Subscribe to this Blog


Subscribe Via Email

Enter your email address:

Friday, February 29, 2008

Sprint Becomes Poster Child - How to Run a Perfectly Good Business into the Ground

Sprint made it official this week.  They have officially run Nextel into the ground.  Nextel, used to be a great example of how a cell phone company could provide best in class products and services to business users.  The combination of a cell phone company partly owned by a cell phone manufacturer (back in the days when Motorola was still considered a 'manufacturer') created that unique combination of good technology and good service.

Sprint came in and purchased Nextel for about $36 billion dollars.  Sprints extremely poor reputation among business class cell phone users (quite a few of which had dumped Sprint to go to Nextel in the first place) created a panic and shortly there after an exodus. 

Sprint's purchase and operation of Nextel chased away 683,000 wireless customers!

Sprint may have been bigger than Nextel and Nextel's technology may have been in need of a rejuvenation, but Sprint was neither better nor rejuvenating and now Sprint shareholders are paying for that bad move.  Some cultures just do not mix.  Its would be akin to watching Super 8 hotels try and by the Wynn.  Sprint would have been better off gambling with fast food, or music downloads or even peddling a plasma lift to aging baby boomers, but not trying to run Nextel.

Sprint Nextel Corp., the third- biggest U.S. wireless carrier, posted a $29.5 billion loss and scrapped its dividend after writing down the value of Nextel Communications Inc. and losing 683,000 customers.

Bloomberg.com: U.S.

RFID Patient Bracelets

We rarely like to think of ourselves like cattle or any other item for that matter, but I was struck by a local story here in North Carolina.  A Florida man had wandered out of a local hospital and died about a quarter mile down the road just off into the woods a bit.  No one found him for almost 2 years and they made an identification based on the hospital medical id bracelets that he was wearing.

It struck me that hospitals back then had not yet adopted RFID technology.  They are using it more and more these days, especially with newborn babies.

I mention this from the perspective that while we start to face up to the potential of a recession many talented logistics professionals are going to be searching for a new job.  For those that have developed expertise in RFID applications, they might look outside of the traditional world of logistics and consider where else RFID technology might be applied next and that could include hospitals, prisons (sad but true) and possibly even events from concerts to sporting events and amusement parks.

Monday, February 18, 2008

Prodding Cattle to a 143 Million Pound Beef Recall

The beef industry this week is looking at the largest recall in beef across the country in history.  It stems from secret video that capture workers at a meat packing plant using electric cattle prods and fork lifts to move cattle that couldn't walk to the butchering area.

Cattle that can't walk are not allowed to be butchered and sold for consumption as they may be at a greater risk for mad cow disease.

Not being able to walk is one of the symptoms.

The plant claims that the animals cleared inspection just fine before this occurred, which either means the cattle lost the ability to walk afterwards (still not ok), someone subverted their inspection process, or the cattle got cold hooves about getting butchered, not realizing that if they had BSD they would be put down just the same.

Currently, the recall is estimated to hit 143 million pounds of US beef from one California plant.  As past recalls have indicated, this may be just the tip of the latest ice berg, like getting wave after wave of Macys coupons in the mail leading up to Black Friday.

This latest recall however, could spread as more plants review their own processes and work to prove that they are not pushing a fork lift in a cow before its ready to be cooked.

Friday, February 15, 2008

How to get a Better Deal with Your Good Credit or Cash - Part 3

We have been covering a multi part series to help our distributors and wholesalers and other businesses navigate an economy where credit is starting to rapidly constrict for businesses.  The reality is that a number of the large banks that have been burned by mortgages also operate in credit markets for businesses running factoring and insurance companies that lend to businesses and secure receivables.  As those companies have taken major losses in mortgages, they have instituted tougher controls in all areas of lending and that mans distribution credit is tightening.

See the first parts in these articles first on How Distributors can Navigate Tightening Credit - Part 1 and then How to Play your options During Periods of Tight Credit - Part 2

So when you are positioned well with your own cash or credit or ship shape financial records, its time to do some business and get ahead of your competitors that are in a tougher position.

