Q If you had a magic wand, what would you do to improve the service that high street banks provide to their business customers?
A My simple answer is to give more authority, trust and freedom to local bank managers. Today, too many decisions are referred to head office where faceless bean counters use inflexible ratios to decide the facilities they offer to customers they’ve never met face to face.
The safety of most loans depends on people, not spread sheets. It is more important for a banker to meet the management team than to analyse a computer generated business plan. Sadly, most of the big banks now see their bank managers as salesmen who are measured against “KPIs” and appraised on their ability to stick to a process. When it comes to approving loans, they have to keep to company rules.
Someone has decided the way to cut out mistakes is to make all decisions at head office. They are wrong. Big mistakes will still be made but by preventing the local man using his initiative good opportunities will be missed. Many highly competent customers will be starved of cash and clobbered by large arrangement fees because their balance sheet fails to fit theoretical financial guidelines.
I will never forget how my local bank manager made a decision that transformed our business. In 1995, one of our main competitors went into receivership. We had been trying to buy the business for several years and at last had the opportunity. There was a lot of interest so we needed to offer a fair price – we decided that meant £3.5m, but NatWest head office would only provide the cash to support a bid of £2.5m. I mortgaged our house for £1m to make up the difference. Alex, my wife, was not happy!
Our offer was only good enough to get us onto a shortlist and it quickly became clear that one of the contenders was our biggest competitor: Mr Minit, a well-funded global business run from Switzerland.
Knowing I was outgunned, I rang the Minit UK managing director and suggested “a half” – my idea was that following a joint bid we would toss a coin to decide who picked the first shop, then take it in turns to choose until every branch had been allocated. After 15 minutes thought he rang back to turn down my offer.
At 6pm that day we submitted sealed bids to decide the winner. We offered £4,019,024 (Richard Branson always suggests you add a little bit extra in case the opposition bids a round number). We won, but the vendor soon discovered we hadn’t got the money.
We were given until 10.00am the following morning to find the cash, while Mr Minit as under bidder waited in the wings to sign the deal.
While we spent hours phoning everyone we knew who might plug the £500k gap, our bank manager, Brian Ferguson, back in Manchester, was working through the night on our behalf. We knew Brian well and he knew what a difference the deal would make. Brian rang at 9.30am to tell us he had authority to lend us the cash we needed.
Thanks to Brian, we did a deal that within two years had increased our annual profit from £400,000 to £2.5m. A result that showed the value of a real bank manager and helped me repay the mortgage within 12 months – which in turn made a major contribution to the happiness of my marriage.
Q I saw a new Timpson shop within a large out of town superstore this week. Does this mean your company is abandoning the high street?
A Over the last two years we have opened lots of supermarket concessions but that definitely doesn’t mean goodbye to Timpson on the high street.
Shopkeeping has always been on the move. When I started work in 1960, a lot of our shops were in the suburbs of big cities like Byker (Newcastle), Waterloo (Liverpool), Aston (Birmingham) and Gorton (Manchester). Since then, retailers have shifted into shopping precincts, town centre malls, retail parks and big regional developments like Bluewater in Kent, but the biggest change has been the move of food shopping into the out of town supermarkets. Now a big slice of trade is moving online. It makes you wonder where people will be shopping 50 years from now.
We haven’t found a way to provide a comprehensive shoe repair and key cutting service on the internet – we still need shops, but they must cater for today’s customers. That is why we are opening in (and in the car parks of) supermarkets. Surprisingly, these new outlets make little difference to the sales at Timpson shops nearby. It seems that lots of supermarket shoppers never do any other shopping.
The supermarkets find that Timpson services help to attract extra customers and we have discovered a new way to grow our business – but our best shops are still located in the centre of town.
People are too quick to forecast a dismal future for traditional shops. Last week Timpson bought Snappy Snaps, the London-based franchised photo business with 121 shops. That shows that I still have plenty of faith in the future of the high street.
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