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From the time he was born in South Africa, Michael Parry was exposed to a very international life. His father was born in England, his mother in Poland and his sister in Cyprus. During his lifetime, he has visited about 80 countries across the globe.

After finishing high school and his compulsory military service in the South African Air Force, he completed five years of articles with the largest public accounting firm in South Africa at the time, Alex Aiken & Carter, which subsequently merged with KPMG. During his articles, he became the audit manager of two of the largest gold mines in the world, a large hospital, one of only two casinos in Southern Africa, banks, savings and loan institutions, manufacturers, retailers, hospitality and many other industries.

After spending over five years in auditing, Michael knew that he did not want to stay in the auditing profession. However, he was not sure what he wanted to specialise in. He left the public accounting profession and joined the second-largest chicken producer on the African continent, Festive Farms, as their Financial Accountant. After two years, at the age of 27, he was promoted to Chief Financial Officer of the company. Shortly after this promotion, two things happened that would influence his career forever.

While Festive Farms was the second-largest chicken producer, they also produced and supplied about 95% of the commercial turkey demand in the Southern African market. With the vast majority of turkeys being consumed only during the Christmas season, all of their large chain customers would put tremendous pressure on Festive’s parent company, Imperial Cold Storage (ICS), to sell turkey at below cost so that these chains could use low turkey prices to compete for customers over the holiday season. The threat, from these big chains, was that if Festive Farms did not sell turkeys below cost, then the big chain stores would not buy other ICS products such as seafood, dairy, vegetables, ice cream etc. And so Festive, while very profitable on the chicken side, lost a fortune on the turkey business.

At his first management board meeting as CFO, Michael asked why Festive was in the turkey business? Most of the management made fun of his question. Why would any company give up something in which they controlled 95% of the market?  Fortunately, the President, James Abel, realised the significance of the question and a Board of Directors’ decision was made within a few weeks to exit the turkey business. All of the turkey farms were converted into chicken facilities and the results were dramatic. Within a year, the profit of an already profitable company quadrupled. It was this result that made Michael realise that he wanted to specialise in improving bottom lines significantly.

The other factor that had a significant impact on Michael’s future career also happened while at Festive Farms. The company was upgrading its phone system from an old plug-in board to one of the newest inventions at the time in Southern Africa, a large PABX system, and Michael was responsible for the purchase.

Two vendors were in the running. During the negotiations, one vendor was bad-mouthing the other vendor for not having any sales of the new PABX system in the Southern African market. This other vendor was one of the leading technology companies in the world at the time, the British GE, who had sold quite a few units elsewhere in the world, but not in Southern Africa. The cost of the new equipment was a lot of money back then – about 30 times Michael’s annual salary as CFO. Upon learning this information, Michael was able to turn GE’s weakness into a strength and negotiated the purchase of the PABX system from GE for free, but allowing GE to bring in one potential customer a week to look at the newly installed equipment at Festive, as long as one week’s notice of the visit was given. After GE made their second sale, they stopped bringing potential customers around. This experience was the start of Michael’s passion for negotiating win-win situations.

After Festive, Michael joined one of the oldest steel foundries in South Africa, Ferrovorm, that had recently been acquired out of bankruptcy by the construction conglomerate Murray and Roberts.  Within three months, the actions that Michael implemented, enabled Ferrovorm to return to profitability and, through positive cash flow, to repay Murray and Roberts their entire investment in acquiring Ferrovorm.

One day, after meeting the German Chairman of the Board of Dürr South Africa, Michael was hired as the CFO. Dürr South Africa had not made a profit in the South African market in the entire 10 years that they had been operating in the country. Over the next two years, the company had the best results in nearly every measured ratio in the worldwide group.

In 1985, at 32 years of age, Michael was transferred to the USA as the CFO to be a part of a turnaround team to salvage the US operations of the Dürr Group, which was achieved within a few months.

