Auditel's January '09 intake of new franchisees

Auditel specialise in cost and purchase management and are the UK’s leading home-based executive franchise. In January the company celebrated a remarkable record in the number of franchisees recruited for any single month since the company began franchising in 1997.

As Laurence Knott, Auditel’s Head of Marketing, explains, “We opened our doors for business after the Christmas break at 9 am on Monday 5th January and by 11 am we had our first signing! Since then there has been a steady flow of new franchisees joining us. Among the first intake were professional men and women from retail, energy, marketing, recruitment, engineering, IT and the healthcare industry.”

Nottingham-based Phillip Godwin, ex- Governance Manager of a large energy company joined with his wife Pam. “I had wanted to do something different for some time and had looked at a number of franchise opportunities before coming across Auditel. What made them stand out for us was first all the people - professional and dedicated. Next, the business model - adaptable to the lifestyle that we wanted to achieve and also the commitment to personal development. Finally, the support and expertise of the network - a company I would want to do business with.”

For Pam Auditel was the right opportunity because, “It gives me the opportunity to work together with my husband in a business partnership in which we  can both contribute and use our different but complementary skills. Auditel and its support team were professional from our first contact with them. They were fully supportive and able to answer all the questions that we posed in the decision-making process.”

Wokingham- based chartered accountant Kien Lac, who worked in healthcare before becoming an Auditel Consultant, says, “As an ex-Finance Director, I felt that the Auditel business model offered a compelling proposition to the client which has a direct benefit to their balance sheet.”

According to Tom Endean, Marketing Manager at the British Franchise Association, “While businesses are battening down the hatches and hoping for the current economic storm to pass, many franchise businesses are enjoying good health”. A trend that Auditel’s success so far in 2009 certainly seems to confirm.

As Auditel’s Managing Director, Chris Allison, explains there are very good reasons for this. “Despite, or perhaps because of, the current economic climate our cost and purchase management services are in great demand. Most businesses are beginning to realise that they simply don’t have the in-house resources to effectively manage their overheads in an ever-changing and complex marketplace. And at this time, with sales revenue falling for many companies and staff under increasing pressure, organisations are taking a fresh look at their expenditures and are turning to outsourced providers of specialist cost management services. As a result, our consultants are busier than ever and our franchise recruitment is breaking all records.”

Laurence reports: “Despite the current economic climate, Auditel are experiencing business success with increasing demands for our services and an influx of franchisee enquiries. Our business model works very well, particularly in times of economic uncertainty. We are finding that organisations welcome our support in reducing cost and there has never been a better time to buy an Auditel franchise than now. In fact, our signing of new franchisees in January reached an unprecedented level for a single month – the first one coming on board at 11 am on the day we returned after the Christmas break!” Laurence added that he is really looking forward to an exciting year with Auditel and the opportunity of adding his experience to their management team.

The difficult trading conditions in the retail markets over the past 18 months have caused two suppliers to become insolvent, E4B and Bizz Energy. Bizz was the largest independent supplier to have been around for a long time, weathering the last wholesale price increase three years ago and expanding its business in the process. So their demise is a significant event and demonstrates the effect of the size and speed of these recent energy price rises. Those supply companies without their own generating resource have been particularly hard hit. They have had to try and hedge their requirements for 2, 3 or even 4 year fixed price contracts with their customers in an ever rising market. We may be reluctant to shed many tears for them but in the longer term it means less competition, and that is bad news for SMEs.

More bad news is the way in which complaints about energy suppliers are now handled and how redress might be obtained. Energywatch ceased to exist at the end of September and was due to be replaced by an expanded Consumer Council and an Ombudsman scheme. The Consumer Council is unlikely to be operating in any meaningful way until well into the New Year or even two years if the experience of the start of Energywatch is anything to go by! In the meantime any unscrupulous energy company will be able to ignore customers’ complaints and bully hard-pressed SMEs into accepting their views.

The Ombudsman scheme is in a similar state and currently will deal with only the very small businesses that have been unable to reach a settlement with the supply company after eight weeks. Even after a referral the supply company can still threaten disconnection for non-payment of disputed invoices, so a credibility gap exists. Auditel and a number of other consultancies have made representation to the new Ombudsman on this point, which he is seriously considering.

The energy regulator OFGEM has published the results of a probe into the SME part of the industry. It found no evidence of cartels operating but was concerned at some aspects of competition. The report can be downloaded from www.ofgem.gov.uk.

