Sticky Solutions

I bumped into a friend of mine yesterday as I headed for a quick sandwich at lunchtime. We chatted briefly in the glorious sunshine and we both kicked off with the usual conversation: ”How are things?”, “Not bad but cash is really tight out there”, “Lots of people are under pressure”, “Survival is the key for this year” etc – nothing unusual in any of this, we have all had these conversations, probably more than once in the day!

My friend works on the management side of a shopping centre and he was telling me how many of the tenants are under pressure. I was asking what the procedure was with tenants that fall behind in their payments and he was saying that while they do understand their procedure is to take legal proceedings against them.

He did acknowledge that this process was probably a total waste of time as he knows the tenants are under pressure. It is difficult for him to make exceptions as there are clear cut procedures that must be followed. In a black and white world of contracts and procedures it is difficult and messy to stray from these.

All of this makes total sense but at the same time it makes absolutely no sense.

Effectively both landlord and tenant are in a partnership of sorts with the property. Logically for this arrangement to work both the tenant and the landlord must make money, but the pie has got smaller and there is a general acceptance by everyone that this is the case.

The solution is probably some form of adjustment on the lease, some form of turnover related rent, some solution that acknowledges that both parties need to make money from the property. The solution may be for 12 months with a review. Even better if the tenant and the landlord can openly review the sales performance of the business and have an open and fair conversation. Better again is the tenants working together on a Marketing programme to generate new business for the centre. Focus the energy on positive solutions instead of solicitors and aggro.

The alternative makes no sense and will probably result in a closed unit that the landlord is unable to rent to anyone else – even offering a better deal than the original tenant! On top of that we will have staff out of work, less wages being spent at the centre, less traffic to the centre.

There are no winners in this game so we should work hard at finding positive solutions to deal with these exceptional circumstances. These solutions will be ‘Win Win’ – for the landlord it may not feel like this right now but long term tenants are better even if a short term sacrifice of principles and income is required.

I call this a ‘Sticky Solution’ for two reasons:

Firstly it is not straight forward – the rule book and normal procedures need to be put to one side and a different solution needs to be worked out – it is a little messy or sticky . Secondly the solution requires for both landlord and tenant to work as a partnership. Like it or not they are on the same side facing the same problem and effectively ‘stuck’ together. The problem needs a Sticky Solution.

Sticky Solutions are required everywhere in order for us to see out this recession.

To find Sticky Solutions we must all have the common goal of keeping businesses open and staff working. Fairness, openness, respect and honesty are critical attributes that are required to find these solutions.

All of this probably sounds very utopian but why not?

Sticky Partnerships

Today we are all co-dependent – employees, business owners, suppliers, customers, landlords, bankers, government and even the taxman. We all need to play our part in keeping business going and staff working, which in turn keeps us all in income.

Owners & Staff – Take the work situation with contracts and agreed % increases and bonus structures etc. The electrical workers strike recently is a prime example of this – in the context of the current economic climate the strike made no sense. A Sticky Solution was required but was not achieved.

Staff should not be taken advantage of in the current climate but they need to be realistic about expectations regarding pay and hours of work. Digging deep, sharing the burden and doing everything to keep the business open and your colleagues working is the order of the day. Dealings with staff need to be open and honest in terms of revenue and costs. A Sticky Solution.

Business & Suppliers – We need to work together with our customers and suppliers through these challenging times. Everyone needs to make a profit and everyone needs to get paid. Be fair, open, honest and human, showing respect in times of crisis. Positive solutions are required instead of solicitors when a business faces financial problems.  Let’s do everything to come out the other side of this crisis together.

The Taxman –The Revenue Commissioners play a huge role in whether many businesses will keep going or will fold. As a preferential creditor the Revenue are effectively ‘judge and jury’ with businesses that are in trouble. Keeping businesses open and people employed must be a priority in all feasible situations. Settlements and payment arrangements must be structured to take this into account. A very Sticky Solution.

The Banker – Now where do we start with this one? We all know of a dozen instances where the banks have taken over properties due to non-payment and then offered them back to the marketplace at a fraction of the original loan values. What is the point of this? – Is it not better to come to some reasonable arrangement over time with the existing customers instead of shutting them down, transferring the bad debt to the tax payer and then crashing the value of commercial properties in the process?  The Stickiest Solutions of all are required here.

..So, we need ‘Sticky Solutions’ to our very exceptional problems. We are in this together and we will have to throw out our rule books and our fixed procedures and put positive effort into real solutions even if they are a little messy and very Sticky.

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