By Alex Balcombe, Partner at Harris Balcombe
John Lewis, Tesco, and Hotpoint have all been in the news in recent months over product recalls. They can affect your reputation and potentially cause long-term damage to your business. Dealing with the ensuing regulatory issues, while establishing out what actually went wrong to prevent it happening in the future, can be stressful, particularly when you’re also trying to manage your insurance claim.
One of the biggest concerns in product recall situations is damage to reputation. Will it cause people to turn away from your brand in the future? Will it affect their thoughts of your brand? And how will you deal with a potential loss in profits?
There are a number of reasons that products can get recalled – but usually it’s for safety or quality reasons, spanning from food contamination to fire risks. One of the more recent and widespread recalls came from the washing machines of Hotpoint and Indesit. It found that models it has been producing between 2014 and 2018 could have a defective door catch on certain models, which can lead to overheating during use.
They do have the potential to cause catastrophic losses to businesses. One extreme, global example was the Samsung Galaxy Note 7 recall, following the news that some of them were bursting into flames. The issue cost them $5.3 billion.
No matter what, you must be able to minimise the disruption of your business. From food to pharmaceuticals, how can you best handle a product recall situation?
Plan before it happens
Assume that every single one of your products could get recalled at some stage. It sounds extreme, but it’s far better to be proactive and have a plan in place ahead of time. Ensure that you have taken out the appropriate insurance, and make sure you also get advice on any issues that might affect liability, such as compliance with warranties and conditions.
It may not be your manufactured product that causes a recall, it could be something from a supplier. Make sure that, whether you’re in the automotive or grocery sector, you cover your bases and analyse health and safety standards before getting into business with them. If you can, tour their warehouse, check for reviews and thoroughly check to make sure there have not been prior issues with the stock.
Don’t sacrifice satisfaction for profit
One serious mistake some can make is to focus specifically on profit in the event of a significant recall. But this focus can actually be detrimental to your profits later down the line – especially if people can tell that you’re just focused on the bottom line.Sometimes you just need to take a revenue hit in the short term, to ensure that customers stay loyal. Offer a full refund if possible, pay for repairs, or offer other beneficial alternatives. Make it as easy as possible for them to return or dispose of the product.
No one likes it when they don’t get answers. Don’t just issue one press release, then hide and avoid other communication. Social media can be a really good benefit, not a hindrance, for those who suffer product recall situations, as it allows you to keep contact with your customers and maintain messaging on your own terms. You might even find out about a defect from a social media message.
In the short term, you may need to hire extra staff to keep communications always on, especially if it is a safety issue. Hold a press conference, issue a statement, and being open will help you to maintain professionalism but also ease the minds of your customers.
Release thorough information
People want to know where to go from here, especially if it’s food, pharmaceutical or child-related. Do they need to get checked by a GP? Do estate agents need to issue certain advice to their tenants if they own a certain appliance? They may need specific or technical advice.
Make sure you educate and inform your customers – no information is too much information. But it must be easy to understand – write to your audience. If they can’t understand the corporate or business jargon you’re using, they might not understand the importance of the recall or actions they need to take.
Stay Legal – Don’t Cut Corners
Obviously you’ll get advice throughout (and hopefully before), but when a recall involves potential dangers, to your customers, you need to make sure that you’re complying by all legalities as government agencies will also likely get involved. Make sure that all steps are taken – any work to reduce this next time.
The insurance claim process can be tricky and time-intensive. A loss assessor can help with this full process by scrutinising your policy wording, and advising you on any issues that may affect liability, such as compliance with warranties and conditions. They will also work with your crisis management team and take part in practise runs to test that your crisis plans are effective and realistic – hence why it’s important to plan in advance.
They can also identify parts of the policy that protect against various setbacks. For example, it is common for major grocery retail chains to charge suppliers for costs incurred by the recall of their goods, such as removing products from shelves and the associated admin. If the insurer declines these charges, it is likely that the policyholder will lose their customer. Experts may be able to argue that these charges should be covered by the product rehabilitation term found in many policies because they will impact the business if they are not paid.
If the product recall is down to a supply chain issue, they will work you with and any supplier who may have provided a defective good, to make sure that the excess and other uninsured elements of the claim are covered.
Despite your commitment to being safe and offering high-quality goods, product recalls can still happen, especially when there’s a big supply chain involved and a myriad of places for something to go wrong. But don’t panic. Investigate the issue, report it, and handle it. If you follow the steps above, you’ll have a plan in place before it happens – and you’ll thank yourself later.
THE EMOTIONAL AND FINANCIAL COST OF WORKING WITH OUTDATED TECHNOLOGY
Slow Tech Could Waste 24 Hours of Worktime a Year
In this digital age, businesses are hugely reliant on technology to get work done. And this is especially the case for one-man-bands and small home-based businesses who may count on a single computer to keep things running smoothly from their home office space.
This said, if the technology at hand is slow or outdated, it could become more of a hinderance than a help. Investing in upgraded tech may seem like a steep expense, however, delays cost time and time is money. In fact, recent research looking at the impact of tech troubles in the workplace found that delays caused by slow technology could add up to a hefty 24 days’ worth of worktime a year per person.
