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LadyEllen -> one firm against the "downturn"; the next instalment (3/14/2009 9:19:41 AM)
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Hi All
The next instalment of the tale of a UK company struggling through the depr…sorry recess……no, “downturn”.
Well, contrary to the common experience of late and the worst predictions, I’m happy to report that things are looking up, for us at least; January and February both saw us make a small profit for the first time since August of 2008, and so far in March we’ve made the same revenues as in the whole of February, which is quite some achievement given the general background across the UK and Europe. We’re on course for our best month since 2006.
The changes to the company all went through OK in the end; employees are now shareholders and some are directors. Whilst bad news (such as our end of year results for 07-08) travels faster than a speeding bullet it would seem, good news travels far slower and the credit reference agencies have yet to note these changes to our capital base et al and adjust the gloomy forecast on our prospects. Still, these people are above the law and any sense or reason and we just have to wait for their illustrious little brain cells to pop into action – at which point we expect a deluge of desperate suppliers to overwhelm us with requests for business even more massive than that experienced so far given we are now a “good risk”.
Suppliers have been banging on our doors now for weeks – despite the credit reference agencies’ dire predictions about us. It would seem that “risky” business is better than no business at all for many. To have gone in six months from not being able to recruit new suppliers because there was no capacity available in the market, to having to turn them down and to have been able to steadily reduce supply costs for the last two months by another 10% (now 25% down from summer 08) certainly shows the situation many find themselves in. This sounds harsh that we’ve reduced supply costs perhaps, but the truth is we have to follow the market trend with this or become uncompetitive as our rivals cut prices – we still pay about 5% over the general market.
Cash flow remains the biggest problem we have – like everyone else we find customers less reliable when it comes to paying up on time, and we face suppliers desperate for payment on time insisting on it. Caught in the middle like this it puts a squeeze on us of course but we’re managing by hook and by crook to keep most of it under control. The biggest issue is Sterling cash flow since our sales have gone from 75% Sterling to less than 50% Sterling in the last few months – when your overheads and taxes are in Sterling, and your source of finance is based on your Sterling ledger this presents the bulk of the problem. However continental suppliers whose services were ordered in Sterling are happy to take Euro instead, so we’re getting through based on our positive Euro cash flow, which remains positive despite two continental customers who think we wont come after them for payment and owe us around 50k from some months back; are they about to get a surprise.
Of course this whole cash flow problem would be solved immediately if our bank – the one that lost £600 million with Madof and got tens of billions from the taxpayer to prop it up – would just give us finance for our Euro balance as well. But they don’t seem very interested; it seems their problems wont be solved by lending money to reliable customers who have been with them for some years. Funny how banking works.
So in other news, we opened up a new company to take advantage of the lower end of the market this week – and through that, as a spin off, we can secure finance for the Euro ledger from another provider, without our reluctant bankers being involved, after all we wouldn’t want to divert them from concentrating on their taxpayer funded bonus and pension arrangements into doing banking….
The new operation is going well; the first contract was made with a customer on Friday and there’s plenty more to come that’s been discussed and agreed in principle to make it work, alongside the best new recruit for the business for some years.
Now watch some bugger ruin it all………
E
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