From the end of 1988 until mid-1997, Michael owned his own turnaround firm, proudly achieving the record of never having a client file for bankruptcy. In 1997, Dürr asked Michael to return as CFO, as they were going on an acquisition run and the North American CEO was going to retire in 2 years. Over the next few years, over a dozen acquisitions were completed and in 1999, when the CEO retired, Michael became president of Dürr Inc. (the US holding company) and he was the only US member on the Board of Directors of the US operating and holding companies.

In 2006, Michael left Dürr and moved to Grand Rapids, Michigan. Once again, he started his own firm, Parry, Murphy and Associates, but this time specialising in helping clients, on a pure success-fee basis, obtaining fairer pricing, mainly from their existing suppliers, without negatively impacting quality and/or service.

Through experience, Michael has learned that sellers generally quote the price that they want, not the price they will accept. Michael wants his clients’ suppliers to make a fair profit and to remain viable. His focus is on identifying and negotiating better pricing for his clients where the existing pricing results in unreasonably high profits for suppliers. He even guarantees financial results.

Over the years, Michael has developed 10 golden rules to achieve successful outcomes, when negotiating with suppliers.

  1. Strategise, strategise, strategise

Avoid negotiations without a clear strategy. If you get caught unprepared, do not be embarrassed to say that you need to get back with the other party.

Do your research and identify:

Developing a strategy is like playing chess. Try to develop multiple “what if” scenarios for each point in your journey. Obstacles may develop as you progress with your strategy. If the obstacle is not what was anticipated, try to avoid making snap decisions. Negotiations with vendors is like going through a maze while playing chess at the same time. Try to identify an intersection in advance and what your options are at that point. The biggest difference though is when going through a maze, one can always go back to the last intersection. With vendor negotiations, that option is not so viable. You might have to dig a new tunnel.

If you use the same starting strategy with 100 vendors, by the time you are done, the course taken could be different for all 100 vendors. The better you are able to identify the deviation in advance and to anticipate your and the vendors' next move (or multiple moves), the more successful your negotiation will be.

Be careful of developing strategies on the fly. This art can best be improved through experience.

Have a trusted source that can play the devil’s advocate as you develop your strategies – see rule 10.

  1. Do your homework

Try and find out as much relevant information about the supplier – website, blogs, internet searches, LinkedIn, credit reports etc. Be selective about what you let the vendor know that you have learned about them.

Prepare a key data sheet on the vendor and record what you regard as important information - e.g. size, strengths, weaknesses, advantages, disadvantages etc.

Get names of their customers and check references but bear in mind that while checking references can be useful, the vendor will unlikely give you the names of bad references, just like a job interview candidate. Through experience, there are certain questions you can ask where the way they answer will tell you a lot more than what they say.

  1. Be truthful

You want to have a reputation of telling the truth. Once you have lost that reputation, life is going to be a lot more difficult, especially if your job involves negotiations.

Sometimes you have to be able to say that the answer is something that you can’t reveal. However, if you say that, in many cases, the vendor will try and analyse why you said that and then focus on other ways to get the answer (such as talking to your staff or the competition).

The best part about the truth is that it is easier to remember. More than likely, the biggest asset you have is your reputation. So hard to gain, so easy to lose.

More than likely, the biggest asset you have is your reputation. So hard to gain, so easy to lose.

  1. Competition

One of the best tools to getting good pricing is competition. However, one needs to be careful that the competition is not working together in order to charge you a higher price. Not so easy to detect, but there are ways to avoid this. Where there is true competition, it is best to have competitors who have some sort of idle capacity. Make sure that you allow yourself the ability to negotiate.

  1. Avoid getting cornered

Do not eliminate your ability to negotiate by saying to your vendor: “If you get your price to $x then you will get the order”. Because if they do get their price to what you ask then you will be obligated to place the order at the target price you set. Rather say: “If you get your price to $xxx then you will have a very good chance of getting the order.” The latter approach still leaves you with options such as to negotiate for a lower price with a competitor.

By fabricating a story, you increase the risk of being backed into a corner.

