One thing that is certain to give you grey hairs at some stage in your business owning life, is the concept of redundancy. If, when things hit fans, you are able to move easily to an alternative supplier or resource, you will have an edge over your competitors, and still be able to deliver to your customers. With minor glitches perhaps, you will be able to maintain your profitability, and hence your business’ value.
I maintain several prepaid SIM cards from different carriers in order to be able to buy some data quickly, in need. In the last year that policy has helped me several times as my primary operator has thrown a fit, or I have found myself at a meeting or conference with poor coverage for my principal carrier.
If your business has only one supplier of a primary service or product, your bank will take a dim view of the business value and risk profile. Particularly if that single supplier can screw up the first day of spring for you. As I originally wrote this, a Standard Bank executive was claiming that everything was back to normal. It was not. “If I can be honest with you….” (like they aren’t always). “We truly apologise… ” (because it’s not always truthful).
Why do we insist on having all our funds and facilities in one bank?
The problem stems from the banks themselves who insist on certain “covenants” if your business has any sort of credit facility with them. Some of those covenants created potential value problems for Standard Bank customers when their electronic banking facilities collapsed for the first few days of September 2014.
So the week 36 little debacle serves to highlight in an inconvenient way how we can fall foul of the very covenants which our various banks insist on, in order to safeguard them.
Try negotiate yourself into a space where you are able to have more than one supplier, including your banking supplier. Just so that if something desperately needs to be paid on the first day of spring, you are able to pay it or (better) receive it.
I have bounced this idea off several clients, friends and banks over the last two weeks. Here are the problems:
- Your banking covenants forbid you doing so, particularly if you run any sort of credit facilities with the bank
- There is only so much money to go round
- You’ve already burned all your bridges at other banks
- You just couldn’t be bothered
I don’t think any of those are insurmountable. Just do it. We are South Africans. We make plans.
I was wondering if we cannot have an alternative to the post office. We dont receive our critical parcels (courier service via post office) . It throws us completely. No statements so the supplier wont give our discounts. There should be a covenant of no striking for postal workers. Thanks for your wonderful down to earth emails. They are one of the few that I actually read and understand. Keep it up.