The good news is the GFC is no longer hogging the headlines. But the bad news is much of its deadly legacy remains and is still to emerge in the months ahead.
Some of the repercussions we can expect are tied up in the law courts around the country but liquidity (lack of that is) is the major unspoken problem with many small businesses just hanging on.
Finding the holiday pay aggravated by the usual Xmas down turn in sales, which lasts till at least mid-February, have made many SMEs (and I’m talking about the vast majority of businesses in Australia, say 95 per cent of the 2 million registered as going concerns) are extremely fragile at the moment and just a single small push will put them over the edge.
So we are talking about a potentially very large number of possible failures.
In case you are now wondering, I guess I should flag my own personal optimism about 2010 and say our own business is in better shape than we have been for years.
Why is that so?
Well, like a lot of businesses (and particularly internet start-ups like us) we were severely hit by the GFC and in fact we lost our major financial backer in September last year. It was a significant set-back since, like most start-ups, we earn only a fraction of our total costs and the on-going funding of our R&D has always been a struggle for us.
How did we turn it around?
For starters we copied the ‘big’companies well-established recession strategy (me too usually works). We laid off everyone, I mean everyone we possibly could that is. Not a decision I am particularly proud of but one we were forced to take.
Then we took a hard look at where our revenue was actually coming from. We then cut back our costs severely in all areas other than our SMARTPAGES directories.
Next we did some navel gazing and asked ourselves: what were our ‘real’ strengths?
By real I mean what our existing customers and any future prospects would consider were our strong points. I would emphasise these are not what we would necessarily have wanted them to be. This has to be a hard-nosed business decision not a subjective or emotional one.
In our case we discovered that our perceived strength (‘add value’ or however you want to describe it) lay in our knowledge of the internet. What works online, what doesn’t etc.
Nine years’ experience of publishing on the web, my Masters Degree on Information Systems, patents and studying for a PhD on Search Engine Optimization were an unexpected big plus for YOC – they were seen by outsiders as extremely valuable Intellectual Property (IP) and in fact not just another on-gong drag to our business.
How did we unlock this IP?
Well I can’t reveal everything but let me just say we have entered a completely new field with a great future and, better still, strong cash flow in the short term.
Is this the right decision for YOC going forward?
I am very confident about our new future, although only time will really tell, but what I can say is any other alternatives available to us were dire.
And we observed the first rule of business. To succeed in business you must first survive … and I think we will.
However the two critical questions for readers remain:
• Is your small business going to survive the GFC after effects, as it is?
• And if not, what are you going to do about it?
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