With our Wedding Flowers hotline ringing off the hook, Judith up to her chin in raffia, and our drivers up at the crack of dawn for early morning Saturday deliveries, the wedding season is now truly upon us at Flowers HQ. With the bustles of brides visiting our wedding team in Park Royal for advice on an almost daily basis, you’d be tempted to wonder whether the recession is really just a figment of the media’s imagination after all…

Although couples are insisting on committing to their 2009 wedding plans, the economic downturn has nonetheless brought with it a whole gamut of challenges for those intending to marry this year. Partner up the recession with the fact that the average cost of a British wedding topped £20,000 for the first time in 2008, shows that deciding when to scrimp and when to splurge on a such a monumental day isn’t going to be easy.

As the wedding season has approached, we’ve seen a significant increase in wedding flower enquiries in recent months, and with those we’re seeing more emphasis laid on price: “We’re looking for something cheap…” , “Could you advise us on the cheapest flowers…” etc. This nature of enquiry can automatically put any florist into defence mode, as any floral designer worth their salt knows that “cheap” is a relative description and doesn’t normally equate for very good (or even appropriate) flower arrangements.

Wedding Flowers on a Budget

If there is a budget involved (see below for more advice on setting wedding budgets), a wedding florist can then easily come up with flower choices and designs that will fall within that budget. According to last year’s figures, the average cost of wedding flowers in 2008 reached £381, accounting for just 2% of the overall average UK wedding budget of £20,000 (Source: Sky News, November 2008). But in most cases, wedding flowers normally take up 10-15% of the final wedding bill – thus proving every wedding is different with an array requirements and preferences.

The task of choosing wedding flowers is a personal, expressive and emotional experience, which is why we always recommend brides drop into Flowers HQ for an informal chat to discuss their requirements in person with our wedding florists, who will source the right wedding flowers for you – not only suiting your pocket but also of exceptional quality too.

Credit Crunch Wedding Flowers

While 10-15% is a good estimate for your wedding flowers bill, you can modify many floral elements to determine the actual amount you will spend on your wedding arrangements. Factors such as whether or not your preferred flowers are in season, the number, size and complexity of the arrangements all influence your final cost estimate.

In economically hard times, creativity comes to the fore, as brides are find ways to spend their wedding budget more wisely, and discovering “cheap” wedding ideas that help them save money. Here are just a few budget-friendly ideas to help you on the way to beautiful, economical wedding flowers that won’t cost you a king’s ransom.

Easy Peasey. Flowers in season are often less expensive and easier to source. For a list of common flowers for each season, visit our wedding flowers tips page for our guide to seasonal flowers. Don’t forget that flowers over peak / holiday periods such as Valentine’s, Christmas and Mother’s Day will cost more.

Simple things. Because the time taken to create your flowers will be factored into your wedding flowers bill, go for less elaborate bridal flowers which are less labour intensive.  For instance, a hand-tied or free form bouquet takes less time to create than a wired or teardrop one. For extra savings, bridesmaids can carry a single flower in a flower wand instead of a bouquet.

Filler thriller. Use more, cheaper foliage and greenery, baby’s breath, wax flower, soft ruscus etc which will pad out flower arrangements. Use flowery blooms as an accent to the arrangement rather than the main ingredient.

Bargain hunt. Shop around for end of line / discounted glassware in charity shops and budget household stores for vases. This way, for the price of renting / paying deposit on breakages, you can keep, sell on or recycle. The Christmas sale period is the perfect time to purchase candles, fairy lights and other decorations at huge discount.

Let’s go outside. Find a venue such as a park or garden that is already lush and beautiful – a springtime wedding in a garden will require little in the way of floral arrangements, while a traditional church may be breathtaking on its own. Also consider that many venues come ready decorated in the lead up to Christmas, so holding an earl-mid December wedding may provide you seasonal flowers for free.

A problem shared. Find out from your venues whether any other weddings are scheduled for the same day. If the two events can share decorating expenses, you’ll save a lot of money.

