I saw some of the most empathetic nurses and others who should honestly consider changing job. I saw – first hand – how the NHS works and how you need to be assertive to get things done, how you play the system and what makes the difference between a positive and negative patient/relative experience.

Reflecting on a hectic week, there were a number of lessons that I thought worth sharing as they have a business relationship, in no particular order, here are seven things from the last seven nights: -

1. Be Decisive. Knowing that something was wrong and not hanging about.  If we’d of left my sons “severe tummyache” much longer, his appendix would have ruptured.  At times I had to be assertive with some members of the nursing staff to get things done.   So, if something needs to be sorted in your own organisation – sort it.
2. Take the lead. In moments of stress, anxiety or worry people look for a figurehead.  Someone that can give confidence and re-assurance.  If times of business uncertainty, lead from the front but don’t be frightened to ask for help or show that you’re culpable, but able to cope.
3. Listen to advice but take your own decision. You know your kids or your family.  The nuances, the little things, you live with them every day.  I’ve had to challenge some diagnoses this week, because I know my wife better than anyone.  It’s the same in business.  Listen to expert advice, but apply that advice with your knowledge of your business to get the best results, don’t rely on it exclusively.
4. Look for evidence when you need to make decisions under pressure. With lack of sleep, poor diet, stress and worry, it’s a recipe for poor decision making.  Irrational, more than rational.  One thing I’ve learned over the years is “look for the evidence.”  I had to make a judgment call to a consultants face to take my wife out of his care and take her to another hospital.  I looked at the evidence and made the call.  Best decision of the week. The learning is about ensuring you’ve appropriate evidence within the timescales allowed to be objective.  This is tough under great stress, but it lets you see clearly.
5. Mental toughness is a learned skill. So many people have been concerned for us all, that is a wonderful thing.  I’ve learned over the years that mental toughness is about dealing with things that you can influence, worring less about the things you can’t.  Staying objective, being honest and sharing the load wherever possible.  Not being a victim, but a person in circumstance.   I don’t believe in bad luck,  I do understand co-incidence and timing.   Your attitude to a situation, can influence it’s outcome.
6. Accept help. My in-laws are fantastic.  They are both in their late 70′s but two of the most wonderful people you could wish to have around you in a crisis.  Both rocks, nothing is too much trouble.  They’ve cared for us all and helped with the practical things, without them, this week would have been much tougher.  I quickly realised I couldn’t do everything with two family members hospitalised.  Look for those people in your team who can be your support you in the same way.  Trusted lieutenants and be realistic about what you can and can’t do.
7. Be clear in what you want. Just because you said something that you understand, doesn’t mean the person you said it to succesfully recieved it.  I said “My wife needs fluids” – I meant she needs a drip.  The nurse received this as “My wife needs a jug of water”.  It’s important to back-brief, clarify and repeat when discussing important matters.  Business meetings, strategy briefings.  You brief it, then get people to brief you back what you just said to them.  Same page of the same book.  Sorted.

If there’s one closing thought, it’s that business must always come second to your family.  They above anything else should be your priority in times of need or not.

Listening to how other people do things in their business is a pre-requisite of staying relevant in my view.  It allows you to think about the way you do things, challenge your conventions and go away with a notebook of scribbled ideas – hopefully.

I recently saw James Timpson speak.  James is the son and of legendary entrepreneur John Timpson, most normally associated with the Timpson Shoe repair chain in the UK.  I’ve read John’s auto-biography and shared a stage with him last year at the Institute of Directors North West awards where he picked up a lifetime achievement award.

James, speaking at the Institute of Directors North West Annual conference, shared some of his thoughts about their take over of the Max Spielman photo-processing business.  It’s quite a story, I’ve bullet pointed the main elements of the purchase aswell as the things that stood out to me about how Timpsons run the business.  In many ways, you could say they are unconventional, however I think adopt a lot of common sense things, that allow the business to exist.

Max Spielmann

• In 2000, 780 shops, 2600 staff.  Turned a £14M profit.
• By 2008, there were 350 shops and a £13M loss in the business.
• Technology change was the big contributor.  Move to digital.  Business didn’t react to the change quick enough.
• First thing they did was shut the head office to send a message to all the staff.  This, James outlined, is the fastest way to get to the root of the business problems.
• James then travelled to every branch, listening to staff.
• They quickly moved the business into digital print.  Passport photos and portraits.  Trying many different things before settling on these core services.
• The business is now making aroun £1.3M profit.

Timpsons Business Model

• No Electronic Point of Sale (EPOS), Manual Cash Registers Only.
• They run the business with an “upside down” organisational model.  At the top = Customers, then Staff, then HQ, then the CEO.
• They have two rules.  Money always goes in the till.  You always have to look the part.
• When they buy a business, turnover goes down for 3 years whilst they focus on higher margin,  more profitable sales.
• Prices are flexible in the stores and determined by staff based upon local market conditions.  So haggle!

Timpsons Philosophies

• They believe in employee empowerment.
• When you loosen the reins, the good people stand out.
• Bail out early, if you make a mistake.
• They recruit on personality using a basic Mr. Men style scoring sheet.  Graphic images.  Simple, yet effective.
• They always have a pipeline of potential recurits.  They send monthly newsletters to these people to keep them warm.
• They give every member of staff their birthday off.
• They have a large number of employ benefits such as a wedding car the staff can use, a hardship fund which people can draw from, holidays home for staff and a dreams come true fund.  Check out their welfare benefit poster here.
• All employees in the retail chain participate in profit share.  Basic calculation is calculated by adding up the wages of people in the shop that week and multiplying it by 4.5.  After that figure is achieved, then all staff get 15% bonus of the over-achievement.
• Any employee can give up to £500 compensation to any customer on the spot, in the interest of customer service.

What’s evident is that the Timpson business model is a big success for them.  Their small store, low cost, profit share business models relies a huge amount of employee trust.  They reward that trust with some fantastic employee benefits, a list that very few businesses could compete with.  I like their simplicity, their customer first business model and the non-hierarchical way in which the business is run.  Their business model is far from cobblers, it’s clearly repeatable, across the right retailing proposition and there’s plenty to learn from it.