The reality is that your vendor pays their factor a fee for financing your debt. Now this fee is not typically going to be very large, maybe a 1-3% tops.  That's not a big percentage but if you are buying a large amount of goods, it could open the door for you to split the difference with the vendor and prepay in cash.  You will not get anything if you do not ask, but be careful not to demand. 

Some vendors do not have flexible programs that enable them to discount a sale to remove the cost of credit.  Appeal to their greed by offering them 40% of the factoring fee that would have been paid and you get the other 60% in a reduced price.  If their pricing is locked down, ask them for a credit on your account to be used against additional future purchases.  Sometimes their systems (especially warranty and returns) can not accommodate a 1 off price change, but they might easily be able to give you a manual credit, especially when its linked to additional future business.

If you can not get a discount, look for some of those other little things that you probably have needed for quite some time.  Replacement units, FRU, promotional materials, maybe some firesale options, or maybe even the first shipment of arriving product if products are on back order.  If you are working from the position of providing updated financial statements, ask for a higher credit limit from both your vendor and from the factor. 

Also consider talking to the factor about establishing a line of credit directly with them if you do not already have a line of credit.  See if you can translate your history and information with the factor into a real asset that you can trumpet for your business.

Thursday, February 14, 2008

NetBooks Online ERP Accounting System

As a former accountant, I have worked with some of the largest and some of the smallest accounting systems and ERP systems in the world.  More and more though companies are trying to find a way to match their accounting (historical) with their forecasting (future) and sales (today) processes.  That often means matching up people from different walks of life in the business and the internet is the only real way to do that effectively.

ridgely-evers Now, I have been running my own company on Quickbooks for several years.  As the time comes to consider the upgrade question, I came across a new company called NetBooks created by one of the original QuickBooks designers, Ridgely Evers.  He founded NetBooks.

Now, even with QuickBooks I have considered the concept of doing some online accounting work.  That product if you buy the software will have you doing updates all the time so that you will wish you had run a system online where someone else gets to be responsible for the joy of keeping the system upgraded and finally tuned.

NetBooks

Basically, NetBooks charges $200 per month at a starting rate covering 5 users.  It provides Small business management software that helps bring together the inventory and the marketing team with the accountants so at the end of the day it is more of a small business erp system than just a book keeping program.

If you compare that to the starting price of Quickbooks at $200 plus the price of Salesforce.com for 3 users at a starting price of $60 per user (5 x $60 = $300) per month, this is a pretty good value.  Plus, instead of trying to work in 2 systems, you have it consolidated into 1 system.

Woman Sues Best Buy For $54 Million - Notebook Allegedly Stolen by Employees

trusted-geeks-best-buy Many people today can not live with out their laptops.  Laptops often hold passwords, personal finance and credit information, company trade secrets, sensitive financial information, email communications, contacts and much more. 

The value of a laptop is often physically inexpensive compared to the cost of the software installed on the laptop and even much less expensive than the value of the information on that device. 

Imagine then trying to identify the value in actual dollars if your laptop were stolen by the company hired to perform repairs or upgrades on it?

Consider the further aggravation if that company loses or enables your device to be stolen by employees or other customers due to lax security.  Then consider the time you would spend trying to track down and secure your laptop and the information on it if you were not given open and honest information about the theft.  This is allegedly what happened in a case brought against Best Buy for $54 million.

 

In addition, Campbell claims Best Buy was indifferent and insulting in its response to her repeated requests for a theft investigation and compensation, and showed a "company-wide disregard for legal obligations to immediately disclose the theft and notify me of potential exposure to identity theft over the course of the ordeal."

Best Buy has said it has done everything it can to make amends. "We're obviously embarrassed and disappointed that we were unable to resolve this customer's issue," a spokeswoman for the retailer told The Associated Press. "We've tried to resolve this dispute and feel badly that it escalated to a lawsuit."