Recycle arrangements. If you can’t share your arrangements, transfer the flowers from your ceremony to your reception. Save more money on head table decoration by displaying the bridal bouquets on the head table.

Don’t Do it Yourself!

Floristry looks easier than it really is, so if you really can’t afford a florist, make sure you find someone with at least some skill and experience with flowers. We can provide flowers wholesale at discount prices for brides wishing to create their wedding flowers ‘in house’, but don’t forget you’ll need somewhere cool to store them safely and keep them fresh.

Making of the arrangements should be left to the very last minute, so best not leave them to a stressed-out, sleep deprived bride-to-be! If you don’t know what you are doing and don’t enjoy working under pressure, don’t try this – even if the temptation of saving some money is far too much to resist!

A good budget compromise would be to ask your florist to create the key arrangements such as the bridal and bridesmaid bouquets which are important to get absolutely right, then purchase additional matching stems for your own vase displays and other ad hoc uses such as buttonholes, hair flowers etc.

Jilted at the Alter?

With sterling still relatively weak against the euro (therefore inflating wholesale prices) as well as diminishing footfall, local independent florists are increasingly falling victim to the economic downturn, leaving distressed brides empty handed for their big day with little time to make alternative arrangements.

If your wedding florist goes bust, first off – don’t panic. Most florists will be able to stock your wedding flower requirements within 4-5 days, depending on how often they visit their wholesalers. If you are based in the London area (and your wedding doesn’t fall on a holiday / event day such as Mother’s or Valentine’s Day) we’ll be more than happy to pick up your order (we get fresh flowers in direct from the Dutch auctions nearly every day).

In many cases we’ve been known to slash existing quotes, and can sometimes provide wedding bouquets with just a day or two’s notice. So, even with times as they currently are, there are good deals to be found by the frugal bride. If you’re just starting to plan your wedding, our short list of 5 steps to a debt-free wedding might just be of some use…

Easy Steps Towards Recession-Proofing Your Wedding

1. Establish Your Wedding Budget
Choose a reliable method to keep track of all expenditures – there are now lots of websites that offer free budgeting services. If possible, keep your wedding fund separate from your personal accounts, so you can easily determine what’s being spent on the wedding. Don’t forget to call in all those favours: contact old mates, colleagues, family members and even the bloke down the road who you lent that jump lead to last winter, who may be able to offer their services.

2. Wedding Wedding Gifts.
Continuing from the above, barter your way to the wedding you want by asking wedding guests to offer their skills and services as a wedding present. If there’s a hairdresser or keen photographer on your guest list, time to bend their ear and put them to work! Chances are they’ll probably bring you a pressie anyway on the day, too… ;)

3. Beware Hidden Costs
Set aside 5% of your budget for those extras that are bound to sneak in one way or another. If you absolutely cannot exceed £20,000, aim to spend £19,000. When last minute costs such as VAT, fees etc come up (and they will), your reserve funds will save you from debt. Similarly, look out for deals and discount rates often offered during low season, midweek or during the day which can trim significant costs from your wedding bill.

4. Super Skinny Me
Serve three courses instead of five (saving on catering and waistlines). Have two bridesmaids instead of four (saving on dresses). Invite 100 guests instead of 200 (saving on just about everything). If you’re struggling with whom to cut from the guest list, cut out children and anyone you don’t know personally, and you’ll see that guest list rapidly streamline itself!

5. More Wine, Madame?
Don’t crack under pressure of the up-sell! That diamond-encrusted designer dress, the fancy five star hotel suite, the vintage champagne – they might seem like good ideas at the time, and it’s easy to get carried away, but they all add up. It’s important to understand which details are truly most important to you.  Be strong, prioritise what you want beforehand and you’re less likely to face a nasty surprise later.

Similar Posts: If you liked this post you may find our credit crunching post Lessons From Flowers – Tulips & the Economic Crisis interesting as well as our oodles of wedding related posts!!

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Happy New Year to everyone!