Here’s why keeping hold of outdated tech when its past its best could cost your business in the long run.
The biggest tech hold-ups
Delving deeper into the research, it’s evident that the most time can be lost on some of the smallest of tasks. Simply waiting for your computer to boot up, for example, can add up to 8.8 days of lost time over the space of a year (17 minutes a day), while 8.5 days can be lost to opening emails (16.5 minutes a day). Slow software has the most to answer for, however, contributing 10.4 days’ worth of wasted worktime (20 minutes a day). When you think about your own day rate or that of an employee’s, this lost time all adds up to some serious money, right? Probably more than it would cost to upgrade your tech.
Productivity can suffer too
Glitchy tech may not only cost your business time and money; productivity can take a serious hit too. According to the study, a third of workers admit losing motivation when they have to wait on tech to respond. And this comes as no surprise. When faced with freezing programmes and buffering browsers every day, frustration can build up. And when someone’s suffering frustration, productivity and motivation can drop. As a result, it may turn out it’s not just the tech that is slowing down tasks, but a reduction in employee efficiency too.
Tech expert and anti-futurist, Theo Priestley, argues that the issues caused by outdated tech at work can even have a negative effect on someone’s work-life balance and wellbeing. He explains, “not being able to complete work or feel productive or have a sense of accomplishment in a task can be a stressful experience. And depending on the nature of the work, more often than not, employees will need to work additional hours to compensate for the wasted time, which has a knock-on impact on personal and family life.”
Outdated tech can put your business at risk
Beyond the costs to your business, outdated tech can also put it at increased risk of cybercrime. The older the technology, the easier it is for hackers to exploit it. What’s more, if you don’t update your security software regularly, it won’t be equipped to address the latest security threats.
Priestley explains “outdated technology and software means easy exploitation from inside and outside the organisation. If you’re not using the latest versions of operating systems, or software that you’ve invested in, then there’s greater chance for someone to exploit known weaknesses in that system and expose or steal data or valuable company information from them.”
What is the solution?
Regularly assess what condition your hardware and software are in and where delays are occurring. If you find yourself waiting on the same problem day in day out, it’s probably time to do something about it. But how often should you be upgrading your IT equipment?
In general, a computer being used for business could do with being upgraded every two to three years for optimal performance. Alternatively, sometimes simply upgrading the memory or hard drive can help applications run more quickly. Any other equipment such as printers, keyboards, etc. only really need to be replaced when they break.
As for software, upgrade it regularly. While it can be a temptation to stick with older versions that you’ve grown accustomed to, the newer versions will offer improved capabilities, efficiency and security.
While computers slowing down over time seems inevitable and something that we’ve accepted will happen, it’s important for businesses to recognise the problem can have a bigger knock-on effect than you may think. By investing in updated, efficient technology, the savings experienced via productivity are likely to vastly outweigh the price of the tech itself. So, next time your computer freezes, perhaps consider whether it’s time for an upgrade.
OFFSHORE COMPANY FORMATION TACTICS FOR SMEs
James Turner, Director at company formation specialists, Turner Little
Starting a business brings with it its own set of challenges, as well as opportunities. But when setting up a business, the where is often as important as the how, and knowing what to expect in terms of company formation regulations and requirements is key, so you can start your entrepreneurial journey on the right foot.
James Turner, Director at company formation specialists, Turner Little, takes us through what we need to consider when it comes to offshore company formation, and the benefits it can offer start-ups and SMEs.
“Despite what the media will have you believe, there are numerous legitimate reasons to use an offshore company. Offshore companies can often provide SMEs with access to better infrastructure and legal frameworks. Regulations in different parts of the world could prove to be restrictive for businesses by preventing foreign entities from launching factories, buying property or investing in local companies. In this instance, setting up an offshore company can help in completing transactions and provide you with the ability to hold any local assets necessary,” says James.
“However, one of the fundamental reasons for setting up an offshore company is often privacy. Moving assets or setting up a business is often done in a country that offers more tightly protected data security, has a robust legal framework and a network of service providers that streamline the setting up process. Switzerland is often the country of choice when it comes to privacy, as it’s synonymous with security and data privacy. Another reason SMEs should consider setting up an offshore company is tax efficiency. Tax advantages are offered by different jurisdictions. For example, Singapore has one of the lowest corporate tax rates, while the Cayman Islands might be more ideal for freelancers who are looking to minimise the effective tax rate on their businesses,” adds James.
“Offshore companies provide SMEs with the ability to mitigate risks that arise from political instability or currency volatility. We have already seen businesses starting to register European entities in order to limit their exposure to the fallout that may result from Brexit. Whatever the reason, spreading your operations across jurisdictions may be the best long-term business strategy SMEs can adopt to secure future growth,” adds James.
Turner Little specialises in creating bespoke solutions for individuals and businesses of all sizes. The knowledge and expertise of their specialists will be able to assist with any enquires, no matter how complex.
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