Question about Business Resilience

Originally posted by Langesund.

We are in a period of great uncertainty within the economy with many business failings. I would like to ask all candidates what experience and skills they bring which will help the Phone Co-op remain a successful innovative member owned telecoms business?

While we obviously must not be complacent, I believe we have every reason to be optimistic about our ability to thrive in a tough economic climate. In my view, a consumer co-operative business or any mutual for that matter, is inherently more likely to more resilient than a plc. A consumer co-operative run for the benefit of it's members, rather than it's 'shareholders', results in a very different quality of relationship with it's customers, with significantly higher loyalty levels. In addition, as I mentioned in my election statement, the Phone Co-op is financially strong and has a sound management and staff team. We are therefore well placed to deal with the inevitable challenges that will arise.

We also have a strong board with a wide range of relevant skills and experience. Regrettably, Tony Mitchell has decided not to stand for re-election, so this means we will have at least one new board member after our AGM in February. It's always refreshing and indeed it's clearly beneficial for us to welcome new members to our board team. Having said that, I hope members will also bear in mind the need for board stability, since I believe this is especially important now that the economy is in a serious recession. Some might say: "well you would say that wouldn't you, because you're are the longest serving director and are standing for re-election". And that would of course be completely understandable. I am genuinely convinced however, that this should be an important consideration for our members in this particular election. Board turnover has averaged 2.4 directors per year over the 10 years since our inception and I believe that this is a higher level than would have been ideal.

Peter Turnbull

The great thing about a co-op like ours is that it is automatically insulated from some of the fads and fashions of the mainstream capitalist system. It succeeds partly by not making, and not being able to make, the mistakes that most other businesses have made.

Most of these mistakes come back to an over-reliance on debt and an over-concentration on a narrow view of profit which can usually be boosted short-term by gearing up. The co-op has grown steadily and healthily, with a cushion of finance from its shareholding members. A lot of the time capitalist businesses will seem to be doing better - until they go bust. This is the Black Swan phenomenon in action.

Many of our competitors had never seen a recession, so they assumed such things could not happen. Ten years ago many building societies were seen as slow and unimaginative, and so demutualized into racy go-getting mortgage banks. Every single one of these is now bust. This was not just forseeable, it was inevitable. But the herd mentality of the city makes financial fashion very difficult to resist unless, like a co-op or a private business, you are physically restrained. Hindsight is a wonderful thing.

I spent a career in and out of the city - and also in the public sector, nationally and locally. One of my claims to fame was that I foresaw the housing slump of 1990-1993 when few else were willing to do so. Just like the present one, there was huge vested interest in pretending that house prices could only rise, that if they fell it would be a short-lived correction and so on and so forth.

I have never trusted received wisdom and if I see something that "everybody" is doing I will generally try to do the opposite. This is not always easy. I failed to persuade my wife to sell the family home in 1990, but this time I am sitting pretty in rented accommodation. Some of that is chance, but life (and business) is about spotting your opportunities and, when in a hole, not digging.

Roberj02

Admin wrote:Originally posted by Langesund.

We are in a period of great uncertainty within the economy with many business failings. I would like to ask all candidates what experience and skills they bring which will help the Phone Co-op remain a successful innovative member owned telecoms business?

I have extensive business experience through both periods of growth and recession. In particular my recent experience with Lembas Ltd., a wholefood wholesaler involved turning round a struggling business from one which had a balance sheet in the red and losing money annually to a profitable company with a strong balance sheet. During my 9 years there turnover was more than quadrupled, margins almost doubled, staff increased from 5 to 18, wages rates increased 150% and Lembas now owns its own warehouse and is fully computerised and has now cleared all loans. All the co-operatives I have been involved in have grown rapidly and were all profitable during my time there.
At Notts. Co-operative Development Agency (NCDA) I assisted many co-operatives to set up and worked closely with them thereafter. Although not all succeeded the NCDA loan fund revolved successfully and in most years actually increased in value.
The phone co-op is in a very strong position and I would be most surprised if the present financial crisis proved to be a major threat. On the contrary it could be an oppurtunity for further growth as long as good financial control is maintained and potential marketing opportunities exploited. I have skills and experience in both of these areas and over 30 years experience in the co-operative sector.
In the unlikely event of the Phone Co-op experiencing problems I would not be frightened of having to make difficult decisions.

Paul Grassick