We’ve been a bit quiet on the blog of late, what with having to get all our Christmas flower deliveries sorted and having to do some very very last minute Christmas shopping of our own too. We’re back in the saddle now, looking forward to 2009 and will be posting more regularly going forward. Meantime, here are five random New Year’s resolutions (in no particular order):

1. More charitable initiatives: We’ve supported a number of charitable initiatives in the past, but haven’t been that organised in our approach.  Hopefully in the next week or two, we’ll go live with a very cool new initiative.  Watch this space.
2. Focus Focus Focus for Valentine’s Day: Everyone thinks florists make a fortune selling Valentine’s flowers.  Sadly not; it’s the flower growers that really rake it in, as flower prices can quadruple (or more) for the big day.   Getting Valentine’s right is a real head ache for florists as so much can go wrong and cause disaster.  All rather stressful.  Still, Valentine’s Day is on a Saturday this year so it should be quieter, with less traffic on the roads.  Hooray!
3. Keep building our international businesses: The team also runs Arena Bloemen and Arena Blumen, fulfilling from our base in Holland and delivering the same experience for Benelux and German flower lovers as we do for UK flower lovers.  This year, we’ll focus on building up our international businesses and optimising the operating model to deliver great value and quality across Europe.
4. Green initiatives and FFP: We were the first florists to sell Fair Flowers Fair Plants flowers and we want to expand our FFP range as it’s not broad enough.  We also want to be more transparent about improvements in the green areas of our business, like recycling and green waste.  Adarsh has done some great work here recently, but just hasn’t had time to write up what he’s been up to.
5. The customer is king: Last but not least! We’ve got no business without happy customers, so our top resolution for this year, as with every other, is to keep making sure we do the best job we possibly can and delight our customers.  If you have any suggestions of how we can improve, please send them to feedback(at)arenaflowers.com or leave a comment below.
6. Fun!: A bonus 6th resolution is to remember life is fun and not to be taken too seriously.  In that vein, and for those that didn’t see it in our Arena Flowers Twitter feed, here’s an alternative take on the phrase “Arena Flowers” that we found on the web through our Google Alerts. The artist named the piece “Arena Flowers” entirely coincidentally and described it thus:

Batch of for-fun character designs! The concept is a group of young ladies with no predisposition towards this activity for various reasons find themselves involved in wizardly pit fights.

See his Arena Flowers in full here.

Happy New Year, Everyone!

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Over the last few days there has been plenty of uncertainty in the global economy. Banks have failed, shares have plunged and deposits have disappeared. Even a nation has gone bust as Iceland attempts to keep the country from free falling into a recession. Not just that, the Icelandic troubles have caused ripples across Europe as many of us have our hard earned savings deposited in one of Iceland’s three biggest subsidiaries. An estimated 300, 000 British savers have high interest accounts with deposits amounting to £4 billion, which now stands frozen and no information is forthcoming although the UK’s Financial Services Authority has assured that British savers would be compensated.

The present global financial crisis is not something that erupted all of a sudden. It has been lingering over a period of time. There is some evidence to indicate the current turmoil was in part brought about by the executives using analytical and technical approaches poorly. Financial companies use analytical models to base their decisions and they have been very poor in their approach to financial management. For example, firms continued to make subprime loans even though the charge off rates were climbing. They assumed that real estate values would continue to rise and there would be more liquidity in the market which lead to a housing crisis in the world’s largest economy. Is there an end in sight?  Clearly, the underlying problems will take time to work through as Governments attempt to take control of the situation.

We have seen many downturns across the centuries which have taken the sheen out of economic growth. Historians have likened the origins of the current financial crisis to the great depression of the 1870s. iTulip, a leading  economic and financial news commentary site, has a great article comparing the economic crisises from two different eras. iTulip is a community of best minds in the financial sector which collectively predicts global economic patterns. Apparently, iTulip has been correctly calling economic predictions in the last decade.  Strange that iTulip takes its name from a gorgeous flower – Tulips, our favourite at Arena Flowers. There certainly must be a reason!

