Channel in distress?

Nitin Joshi: The external factors leading to a company's distress are increasingly limited.

Now that all the furore over the new Big Bang has died down and people are still alive to read this column, it is worth
pondering whether any business can have eternal life.

The oldest company in the UK is the The Shore Porters’ Society formed in 1498 in Aberdeen. It is a transport contractor. The second oldest is John Brooke and Sons Ltd, a wool cloth mill, founded in 1541. But, by the clock of humanity, both are relative upstarts. Of the 10 oldest companies, only one can truly call itself a service business, in fact, a bank. Today, it is hard to find a business that is not a service business.

If you looked at the common denominator of those early pioneering days of commerce, much was made of little. Modern monoliths were built on piracy and legalised criminality (the chief weapon of imperialism), but today’s channel player has to make its own wins. It is not alone.

Four years after the non-event that was the Millennium, when companies went to the wall citing it as the reason for their demise, we are already seeing the highly imaginative uses of the term credit crunch.

Temporarily at least, this term has replaced loss of market. It cannot last forever. The external factors leading to a company’s distress are increasingly limited.

For channel suppliers, only two things matter; the quality of management and the competence of their finance function. Both have been wanting.

You even get idiots on TV game shows stating their occupation is company director. Company director is a legal
position. Idiocy, on the other hand, can be a role for life. You need a good lawyer, an accountant, an asset-based lender,
non-executive director, management information, sales focus on margin minimal office infrastructure. Then buying well and knowing your vendors is key.

Let us go back to the beginning. We are a service economy. There is no reason why owners and directors cannot maximise any opportunity before them or, at worst, limit the damage ­ for a modest stipend.