In her blog, Campbell provides a timeline of her contacts with Best Buy, starting May 25, 2007, when she left the broken notebook at the Tenleytown store for repair under a service contract. On Jan. 25 of this year, a Superior Court judge recommended that she and Best Buy try to settle the matter on their own.

Campbell said she offered to drop the suit, if the company paid her for her expenses and time and addressed "the shortcomings in its property and privacy protection practices." Best Buy hasn't responded, according to Campbell, and the next court hearing is set for Feb. 22.

The only compensation Campbell has received from Best Buy is $1,110.35 that was transferred into her credit card account in late October without her consent, the plaintiff said.

Woman Sues Best Buy For $54 Million Over Lost Notebook -- Best Buy

So what do you think?  How much is your laptop really worth?  If stolen, could it sabotage your credit, tank your business, make you lose an important deal or miss an important deadline?

Wednesday, February 13, 2008

How to Play your options During Periods of Tight Credit - Part 2

This is Part 2 of a series initiated with the article 'How Distributors can Navigate Tightening Credit - Part 1' .  Credit is rapidly tightening for many distributors and wholesalers.  There are certain characteristics of companies that successfully navigate these periods and ways to navigate them to come out on top of your competition.

If you are relying on vendor financing, then you will need to provide transparent audited financial reports for review and justification of your future orders. 

Short of that you can fall back on your own lines of credit possibly through your own banker.  The benefit of this over vendor financing is that you get to keep your financial information private out of your vendor or factors hands.  Plus, you get the benefit of the credit when you go to all that trouble of providing audited financial reports.  When you get vendor financing through your vendors factor, you are essentially meeting all the obligations to get a loan and then giving the loan to your vendor so that they can DO you the favor of giving you financing.

If you do not have the credit, then you better have the cash.  This is your last option to make a deal especially if your competitors are in a better position.  Cash talks and even carries a premium when credit is tight.  If you do not have the cash, but can turn the business, you may want to get creative but be careful.

I know a very successful company, whose owner makes a couple inventory purchases each year on an Amex card.  He pays the card off within a week of the deal, but racks up a ridiculous amount of frequent flyer points which pays for his travels for the next 52 weeks around the world.

In Part 3 we will talk about advantages that you can benefit from if you are in the right place at the right time.

Tuesday, February 12, 2008

How Distributors can Navigate Tightening Credit - Part 1

Click HereAs a distributor or a buyer it is the phone call that ruins your Monday, Tuesday, Wednesday, Thursday and especially Your Friday evening.

"We were just getting ready to ship your order of 10,000 widgets, but the credit department needs more information to release your account from hold."

Take a big breath maybe some energy pills or a red bull and then get ready to do some business. 

Reviewing The Facts

You have a great payment history.  This is your vendor calling telling you that they can't ship a sale to you.  You call your your sales representative with the vendor and they can't fix anything, but promise to take you out to dinner whenever they see you next quarter.

Your shipment and possibly your own customers delivery (and their subsequent payment!) are in the hands of a twenty something credit analyst that works either for your vendor or for a factoring company somewhere halfway across the country.  They do not know you by name, they do not know anything about your business nor how much business you have done, do today or will do tomorrow, if that order will just ship!

When Credit Tightens Cash Rich, Debt Free, Transparent Companies Thrive

There are three characteristics that companies will adopt if they want to thrive during a period of tightening credit in the distribution industry.  These characteristics are not mutually exclusive and can be mixed or matched for even greater rewards.

The Characteristics:

  • Cash Rich Companies - both cash in hand and a healthy cash flow process
  • Debt Free - Companies that are debt free will have a better chance to borrow money during a credit tightening period.  If a company goes into a credit tightening period with a line of credit fully open, even better.
  • Transparent Audited Books - If your company is going to keep vendor financing flowing through the vendor credit department or through a factoring house, then you will have to provide updated audited financial statements on at least a yearly basis and probably a quarterly basis. (Quarterly to supplement audited yearly)

Now when credit flows free, you might be able to get something shipped based on your relationship with the vendor, the vendors sales team, or even officers in the vendor company.  But when credit is tight, everyone is locking down on controls like firefighters cutting fire lines to fight the spread of trouble.  No one is going to risk their jobs, their careers or their company on single deals when they can not support their business decisions with the facts.