Tulips have for a long time been associated with Holland, ever since they were brought to Europe in the 16th century. These large, showy and solitary flowers were indigenous to parts of Central Asia before they were brought to Europe. Similar to the current economic crisis, there was a period in Dutch history in the 17th century, often referred to as the Dutch Golden Age, when prices of the tulip bulbs reached extremely high levels. At the peak of this period tulip contracts sold for as much as £4 million a bulb adjusted to present day value. Much like the present day, where owning a property is seen as a status symbol, tulips held a similar status leading to speculations about pricing. This prompted the Dutch to create a formal futures market, where contracts were bought and sold at the end of the tulips season and traders took catastrophic risks similar to present day financial executives. This led to a steep increase in prices for tulip bulbs until it collapsed completely in 1637, much like the financial firms today.

While the Governments and the financial firms fight the economic demons, we recommend our customers appease those affected in the current downturn by sending a bunch of fresh, vibrant tulips from Arena Flowers. But then we would say that, as we’re a florist!  We have an incredible selection of white, red, pink, orange & yellow tulips for you to choose from. Remember, tulips were, for sometime considered a form of currency and might just be the solution to the current financial crisis!

Similar Posts: If you liked this post you may find our other post The Sky Isn’t Falling In: Global Financial Troubles – Are They Real & How To Respond interesting!! You may also want to read about the Meaning of Tulips.

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The last 12 months have been pretty, erm, interesting for young businesses such as our own (although not as bad as the ancient Chinese curse might suggest). We now get asked almost daily “how are sales holding up?”, “are you doing better because you’re online (or worse?)?”, “are visitors converting to customers?” and so on.  The answers are quite varied and, in most areas, everything has held up well and we even had record sales last week (thanks to all our customers!).  Having said that, the period hasn’t been without its bumps in the road and its interesting challenges.  So for those who are interested in how stormy winds in the global economy might feed through to a UK business or for those who are wondering why lots of local florists have increased prices and reduced the number of stems in bouquets (although Arena Flowers hasn’t), it all starts with this graph:

Roll Up! Roll Up! All Aboard The Euro – Sterling RollerCoaster!

The graph above shows the Euro : Pound Sterling exchange rate over the last twelve months.  You can see that in the second half of 2007 the rate was comfortably above €1.40 : £1.00 (it had been even higher for much of the early part of 2007) and that, from the end of 2007, the rate began to drop consistently until it stabilised at about €1.25 : £1.00 recently.  What are the implications of this drop?  For businesses which import products from the Euro zone this is a challenge, as a product bought directly in Euros (eg a flower bought from a Dutch flower grower) or indirectly (eg a Dutch flower bought through a UK flowers cash and carry) suddenly costs 12% more for exactly the same product.  At Arena Flowers, we cut out all the middle men through buying direct off the Dutch auctions and from growers, so unlike a local florist, we are less at the mercy of unscrupulous middle men whacking up prices disproportionately.  Because we run a lean machine and keep our costs at a minimum, we have been able to resist pushing up prices and we haven’t removed any stems from our arrangements.  However, we have heard lots of anecdotal stories on the Flowers HQ grapevine of florists that haven’t raised prices or removed stems, struggling with increased flower costs.

Has The Euro Been Taking Steroids?

Part 1. Boom! 2-0 Euro Zone vs UK

An exchange rate between two currencies is, in the broadest sense, a reflection of the perceived value of one economy relative to the perceived value of another. No one British needs me to remind them of the knock that the UK economy took with the Northern Rock crisis; a British Government spending billions to bail out a bank is spending that won’t benefit the broader economy but which will increase government borrowing, both of which reduce the economy’s competitiveness; Europe has had need of no such bailout.  The subprime issues and their impact on financial institutions in America have also disproportionately affected the UK economy when compared with the Eurozone’s, because of London’s status as a the leading financial centre in the world and its dependence on finance.  So the Euro zone has become stronger relative to the UK and the Euro has appreciated.