Against this background it is important that SMEs either fully understand the energy markets or have access to a transparent and trustworthy third party who does. If they are advised by a broker who maybe more concerned with putting the business with the supplier paying the largest commission then they are unlikely to obtain the best deal, either in terms of price or service.

Before engaging the services of a consultant it is wise to ensure that he declares all sources of income, namely that:
• The amount of any commission received is not excessive for the service being providing.
• They can provide two references from companies that you have heard of or can trust.
• They are a member of the Utilities Intermediaries Association (UIA), the consultants and brokers trade association. This means they have signed up to a code of practice, and there is a redress for the customer if the broker fails to provide the contracted service in a competent and professional manner.

With the help of such a professional consultant like Auditel many potential problems can be eliminated and the company can be confident that their energy is being properly managed.

Auditel Consultant Gill Gibbon receives the Franchisee of the Year Award from Auditel's Managing Director Chris Allison

Auditel National Conference 2008

Auditel, the UK’s leading cost and purchase management franchise were proud to present Gill Gibbon the Auditel Franchisee of the Year Award 2008. Gill was presented with her award at the Auditel annual National Conference, which was held at Whittlebury Hall near Silverstone. Gill is a very worthy and popular winner of this award, which is presented every year during Auditel’s black-tie gala dinner to the consultant who best exemplifies Auditel’s values.

Since joining the Network in 2002, Gill has worked very hard to build a successful cost management consultancy practice, which provides an excellent model for new and established consultants alike. But much more than this, she is renowned in the Auditel network for her boundless energy and enthusiasm, her commitment and her generosity of time, knowledge and spirit. Despite a heavy workload, and the demands of a family, Gill always finds time to provide support, advice and mentoring to her colleagues and to help the head office team in their constant drive to develop the Auditel business system. Congratulations Gill from everybody in Auditel for this well-deserved accolade!

Other Awards presented during the evening went to Mike Andrews for the Tim Rix Memorial Award, Neil Calcutt for Specialisation, Maggie Cross, Peter Mayhew, David Willett and Peter Lawrence for Outstanding Contribution, Adrian Burton for Newcomer of the Year, Steve Ray for Unsung Hero, Gordon Brearley for Rising Star and Jonathan Moffitt for ‘Thinking Out of the Box’.

Congratulations to all the winners and thanks to EDF Energy, Inenco, Shell Gas, Travelex, UK Telco, Alternative Networks, Uniworld, Welcome Telecoms and Phase Office Supplies for their sponsorship and support of the awards.

The black-tie gala dinner itself rounded off a day of presentations and Q&A sessions designed to educate franchisees about developments in Auditel’s core markets of energy, communications and business consumables as well as new opportunities for 2009.

All in all, this year’s conference was a really successful and fun event for consultants, invited guests and the head office team alike and provided a fitting grand finale event to a very busy and successful year.

Even finance managers who are aware of the need to control their costs, struggle to achieve meaningful savings because they lack the time and resources to drive cost reduction programmes. In a recent surveyª accountants KPMG concluded, ‘Businesses are under constant pressure to reduce cost, yet many find it hard to do so in a sustainable fashion. Nine out of ten cost reduction programmes fail to achieve their targets, and the gains that are achieved appear to be short-lived.’

Organisations usually focus on the headline prices of their essential overheads, assuming that these equate to the total cost. Not so. Just because a supplier offers you a low price it doesn’t mean you will make meaningful, long-term savings. After all, how do you know if it’s the best price? What if their prices go up next month and you’re tied into a long-term contract? Will they apply minimum charges that push your costs up rather than down? Do you have time to constantly monitor your prices and check your bills? And so on.

Traditional cost reduction programmes focus on these headline prices and short-term savings, but this approach overlooks many of the issues that affect the real cost of purchasing business overheads. What’s more, managing costs and making important procurement decisions often fall to staff whose core competencies lie elsewhere. By taking staff away from their main roles, organisations compromise productivity – another indirect cost of purchase that is rarely taken into consideration.

All charities want to meet their aims and really need to focus on managing their costs consistently and diligently rather than on one-off savings. This is the true function of cost and purchase management, requiring time, resources and specialist expertise, which many charities lack. Increasingly, many are turning to outsourced providers of these services. Thus, they can access specialist knowledge, mitigate the financial loss of taking key individuals away from their core responsibilities and eliminate the costs of employing in-house resources.