Monday, February 11, 2008

Making of The Hobbit - Out of the Frying Pan and Into the Fire

Image of New Line Cinema as Smaug the Dragon from the novel The Hobbit Just like the title Chapter 6 of The Hobbit, "Out Of the Frying Pan and into the Fire" and making up The Hobbit movie has just recently jumped out of the frying and into the fire.  Peter Jackson, who directed the original trilogy, ended his lawsuit against New Line movie studios and took on the role of an executive producer for the movie of the prelude to the trilogy called the Hobbit.  That gave the green light to start making the movie until the charitable trusts that owns the rights to all of the Lord Of the Rings books including the hobbit filed a lawsuit against New Line Cinema today for $150 million.

According to an agreement that dates back to the late 60s, a charitable trust of the late JRR Tolkien was to receive 7 1/2 percent on gross receipts less certain expenses.  They claim that they did not receive $150 million of that money from New Line Cinema and the first trilogy which has grossed over $6 billion worldwide.  There are now threatening to remove the rights to make the movie entirely from New Line Cinema.

Given all the lawsuits you have to question in considering whether or not New Line Cinema has accounting practices that are up to par.  Just like they say in the novel for the hobbit, sometimes where there's smoke there's fire and it's possible that New Line Cinema is the metaphorical dragon, Smaug (pronounced Smog).  It is hard to imagine that New Line would work so hard to torpedo the success of a 4th Middle Earth movie after hauling in $6 billion plus on the first three, but they seem to be making all the wrong moves first with Peter Jackson and now with the holder of the IP rights.  It might be time to check the pulse of the leader of this company and see if the bpm of the organization is still alive or if they are shuffling things around to prop up a serious problem.

Sunday, February 10, 2008

Strike Ending - Hollywood Didn't fall off into the Ocean

hollywood-writers-strike We called it about a week early, but the writers strike in Hollywood is now ending. Writers are heading to sign the papers soon and will be back to work sooner, but they are returning during an economic slump and during a year where much of the work is cooked.

Just like many large corporations that go through massive layoffs, the entertainment industry has also had to learn how to deal with out this portion of their talent pool.  As they have learned to do more with less, they are also less likely to incorporate writers into as many areas as they used to right away as the budgets are already set and because they now no how to do without the writers in some situations.

Plus, the writers now will cost more than they did in the past as they seem to have won in the bargaining and gained much of what they are looking for.  They better invest it well or else they might find that Hollywood has found cheaper, faster, alternatives and that could push some of those writers out of the business all together.  They might find themselves pushing real estate Branson Missouri after the next strike.

 

 

Related Articles

Distribution Business Articles: Movie and TV Distribution May be Back Heading Back on Track soon

Monday, February 04, 2008

Movie and TV Distribution May be Back Heading Back on Track soon

The Hollywood writer's strike has caused a huge back log in distribution for movies, television shows and much more.  The 4 month old strike may be ending soon and that might finally turn this old fashioned industry ship back on course.

Writers are likely to return to an environment where the years budgets are already set, where reality shows are 3 times more dominant and where they will have to scavenge to get a foot hold on new projects.  The projects that will fly will likely be heavily subsidized from industries that still have free flowing cash like Las Vegas hotels and casinos, companies like Microsoft, and maybe your odd car company that isn't faced with a $12 billion loss.

  Writers that were working on existing projects may find that the projects have been scrapped or delayed or they may have to rush to finish projects months over due. 

The reality is however that this strike has caused a back log in production that will take at least a year to work work itself out a shallow level.  Many people feel that like the writers strike of 1988, it may take twenty years for this one to finally get back on track as well.