Part 2. Interest Rates – Boring But Important

The main levers administrators have to encourage an economy that’s struggling are slashing interest rates or issuing a “fiscal stimulus” (translation: giving taxpayers a massive handout in the hope that they’ll spend the economy back into health).  Both of these tactics have been used enthusiastically by the powers that be in the US, with some success; a kind of “throw money at the problem” solution.  The only issue with interest rates being lowered is that it then becomes less attractive to hold a currency compared with other currencies that haven’t lowered their interest rates.  So, when the UK’s Bank of England cut interest rates to try and stimulate growth in the UK economy whilst the European Central Bank kept its rates steady (as Europe was less affected by the crises and was not in need of life support), Sterling became even less attractive because of the lower interest rate returns available when compared with the Euro. So the luckless British pound dropped further.

Part 3. Inflation Rides To The Rescue. Sort of

Bizarrely, more recently the emergence of high inflation and the Bank’s of England’s primary remit of controlling inflation, has meant that the Bank has resisted temptations to cut interest rates further (as cutting interest rates further might fuel inflation).  This is one of the factors that has resulted in the Euro : Sterling rate stabilising.  But as everyone knows, inflation itself is no white knight, though you won’t hear too many UK businesses that import from the Euro zone complaining that interest rates are staying put (or going up) for now.

What To Do? What To Do?

The most obvious impact of recent financial turbulence on businesses like ours is on our European purchasing power.  For florists, an obvious solution is to begin sourcing flowers from within the UK so the bill is in sterling and there is no exchange rate risk.  This is something that we’re looking at (for a variety of reasons, which also includes the reduced carbon footprint).  Another way businesses can get round exchange rate risk is for them to start making sales in the same currency in which they purchase (similar to a natural hedge).  This is part of the rationale behind our Dutch language site (www.ArenaBloemen.nl) and our German language site (www.ArenaBlumen.de); we are now accepting Euros from European customers – Euros which can be used to pay our flower bills with no exchange rate risk.  There are other tactics open to businesses, such as buying currency in bulk and using financial instruments to hedge currency risk, but I’m no bank manager so I’ll leave it at that.

Practically, we haven’t really seen a huge dent in any aspect of our business, aside from our flower purchasing costs, and we have had some great weeks recently.  The big exception has been when there has been a veritable torrent of bad news, all in a very short space of time.  The two examples: firstly the period after the run on the Northern Rock bank, when our conversion rate dipped by 17% for several days and then magically recovered to previous levels; secondly, there were five days of unrelentingly miserable economic news two weeks ago and our conversion rate dropped by about 20% for 4 days and then recovered overnight, as if nothing had happened.  Our theory is that when there’s such a battering of bad news, people do, briefly, pull in their horns, get depressed and think they should eat beans on toast or possibly hide in the cellar.  A few days later, when they realise the sky hasn’t fallen in and they notice that the world is still turning, they revert back to their previous behaviour, or nearly so.

The first time it happened, we were fairly bemused, but the second time round we knew what was happening and were fairly relaxed (and just bought less flowers that week).  It’s funny the way people work and how up and down people can get.  Fortunately, from what we can see, the sky is still up there, the sun is shining and a Brit has made it to the Quarter Finals of Wimbledon, so it’s not all bad!  In fact, bar the odd challenge to keep us all on our toes, it’s all good at Flowers HQ.  We hope it is with you too.

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We often get asked by friends and former colleagues who are thinking about setting up their own business for our top tips on fund-raising for start ups. We’re no experts so, rather than give exhaustive detail of what we’ve learnt here, we thought we’d share three avenues of government funding that we’ve found interesting and which potential/existing entrepreneurs might not be aware of. If you apply for any of them, good luck. We hope you’re successful and get to pose for one of those classic big cheque pics like we did. Here’s me and superstar Howard Beaumont of the Park Royal Partnership with our giganto-cheque:

Let’s start our list with the source of funding that yielded that happy mugshot:

1. The Park Royal Partnership

Arena Flowers is based in Park Royal, in West London, an area which has Europe’s largest concentration of businesses; Park Royal is home to over 2000 companies and over 40,000 employees. We chose to base Flowers HQ in Park Royal because of the excellent transport links and great business environment, plus because it’s an awful lot better value than swanky offices in central London (a saving which we can pass on to customers). One of the things we did before we signed up to our lease was to call in on the Park Royal Partnership (PRP). The PRP is a membership organisation founded in 1997 to regenerate and improve the Park Royal estate and Howard Beaumont, the PRP’s Business Development Manager, was incredibly helpful to us when we were setting up, providing employment support, introducing us to Prestat and their luxury hand made chocolates, and arranging for an environmental review of our business. Howard also let us know about a grant available to PRP members to support marketing programmes. Hence the giant cheque, which part-funded the branding of four of our delivery vans. Whilst Park Royal is unusually well supported as a result of the number of businesses based there, most areas of the UK have similar government-backed schemes and equivalent funding opportunities.

2. The London Development Agency

A case in point is the London Development Agency (LDA). They have a far wider remit than the PRP, and can support businesses based across the Greater London area. The LDA has recently been dragged into some tough PR to-ing and fro-ing as part of London’s recent mayoral election. We steer clear of politics on this blog but we’re pleased to say that our experience of the LDA has been overwhelmingly positive. In fact, without the support of David B and James S at the LDA, who helped us secure a “Selective Finance For Investment in England” grant, Arena Flowers simply wouldn’t exist. The essence of these government grants (also including the PRP award) is that applicants must demonstrate that the government funding will create new UK jobs. For our LDA grant, we needed to create 35 new jobs plus meet a capital expenditure target. Once that was achieved, the money was released. The level of any grant award is linked directly to the forecast capital expenditure figure (as a percentage of the capex). If I remember rightly, the % is capped at c 20%, in order to avoid healthy government support becoming anti-competitive government subsidy. Notably, the LDA can also assist businesses in the often expensive process of fund-raising through its Access To Finance grant. A fairly comprehensive list of funding available to businesses across the whole UK can be found on the government’s under-publicised Business Link website.

3. Small Firm Loan Guarantee

Arena hasn’t applied for a Small Firm Loan Guarantee (SFLG), though our very helpful Barclays bank manager, Alun, was kind enough to talk us through its ins and outs. The SFLG scheme is designed as a “lender of last resort” option for businesses that can’t secure funding from other sources. It’s a joint scheme by the government and SFLG approved lenders. Loans of up to £250k are available, with 75% of the loan guaranteed by the government and a maximum repayment period of 10 years for any approved loan. Repayment holidays will also be considered. There are certain qualification criteria, relating to age and turnover of the business, and it’s not particularly cheap (interest rate = Bank of England base rate + lender margin (typically 2%) + 2% guarantee fee), but it may well be cheaper than giving away a share of your business. Lenders are reputed to be fairly circumspect about approving such loans, despite the government guarantee, as, if banks are cavalier in their approach and approve dubious loans which fail and the government repeatedly has to pay out under its 75% guarantee, the government’s sense of humour failure is likely to be fairly titanic. Consequently, banks’ credit committees tend to be more interested in keeping on the right side of the British government than in putting additional small loans onto their books, meaning it can be quite hard work getting an SFLG approved. Apparently, the best tactic is to go to your bank’s competitors and say “If you get my SFLG approved, I’ll switch my banking to you”. Banks are reputed to be much more likely to approve an SFLG if they can win new business through the approval.

And that’s it for this post. There are obviously lots of other sources of finance, in particular business angels and venture capitalists / private equity, all of which are well covered on non-flower blogs. But there’s nothing a young business welcomes more than (sort of) free money from the government. Good luck with securing it!