Try to anticipate the outcome of strategies two or three moves down the road in order to minimise getting trapped.

  1. Keep Notes

Always maintain a written record of your negotiations, even if it involves sending yourself an email. Record the date, time and whom you spoke with and what the conversation was about. Also, record what the next steps and dates are. Always try to review these notes before you engage in additional negotiations with the vendor.

  1. Avoid negotiating with the qualified low bidder

All things being equal, the qualified low bidder is generally going to get the order. Therefore, negotiating with the low bidder is not a good idea because even if they say no to everything you try to negotiate, they are still going to get the order. This will be to your disadvantage down the road if you try and negotiate with them again, as they will be more likely to keep saying no.

Therefore, we recommend that negotiations take place with the second and third lowest bidders. Once you can negotiate them below the lowest bidder, then you have something to negotiate with the bidder who was the lowest bidder.

  1. Use the vendor’s weak points to your advantage, and theirs

Keep your ears and eyes open to try to learn what are the vendor's weak points are and look for ways to use it to your advantage. For example, if your vendor is having cash flow issues, you might be able to get a much better price if you offer better payment terms.

If the vendor puts pressure on its sales force to meet certain sales targets by certain dates, the vendor may be willing to offer certain concessions as the deadline nears. The loss of a major account will make the vendor more willing to be flexible in order to fill the void.

  1. You do not have to know all the answers

Avoid falling into the trap of feeling that you have to answer all the questions posed to you by your vendor. You are not there to impress your vendor with the knowledge that you might be expected to know. Guessing what the answer is and getting it wrong will weaken your position when the truth comes out. Remember, it is better to be thought of as a fool than to open your mouth and remove all doubt.

Some vendors are very good at fishing to see how competent you are. Some preferred responses could be: “I need to look into that”, “I am not sure of the specifics”, “I am not at liberty to discuss that”.

  1. Make use of an experienced, competent third party

In our experience, this is the most critical part of engaging in a successful negotiation that results in significant price reductions. The third party can be an outside specialist (such as Parry, Murphy and Associates) or an internal person or panel.

The third party needs the knowledge, experience and research tools to identify what savings opportunities are available. The buyer can use the third party as a sounding board or have the third party take the lead in the negotiation process while the buyer remains the “good person”.

For more information on Parry, Murphy and Associates, visit www.parrymurphy.biz

One needs to understand the industry before jumping into its business. Many things that look easy on the outside will surprise you when you get to their implementation. You should have a few resources beforehand if you are to start a property development business.

Make Sure You Know the Industry

People say you need money to start a business. Most successful entrepreneurs disagree. They say you need to have skills like no other to start a business, and the investment will come to you. Make sure you are worthy of running a successful business before you worry about finances. Learn everything there is to know about the industry you plan to target. For that, you may have to do a job, work as an assistant, or join a study course. When it comes to property development, you need to understand every corner of it. Start the business only after you are certain that you have explored the entire industry.

Arrange Investment

Once you are confident that you can run the property development business, it’s time to prove it. Your skills will be tested and there will be money on the line. You either have to invest your own finances or get a loan. It’s best if you have your own investment because that way you don’t have to answer to anyone. On the other hand, it won’t be a problem even if you don’t have the finances. As I said, the

investment will come to you if you are skilled. Anyone would agree to invest with you when they know you are not going down. You can get development finance from Property Finance Partners for your business. It is a property finance company that provides real estate raising finance solutions in the UK.

Keep Contact with Suppliers

A professional network is your net worth. You need to have contact with every supplier related to your work. You should also understand every service and product that you will use and their current value in the market. As a property developer, you may need services of builders, electricians, painters, architect, carpenter, plumbers, decorators, and interior designers. Having a reliable relation with these professionals will give you confidence and allow you to meet deadlines with quality work.

Understand Your Target Market

You should have a full understanding of your target audience before investing in a business. You should know who will need your services, how they will approach you, and if there is any space for you in the market. It can be difficult to survive in a market with fierce competition. Likewise, you should also know the right time to penetrate the market and when to take a break. Having an audience persona in your mind will help you better target your potential customers.