Energy experts Auditel agree, “Clued up companies are already making savings by employing the expertise of organisations that have the experience and time to obtain results.”

However, as in any other profession, there is best practice in cost management. Charities should always check exactly what they are going to get! For example, one of the most important things to consider when employing an outsourced expert is their auditing procedure. Best practice review processes should include the following:

• A comprehensive, in-depth review of current essential services expenditure
• A thorough analysis to determine where savings can be made
• A detailed report of recommendations including information about how the consultancy will earn their fees, e.g., on a contingency basis or a set fee
• The consultant will take full responsibility for managing relationships with existing, or
new suppliers

Charities would naturally prefer ethical business solutions (often referred to as Corporate Social Responsibility), as they recognise the need to be accountable for the impact of their activities on the environment and society.

Achieving the projected savings (and rebates for overcharges in the past) should be just the beginning of the job. The consultant should continue to assess current expenditure against new tariffs and services as they become available, to ensure that benefits continue from optimum cost efficiency across all essential business outgoings.

Several leading charities including YMCA, Royal Air Forces Association, RSPCA, Naomi House, Anthony Nolan Trust, Trafford Community Leisure Trust and John Grooms have all taken advantage of outsourcing their cost management function.

Recently, Brunelcare, a registered social landlord, and an originator of the ‘Meals on Wheels’ concept, commissioned a survey on their business costs. Annual savings amounted to £105,000 on gas and electricity usage including a substantial rebate from previous incorrect billings. Their Finance Director, George Cooke said: “As a charitable housing association, we always look for efficiency gains so we have a heightened awareness that we must spend our money wisely. These savings translate into valuable capital which has, in turn, been reused within our organisation.”

Calvin Klein Jeans is the UK arm of the international fashion group. They have six stores around the country, with a flagship outlet at the Bluewater shopping centre in Kent and access to the main Calvin Klein shop in Regent street.

Case Study:

Download a PDF copy of the case study.

Auditel consultant and Commercial Director, Derek Chisnall began working with CKJ’s UK Operations Director, Pierre David, in early 2006. With the main administration function of the company based in Italy, Pierre and his company accountant, Julian Gautier, only have a small team in London to look after the overheads of the UK operation. An earlier internal review had failed to achieve sustainable savings because, as many organisations find, staff were too busy focusing on the core business to implement the opportunities they had identified or to consistently review new opportunities. Working with outsourced specialists, therefore made perfect sense, especially as the self-funding contingency fee model meant there was no financial risk in engaging Auditel to make their initial investigations.

Pierre had two main objectives for the project: to introduce ‘green’ electricity supplies across his stores and to make savings against his telecommunications spend that could, if necessary, be redirected into his personnel budget. Although not a company-wide policy, Pierre wanted the UK stores to use electricity from renewable sources to acknowledge the growing importance of ethical purchasing and corporate social responsibility among consumers. However, with neither the time nor the expertise to evaluate the market himself, outsourcing the project to Auditel was the perfect solution, and Derek enlisted the specialist expertise of Auditel consultant Richard Coward. In the end, Richard found a supplier who not only fulfilled Pierre’s agenda but also saved the organisation £7,500 (13.7%) annually.

Richard’s audit of the company’s communications spend identified two main areas of concern: the cost of charges for international data traffic from the automated tills back to Italy and excessive charges for dial-up internet access. The first issue was addressed by carrying out a review of the marketplace, allowing Richard to negotiate more competitive rates from the incumbent. The result was an annual saving of £5,000 without the need to change provider, Pierre’s main stipulation for this aspect of the project. The dial-up internet connections, which at one store was often being left open all day, were replaced by a specialist broadband supplier, saving another £8,500 per year. Finally, Richard saved another £7,500 by cancelling a number of facilities for which CKJ were paying but had no further use. In total, these three solutions have led to a 60% reduction in CKJ’s annual communications spend.

In addition to the annual savings, and as an integral part of the Auditel service, Richard checks CKJ’s invoices every month and produces regular management reports. This has already identified a billing error by the incumbent supplier for which Richard has obtained a £1,500 rebate and, just as importantly, leaves the in-house team free to focus on the core task of running the stores.

Savings Achieved:

£7,500 Electricty
£5,000 Data Charges
£8,500 Internet Access
£7,500 Asset Management
£1,500 Billing Error Refund

Total Annual Savings: £30,000 for 18 months