PS if you’ve read this far, 1. well done!, 2 thank you!, and 3. here’s a nice random factoid for you, to reward your diligence. The image in para 3 shows the Bank of England. In my former career I walked past “The Old Lady of Threadneedle Street” daily for 5 years but it was only after I moved on that I learnt that it has no adjoining buildings and no windows on the ground floor. The reason? So that any ambitious ne’er-do-wells find it mighty hard to purloin the large piles of gold bullion stored therein. Still, one of my ancestors was Captain Blood, who famously failed to steal the Crown Jewels, so I wouldn’t fancy my chances of success even if the whole ground floor were made of tracing paper. I’m happy sticking to points 1-3 for Arena’s funding and focusing my efforts helping people send beautiful fresh flowers to their nearest and dearest. :)

PPS clearly, we are a flowers business, not a corporate finance house. Please do not rely on the information in this post in your decision making process and do seek your own, professional advice before making any funding decisions!

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One thing I’ve learned since we set up Arena is that, if you run a business, you have to pay for EVERYTHING! Especially banking.

Consumer banking is nominally free, but is rife with accusations of excessive charges, arbitrarily levied. This “free banking + costly slap” pricing model is the way high street banks bump up their revenue – allegedly. In my entrepreneurial naivety (naivetee? naiveness?), I expected similar “free” terms for our business banking account – ie no charges for day-to-day account admin, but a dent in the pocket if we misbehave (or need to do something urgent/advanced (eg a same day international payment)). Ah, the innocence of youth.

The business banking model, it turns out, is in fact the total opposite of the consumer banking model. Every time you do anything, you get charged for it. For the uninitiated or rose tinted, I’ve categorised my personal highlights of our banking fee structure as green, blue or red:

Green Fees – okay, your fees are a bit cheeky but we’re a business after all, and so, haha, *grimace*, I guess we’ll just have to pay up. We’re all friends here.

• Pay in a cheque: 23p / cheque

Blue Fees – Hmmmm. Hold on a second, are you serious? You do know we’re a start up right – ie we haven’t got buckets of money sloshing about?

• Pay for anything with debit card: 41p / payment
  
• A cheque we’ve written is cashed: 49p / cheque
  
• Bank sends us our monthly statement: 95p / statement

Red Fees – Is this a joke? Are you crazy?!

• Taking £200 out of the cash point, using our debit card: Minimum 3% – so on £200 we pay £6. Six pounds? For a two hundred pound withdrawal?! What?!
• Want to use internet banking? Woo hoo! That’ll be £600 a year plus why not pay £125 for this piece of plastic (do not bend)!

As ever in business, all the above is pre VAT.

I’m afraid to even look at our debit card now, in case we get charged for image rights. Admittedly, it was totally idiotic of me to expect access to the banking network free of charge. And our account managers, Ollie and Dipesh, do do a great job for us. But such details shouldn’t get in the way of a good rant.

The charges are clearly excessive, adding up to hundreds of pounds a month at nil marginal cost to the bank (ie it’s basically pure profit for the bank). Fortunately, where there’s profit, competition should follow. The big web payments providers, such as PayPal and more recently Google, with its Checkout product, are slowly but surely moving in this direction. If PayPal were a person, it could undoubtedly be heard muttering “must become a bank, must become a bank” in its sleep. If either of these two online behemoths does indeed choose to enter the banking space with gusto, it will certainly bring some much needed competition to the cosy UK market place and significantly reduce the gratuitous fees charged to businesses. That can only be a good thing.

In the meantime, what’s the solution for the small start up looking to minimise fees? Clearly to take large amounts of cash out in one go and keep it in a shoe box on the desk. Then get burgled/mugged, lose the lot, and reflect that paying the banking charges wasn’t such a bad thing after all.

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This little credit card thingy is just about the most important widget in our business. We need this smart card to make all our payments – to our Dutch suppliers, to employees, to, well, everyone. It plugs into the side of my laptop. If we don’t use it when we make international payments, we have to revert to a ridiculously arcane faxpayments mechanism akin to waving a black flag in the dark at someone looking the other way. With their eyes shut. I invariably mess that up, don’t realise I’ve done so and then our Dutch suppliers ring up and shout at me, with good reason. Brilliant.

Given this is such an important piece of kit, I therefore look after it very carefully. I would never, for instance, sling my laptop into its bag, with said card still inserted. Because if I did that, then the card might get all bent out of shape and stop working, then no-one would get paid.

Oh.

:(

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