Watching TV last night there was an item about the collapse of sales in some parts of the economy. The interviewer was in a car showroom standing alongside a shiny new car with £28,995 splashed across its windscreen. He spoke to the Sales Manager.

“Tell me – if I put £20,000 in £50 notes down on the counter would you sell me that car?”

The salesman smiled. “I’m sorry sir, I couldn’t do that – you see – I have to make a profit”.

And that’s where the Sales Manager got it wrong. Profit used to be the priority – it is no longer; sure, it’s nice to make a profit if you can but it’s much more important to make sure that your client remains in business.

Imagine that the dealer has 40 new cars in stock, with an average retail price of £25,000 – i.e. £1 million for the lot. He has a choice;

• hang on to them and wait for his price – all the time carrying £1 million of borrowings, with the bank manager breathing down his neck;

• cut his price by his profit margin – say 15% - get rid of the stock and knock £850,000 off his borrowings.

OK – no profit – but he’s still in the game – by the time the shiny new models arrive he will be in with a chance.
In todays Daily Telegraph there is a full page advertisement for

SOLID MAHOGANY FURNITURE AT LESS THEN HALF TRADE PRICE

They are going to shift the stock; they are going to replace it with money; they intend to stay in business.

How’s your client getting on?