EBA Consulting Ltd

"It was during the glory years (of IBM), its years of greatest profit and greatest admiration that it was making the mistakes that sowed the billions of dollars of losses that came later "  Bill Gates (Born 1955) , Microsoft Founder

Tel: 01554 890300

Setting the Price

Marketing is an important discipline in most businesses with certain elements demanding closer attention. One such element is the setting of price levels for the products or services sold.

Pricing is a delicate balancing act, if charges are high, the risk is lost customers, too low and margins are eroded thus eating into profits and eventually causing cash flow problems.

In setting prices, knowing your markets, your customers and the benefits of your product and services are all essential.

Your marketing plan should put mechanisms in place to monitor these fundamentals. Most importantly you need to know what your competitors are doing and how your prices and quality compare. Price is not always the deciding factor when a customer makes a decision, perception is all important; a higher price implies high quality whilst a lower price implies low quality.

The strategy set by the business must be conveyed to the sales team to ensure the whole message is getting across, if the message is quality, service and reliability make sure this fits in with the pricing structure.

It is also fundamental to generate your price make-up based on the financial structure of the business. View your accounts in some depth. Analyse the costs of producing the product and service. Don’t solely depend on your competitors for the pricing strategy. Work out what it cost to produce and what is the desired profit level, that way, elements of the business can be adjusted to ensure you can effectively compete.

This method allows you to have a range of prices with a known break even point. The selling strategy can then be developed according to the marketing plan objectives.

If you need assistance with this contact us now before it's too late

It is vital  businesses, especially the SME sector gain access to key areas of assistance to help them in their development process.

Have the Factoring Companies Learnt Their Lesson

Many small businesses considering factoring as a method of funding view it with a great deal of suspicion. Those businesses that have entered into a factoring agreement still have difficulties in coming to terms with the methods of operation.

The negatives which surround factoring range from it being too  expensive, loss of financial control through to concerns over customers being pestered for payment by someone they don't know. Unfortunately all of these concerns are justified and do cause problems.

Factoring as a funding method can be an extremely important tool for the stabilisation and development of a businesses. Over the last 10 years its growth has been exponential with more and more providers entering the market place. This has the effect of increasing competition and improving levels of quality and service.

Businesses too often are being sold factoring on the basis that it takes care of your funding and credit control function thus saving you cost internally and your sales ledger operates smoothly in ‘our hands’ – 'we are your credit control department'- in theory yes in practice standards vary.

There is nothing wrong with factoring,  if it is too expensive, or you lose control or the collection process is being handled badly then there are two fundamental problems, firstly you have misunderstood your role in the process and secondly the factoring company is not providing the correct service for you.

Cost of a factoring agreement normally has to be weighed against an overdraft facility. Overdrafts generally are at a fixed level; they lack flexibility and are constantly under scrutiny from the bank manager. The Brumark ruling has also influenced decisions and can be a fundamental reason for changing to factoring.

Ongoing factoring charges must be constantly scrutinised as 'extras' often make the monthly cost very high. Simple things such as demanding payment by BACS instead of cheque can rack up the costs significantly.

We always advise businesses to monitor their sales ledger as if factoring is not in place. This reduces the possibility of late payments, disputes and most importantly ensures contact with the client accounts department which can be an invaluable source of marketing information. Unfortunately, too often owner mangers get into a pickle with their sales ledger through lack of involvement, this can result in unnecessary recourse of advanced monies, meaning fund availability is significantly reduced. The end result is a notional facility of 80% advance, in practice drops to 60% or less advance funding . To avoid these problems we recommend incorporating information provided by the factoring company into the business accounts on a daily transactional basis.

Tackling service levels is always a thorny issue, if the accounts side is under control then its  easier to ask the factoring account manager specific question in relation to debt collection. Always work with the factoring company to ensure they work with you.

Factoring is here to stay, used correctly it can improve business performance, used incorrectly  and there is a recipe for disaster. The onus is on both parties to work together in partnership to provide the right working capital scenario for the business. Above all remember you as the business are paying for a service get the best out of it!

If you would like any assistance with your factoring or to have your facility analysed to ensure you are getting the best possible service and funding  contact us now for further information.

Manufacturing Decline

If UK manufacturing output grows by its 20 year average of one per cent per annum, manufacturing productivity grows by 3 per cent per annum, and UK GDP grows by 2.5 per cent per annum, then manufacturing will shrink to around 10 per cent of UK GDP and 5 per cent of employment by 2050.This study, conducted by left-leaning think-tank the Institute for Public Policy Research (IPPR), will do little to lift the gloom hanging over the beleaguered industry, which, despite a recent rally, has suffered from falling order levels and profitability for over a year.

Current figures in the manufacturing sector show approximately 20 per cent of the UK ’s output derive from manufacturing with employment figures at 16 per cent of the British workforce. The most worrying factor presented by the think tank was that the government would be unable to reverse this decline over the next 50 years. The report criticised business support schemes for not offering firms good value for money.

The report's main recommendations are:

* The government must maintain the attractive UK Corporation tax regime if business investment is to recover.

* The existing age limit on manufacturing sector Modern Apprenticeships should be lifted without delay.

* Firms should not be compelled to increase their levels of employee training, but they should receive more effective help in planning their training needs.

Richard Brooks, research fellow in economics for the IPPR, said that there is no simple ten-point plan for manufacturing.

"Instead the government needs to maintain macro-economic stability and match it with a period of micro-economic political stability. This will provide businesses with more certainty about their environment and will allow for quality evaluation of existing government policies.

"At the moment the evaluation of support schemes for investment, innovation and enterprise is rarely performed in a rigorous and independent manner.

"This means we cannot be sure whether such spending represents value for money, whether the pattern of current spending is appropriate, or whether we should be spending more or less overall on such initiatives," he said.

If you need assistance with this contact us now before it's too late