Fallout from the US sub-prime market collapse which spread throughout Britain, France, Germany and Japan has now reached our shores.
Much of the credit offered by Australian financial institutions has traditionally been sourced offshore, so it is with interest that we look at the recent write-downs by international lenders, and consider the impact on our own economy.
During the last six months, international lenders who had carried assets at inflated values for many years have been forced to mark to market their balance sheets, resulting in significant portfolio write-downs.
The significance of write downs to date is showing current year write-downs in excess of US$337bn. Of particular interest is the inclusion of blue chip banks, including Citigroup US$69bn, UBS US$45bn, Merrill Lynch US$38bn and Morgan Stanley US$23bn.
With their balance sheets eroded international banks are protecting themselves against further losses by imposing tougher lending criteria on borrowers and by increasing the cost of credit via higher interest rates.
The fallout from the subprime credit crunch continues to be felt by Australian borrowers with three of the big four banks increasing interest rates beyond RBA official increases again in the past week.
Already showing signs of slow down following four successive interest rate increases by the RBA, the latest un-official interest rate increase is certain to have a further dampening effect on business and consumer sentiment which will inevitably translate into further reductions in discretionary spending, increased mortgagee auctions, corporate liquidation and higher unemployment.
Australia’s economic slowdown has increased the need for specialised corporate turnaround advice.
For more information please feel free to contact one of the team at Vantage Performance.
Regards
Michael Fingland
Managing Director
16 July 2008
Credit Crunch Carnage
11 July 2008
Business Development on a Friday Afternoon
Good Afternoon Australia,
I guess most of your team is checking the clock and counting down the hours to start their weekend after a long busy week. Am I right?
Why don’t you change that and invite your entire staff to drop what they are doing and join the management team to brainstorm about business development in the boardroom.
The results of this session might generate a bright idea towards the benefit of your company out of a long lasting Friday afternoon.
Nothing better than see your whole team engaged in developing your business.
What is your say on that? How would you react if your manager suggested it to you?
Our Vantage Performance team is looking forward to interacting with you again.
Have a great weekend,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
What if your cash position starts to tighten?
Good Day Australia,
Last weekend I went to a friend’s birthday and kept hearing how everyone has been suffering with the current market situation and how cash is king again. So I thought of writing about cash flow issues in our turnaround blog today.
When times like these where expressions such as "Credit Crunch", "Day of Reckoning", "World Crisis" and so on are part of our day to day and on top of that your Financial Controller seems more stressed than usual maybe your cash flow position should be re-analysed.
Cash position tightening due to negative trends on sales, increase of cost of good sold and other costs such as wages can lead to a dangerous road.
The shocking fact is that many businesses still not have a cash flow forecast to be able to predict if the business is "bleeding cash" and soon might be out of it. Does your business have a Cash Flow Forecast?!
It might the case of cancelling a few meetings to be able to concentrate and fully commit everyone to put a cash flow forecast up and running. Be concise about all your inflows and outflows, once the cash position is under control, start thinking of the next step: Growth.
Have you had a negative cash flow before? How did you manage to turn it around?
Our Vantage Performance team is looking forward to interacting with you again.
Have a great day,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
09 July 2008
How to make your workplace a desirable work environment
I always think that where you spend most of your time through out the years has to be a place of joy, friendly people and a health environment. So why not make your workplace another one as you spend at least eight hours a day, five days a week, 12 months a year.
Every year Fortune 500 magazine puts together a list of the top companies around the globe that people vote for best companies to work for based on what they do to boost employee satisfaction.
The reality is that the best incentives are non cash based where people appreciates the most. It can range from gym membership, trips to the coast, day spa, restaurant vouchers, day care, health insurance, casual Friday etc…
On top of that, employees also appreciate respect, good communication, feedback, mentoring, career opportunities, flexibility, balanced work and personal life.
Go ahead, make a change, be creative.
How is your workplace environment? What would you like to change in your workplace?
Our Vantage Performance team is looking forward to interacting with you again.
Have a great day,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
What if your staff is not engaged with you?
Good Day Australia,
Vantage had the end of the financial year lunch at an Asian restaurant in Brisbane. The food was great but what really caught my attention was how every single staff from the restaurant was fully focused and engaged to serve us best. We could feel the appreciation of being looked after with continuous customer service.
Having your whole team working together, communicating and fully engaged is a strength that every business must desire.
How to do it? How to keep it? Questions that pop up and it is probably easy to answer but hard to have it.
Quite often we all know the answers but the x factor is having this fully committed team in a day to day matter.
Letting others that remain silent to speak or ask them every time they remain silent in a meeting or in a discussion room might instigate those that feel out of the team to “step up a knot” towards your business growth.
Eight hours a day full of meetings, daily commitments, networking and planning. Does that sound familiar? Are you able to stop and have a chat with everyone on your floor and listen to them for a couple of minutes?
You might notice that those team members that have been underperforming should start showing more thoughts related to your business. In the end of the day, everyone likes to work in a friendly and constructive environment.
How do you engage your team on a day to day basis?
Our Vantage Performance Team is looking forward to interacting with you again.
Have a great day,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
03 July 2008
What if one of your key personnel decides to retire or leave the company?
Good Day Australia,
Driving to work today I thought of how people get paralysed when they are caught up with an expected situation and decided to post something about it. I hope you all enjoy this one.
When you feel everything is going according to plan, an unexpected resignation or premature retirement letter reaches your human resource department. What’s your reaction?
Did you think of talking to the person trying to understand the reason behind the decision? Is it possible to reverse this decision?
In case that the situation is irreversible, an action plan should be developed and followed.
Informing all your team about the resignation through a formal circular to the staff clarifying and prevent any sort of negative rumour is a major step.
A next candidate for the position should be appointed; the decision is if an internal or external person will take the job. In case there is not a perfect match there is a possibility to wait and take the process slowly as there is nothing worse than hiring or promoting someone that is not suitable or is not ready.
After stabilising the situation meetings could be held to determine how things will be from now on and engaging the staff in general as a team to get through together.
As a suggestion, do not panic because this feeling can be passed on to others and the situation might get out of control. Always have a back up plan around crisis management involving any risk that can affect your business.
Have you had any sort of experience related to losing a key employee? How did you manage it?
Our Vantage Performance team is looking forward to interacting with you again.
Have a great day,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
Has your business grown too quickly?
When your business has had sustained rapid growth and margin decline or losses at the same time, a red flag should be raised.
Increasing sales at the cost of margins is a condition that we come across far too often. Typically it occurs over time “naturally” as management teams often don’t have the systems and controls in place to understand by product or by customer how the increase in sales is affecting their profitability. Failure to pass on raw material or input costs is a key issue as management teams are too afraid of losing customers.
At the end of the day if you have faith in your products and/or services then at some point you need to trust in that and hold your ground or price increases, particularly if failure to do so may place your business in jeopardy.
When was the last time you checked your product range and conducted a pricing and margin review?
Our Vantage Performance team is looking forward to interacting with you again.
Have a great day,
Vantage Performance Team
Turnaround Management Specialists
www.vantageperformance.com.au
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