Use Digital Marketing

Marketing is important to make an entrance in the industry. While many property developers may underestimate it, digital marketing has helped many new entrepreneurs build their business. Use every marketing tool to get an edge over your competitors. Once you understand your market, targeting potential customer becomes easier.

Digital marketing doesn’t need you to have an office, you only need a website and a few social media profiles. You will reach out to potential customers through these channels. It’s also a great way to enter the market because it lets everyone know that you exist and now offering your services. Portray your skills and unique selling point on the internet. See what your audience is expecting from your industry and provide them an easy solution for that.

Build a Reliable Team

Every businessperson needs a team that he can rely on. The team builds the foundation of a business. If your foundation is strong, you are likely to survive in the market. Property development business doesn’t necessarily need a team if the leader is skilled enough. You will need the expertise of an accounting professional with the knowledge of all legal matters to understand and control all expenses. A project manager can divide your responsibilities and ensure that all development on site is in order. Moreover, you may need someone who understands the field to be on the lookout for opportunities.

Deciding Your Property Sector

A property business developer should know every sector of his industry. He should further understand the requirements of each sector where he wishes to operate. Whichever sector you choose, you will need to follow its every news and update. By specializing in just one sector, you are more likely to dominate it. You will know what, when, and where to buy, sell or rent a property. You will be able to make more sales by telling customers exactly what they want to hear if you focus on just one type of audience.

 

New research from Haven Power, one of the UK’s largest business electricity suppliers, reveals two fifths of Financial Services firms think renewable energy is just a passing trend. A perception that is significantly higher than any other industry.

Despite scepticism, almost two thirds of businesses in the sector are keen to start selling energy back to the grid. The Financial Services industry is one of the greenest compared to others surveyed, with 41% stating they already had onsite battery storage facilities installed.

The survey of Utility Decision Makers in Financial Services showed the biggest barrier preventing them from implementing sustainable change was cost (44%), followed by uncertainty on both how to measure the impact and ROI (30%) and how to discuss with investors or senior management (26%).

Paul Sheffield, Chief Operating Officer at Haven Power, commented: “Despite a proportion of firms still seemingly sceptical about the future of renewables, it’s encouraging to see that many are implementing positive changes. Understanding of renewable energy and its benefits varies greatly from sector to sector. We believe that every industry needs to start making sustainable changes to help reduce carbon emissions and embrace cleaner energy.”

When asked to list whose responsibility it is to lower carbon emissions, energy suppliers were cited top (48%), ahead of the Government (47%) and manufacturers (44%). Additionally, almost half (46%) strongly agree it is the energy providers’ responsibility to educate decision makers on the different types of energy available.

Paul Sheffield continued: “It’s imperative that organisations of all sizes across different industries work together with their energy provider to ensure the future of British business is low carbon. By moving beyond viewing energy as a commodity, we can help to drive sustainability and profitability. Here at Haven Power we are keen to help businesses understand the wider benefits of renewables.”

Haven Power is one of the UK’s largest business electricity suppliers, founded over ten years ago, it aims to help businesses control spend, manage risk and boost sustainability by using renewable electricity, energy efficiency and bespoke energy solutions.

(Source: Haven Power)

Data released in Creditsafe’s Prompt Payment Premier League has revealed Huddersfield FC takes on average 53 days beyond payment terms to pay invoices for its suppliers, the worst of any team from England’s top division.

Meanwhile Brighton & Hove Albion, who like Huddersfield are playing their first season in the Premier League, top the rankings, taking only two days beyond payment terms on average to pay suppliers. None of the current Premier League clubs pay businesses within the agreed payment terms however, with the average time to pay suppliers across all the clubs standing at 12 days.

Swansea City, who alongside Brighton takes only two days beyond terms on average to pay invoices, have the highest average value of unpaid invoices at £11,304. This is almost £7,000 above the league average, which stands at £4,385.

