Big banks? We love 'em!

I promise not to spend too much time on banks – they’re such easy targets BUT since I spend most of my time with small business these days, I’m seeing the reality of how banks deal with small businesses rather than what they say in the press or what they say to government and their civil service advisors, who of course, don’t have a bloody clue since almost none have ever done a proper job. Please tell me I’m wrong – I’d love to see the evidence!

Although this is a rant, it’s not an ill-informed one. I have been along to the DTI (I’m sorry, I’ve found it difficult to remember what Mandelson is now calling it) and told a politician and two civil servants how the banks were screwing small businesses. They listened closely, this was for them, down and dirty, they weren’t let out often and here was someone giving them real details of banks who were screwing and reneging on their clients. I could only think afterwards that this was the equivalent of pornography for them - I can hear about it, I can view it but thank God, I’m not really involved!

That’s monstrous isn’t it? Well, unless you’re going to deluge me with the details of politicians and civil servants who have experience of the real world, I think we should move on.

So, returning to your friends and mine, the banks, let me continue with the story: I’ve bought into these three companies in the ‘media, digital and sports’ sectors. They’re all small and range from struggling but in a recession-resistant and organically growing business to one with near perfect financial results but from a small base. I met one of the relatively senior execs in the bank and frankly tell him that, if they don’t have the interest or capacity to lend, then please tell me up-front. And if they’re only interested if given a personal g’tee, then please tell me straight away because if I’m personally g’teeing something,  why would I use an intermediary slowing things down and adding a margin?

Yes, yes this was understood I was told and then the process became clear, we started with my contact and briefing him thoroughly on our businesses; then we were assigned to a development director who asked us lots of questions about our businesses and as you do, my team answered them as if they were absolute insightful gems “That’s a very smart question if you don’t mind my saying so!” Yuk!

Finally three months on, we were asked to meet our Relationship Manager with whom we’d work. This is feeling like progress. So, into our office comes this big, smiley guy and again, he asks us lots of questions about our business and again, we say, “What smart questions, you clearly have a good understanding of our sector!” Yuk again but this is interview three – clearly we must be moving in the right direction? And then he comes out with it, ‘obviously with such a young business, we are going to want security on the directors’ assets.

I go crazy , stunned that 3 months later, they have done precisely what I’d asked them not to do – 3 months completely wasted. It’s clear that this relationship manager had never seen my three month old brief – but no matter, I’m looking for blood and ranting at him

(afterwards I feel guilty) and suddenly, he opens up: “Well, I was a local bank manager for 20 years, I know exactly what you mean: I had personal discretion on loans of up to £200,000, now I have no authority at all. Everything is referred to the credit committee. ”

However, something good has come out of this disgraceful behaviour (and the only reason I’m not giving the bank’s name, is because they are – or were- all as guilty as each other.) The businesses needed funding and if the banks weren’t going to play, I decided to give personal g’tees directly. So I have gambled  and g’teed certain performance measures but in return, I have negotiated for an increased equity stake in the businesses.

So, a by-product is that I have majority stake in two of our three companies: a lot more risk but potentially, a lot more rewards.

Customer Service

I make no excuses: people who don’t understand or care for their customers drive me really, really crazy, so it’s a regular occurrence in my blog. But behind it, the big question is ‘What can we learn from this?’ And in addition, since it seems to be so easy to criticise, let’s make sure we properly celebrate those who are getting it right – they’re out there somewhere!

So, I’ve got this place in New York and  - partly for business, partly for pleasure -  I go across every other month. I use a chauffeur- drive service each way to get me to my apt six times a year. Since these drivers earn relatively little,and they’re often immigrant families making their way in the USA, I like to give them a decent tip (yes, you may have this hang-up that it’s demeaning – and funnily enough – hang on to your money as a result, I see it as ‘recycling’ the money) . However, before we draw battle lines, there’s no way I’m going to stuff a $20 bill down the driver’s throat if he sits in he car when we get to the destination and won’t get off his butt to get the cases out of the trunk or whatever. It’s weirdly self-perpetuating: the guys who sit on their backsides don’t expect a tip and don’t get one whereas the alert, chatty ones….

Is it just me or do you feel that way?

Football Rules

The management lessons from football go on and on. The Evening Standard, December 10th  commenting on the impending departure of QPR team manager Jim Magilton said “Magilton is expected to be sacked along with assistant manager John Gorman. Gorman is believed to have asked the first team squad whether they still supported Magilton at a training ground meeting yesterday and no-one raised their hand”.

This apparently was all about the tough style of the manager losing the confidence of his team. There are three rules here:

1. You can be a tough bastard as a boss but once you are seen to be a bit of a loser people will turn on you and give you no support at all in your hour of need.

2. You should never, ever need to ask people if you have their confidence, you should already know. The fact that you ask shows you yourself don’t have confidence in your own position. Employers are just like animals, they spot weakness and can smell fear – and if you are not popular this is their chance to put the boot in.

I remember when I was a very dominant figure in my first company. I wasn’t disliked but I was getting up myself and starting to take my team for granted. One day they called a management meeting and when I came into the Boardroom, there they all were: sitting uncomfortably, looking embarrassed but determined. Immediately I knew I had trouble. I had been talking endlessly about floating the business but we were being contacted by several agencies who wanted to buy us. I was acting like a tart, enjoying the whole courtship, the dinners and the flattery far too much – and of course, not spending enough time on running the business. Their message was ‘just decide and get on with it’. Even though I was the 51% shareholder, in a people business that is owned by the management it’s incredibly dangerous to rely on that power. Anyhow, they were 100% right (not 49%) and so I did as I was told. Luckily, I took the right option of floating not selling and built a hugely successful business.

3. Apart from the attack of hubris, my mistake was in getting too distant from the team running all the day-to-day operations. It shouldn’t have needed a confrontation.

Football managers and their assistants very often are a double-act of complementary characters. One of the most successful combinations in football that I know consisted of a manager who always wore a suit and never went on the pitch, while his assistant was always in a tracksuit but rarely off the pitch. But very often it is a good-cop/bad-cop combination. Then it’s always the role of the good-cop to have good people skills and know his team well. The fact that the Assistant Manager had to ask, in effect, whether the players supported his boss shows that the combination was not properly balanced.

Having said all that, I’m taking the lessons from a scenario as painted by the press because I don’t know them personally. Football management is a horrible business where absolutely everything you do is on show: any little weakness is magnified and of course everyone can do your job better than you. Also you have less time to do your job than in any other profession and your bosses are usually ignorant and unreasonable. I know this well as I’m one such boss. As owner of Woking Football Club I led a small group in the selection of a new manager. Unfortunately, after his first seven games his record was lost six, drawn one and won none, morale was rock bottom and the fans were baying for blood. We ended up firing him after only seven weeks of the season – certainly not my proudest moment – but not that unusual in the unreal world of football where everything is more intense.