For business owners and managers the past few months have been a very steep learning experience. After a decade of relative prosperity in New Zealand things have changed dramatically, and the changed economic environment has called for a change of pace to the way we do business.
For those of us in positions of responsibility the last few months has meant difficult choices around staffing and resourcing.
And for those of us who are still trading, the fact we are doing so indicates we have been making - at least sometimes - the right decisions.
Starting today - with the objective of empowering NZ small business owners and managers to learn from each other's experiences - Wellington online accounting software providers Xero are sponsoring an online discussion at Public Address System about business survival strategies.
The discussion will be led by myself (Scoop Media General Manager) and Xero founder and serial entrepreneur Rod Drury.
Our intention in holding this discussion is very much to seek to provide practical advice to business managers and owners. Hopefully an element of collegiality may also emerge and it is possible that useful new connections may be made.
And so if you either have questions or experience to share you are very welcome to participate.
As a starter for 10 I will briefly outline some of the strategies we have adopted here at Scoop Media since the credit crunch started to bite
By way of background Scoop is a pretty classic small business - albeit an online one. We employ around 10 people, some part time, and have the usual overheads, phones, rent, office supplies etc. We do not carry any trading stock and most of our overheads are fixed. Most of our costs, 75%, are wages. We are 10 years old in June and determined to get to the other side of this recession.
And when the balloon went up - i.e. when Lehman Brothers went bust - in September we got very serious about business survival.
Fortunately it was not too much of a shock to the system. By September last year we had already experienced nearly nine months of no-growth in the NZ economy, and in our sector, a fairly hostile market for our main product - online advertising. Advertising is often something of a leading indicator of economic conditions and we had noticed things deteriorating as early as November 2007.
And so for most of 2008 we had already been in a cost reduction phase. With the prospect of a deeper recession ahead this aspect of management became the focus of board activity.
Through 2008 the steps we had taken were the usual:
we developed closer relationships with the accounts staff at our major clients;
we instituted close management of overdue accounts and follow up procedures;
we opened discussions with our major suppliers informing them that we were cutting our costs and seeking favourable payment terms;
we cut all non essential expenditure.
One of the first things we did after the Lehman's collapse was negotiate an end to the lease of our Auckland office. It was a bitter pill to swallow but one we had already identified as being the next in line in our cost cutting programme.
While we did not exit at no cost, the settlement did enable us to significantly cut our monthly outgoings and reduced our overall liability.
With costs trimmed to the bone we moved to the second key focus of survival activity - sales.
And so if you want to hear more about how we did this - and also share the experience of other business owners and managers - please join me and Rod at Public Address System over the coming fortnight.