Liverpool are the only club in this season’s top six to better the overall league average, taking seven days to pay suppliers, with runaway league champions Manchester City ranking 16th overall at 12 days. Last year’s champions Chelsea have the second worst record of prompt payments, taking on average 30 days beyond terms to pay.

Last year’s worst offenders to still be playing in the Premier League, Manchester United, have only improved their ranking slightly, rising two places from 19th to 17th.

Chris Robertson, UK CEO said: “It’s still surprising to see that even in the Premier League, where the clubs have never been wealthier, late payments are becoming a growing problem for businesses of all sizes to deal with.

“It’s also striking to see the gap between two of the newest clubs to enter the Premier League, each having totally different attitudes to paying suppliers promptly. It’s clear that being a new club in the league, such as in Huddersfield’s case, is no excuse for paying businesses significantly later than their agreed terms with suppliers, especially when Brighton were able to pay their invoices much more promptly.

“The money Premier League clubs receive through the new television rights deal will total more than £5bn over the next few years, so we can only hope the clubs become better in paying their invoices on time with this additional revenue.”

(Source: Creditsafe)

What you might not know is that blockchain isn’t just a Bitcoin thing. Across the globe, from corporations to start ups, experts are formulating and implementing new ways of using blockchain technology to improve the way we do things; and the same goes for supply chains. Below Finance Monthly hears form Lee Pruitt, the CEO of InstaSupply, on the ways blockchain can likely better supply chains for your business.

Managing a supply chain is an operational and logistical challenge for many businesses, and the more parties involved, the more complicated it is. The ‘links’ in the average chain can sometimes span hundreds of stages and dozens of locations. Keeping everything running smoothly and effectively whilst tracking unusual or anomalous events can be very difficult.

Blockchain technology – essentially, a distributed, unchangeable cryptographically secured ledger in which transactional data is stored and updated – may provide a way to improve transparency and operational efficiency. But it has to be used effectively.

Here’s how you can use blockchain technology to improve trust, maximise efficiency, and foster better vendor relationships.

Stronger audit trails

Blockchain technology serves as a repository of transaction history. Every time a payment is made, every party is registered and recorded in exacting detail.

This effectively means that every stage of the supply chain has a strong audit trail – and this is good for your business on several different levels. From a legal and ethical standpoint, it means that you can be assured that your suppliers aren’t party to any child labour or money laundering related activity. From a logistical perspective, it means you have end-to-end visibility into how physical items are sourced, delivered and stored.

Any efficiency or productivity gaps can be quickly identified and dealt with. Any items that go missing can easily be found. Delays will become rare, if not a thing of the past.

Blockchain technology means transparent and more efficient supply chains.

Trust

When supply chains aren’t fully optimised, it’s the end customer that is ultimately let down. Elon Musk recently described supply chains as ‘tricky’ – and revealed that Tesla’s new vehicles routinely miss their delivery deadlines.

Blockchain will increase trust among consumers, and among all players in the supply chain. Using shared public IDs and ratings, a clear picture of everyone’s goods and services will be readily available: if you want to consistently deliver value to your customers, they will reward you for it; if you’re looking for trustworthy suppliers, you’ll be able to select them based on clear, real time data.

The technology will also help reduce the instances of fraud – meaning your reputation and finances will be protected.

Streamlined invoicing

Blockchain technology will make the traditional invoice redundant. All purchase orders will be recorded and rendered fundamentally unalterable as blocks on the chain: accordingly, when suppliers approve the purchase order, they have essentially made a commitment to deliver the items/services for the agreed cost and only the agreed cost. An invoice could never be issued to ask for more.

Blockchain will also improve operational performance and the bottom line. Many businesses are looking for ways to integrate these new tech solutions into their daily operations, and they are right to do so. Trust, transparency, and efficiency are qualities that are not only valuable, but in increasingly short supply in current models. Blockchain offers to provide them in abundance.

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