It pays to ask for help: Richard Rasmussen

There is no shame in letting others know you are in trouble, writes industry expert, Richard Rasmussen. He has some tips on what to do if you don’t like where your business is heading.

I’ve read with much interest some of the closures that have occurred over the past months, and I can’t help but thinking how many of these operations could have been saved in some form had early appraisal and intervention occurred. Would it have been possible to find a solution?
 
Insolvency practitioners, Worrells identify those phases that lead to the collapse of a firm:
 
1.       The confident phase (the rise)
2.       The consolidation phase (the plateau)
3.       The debt phase (the decline)
4.       The denial phase
5.       The collapse
 
Although their article is not industry-specific, see www.worrells.net.au/insolvency resources/5_phases.htm , I’m sure many printers around the land can relate to these phases and perhaps at what stage they may be. I’ve seen many of the stated characteristics as identified in this article. I’m sure other members of the industry have also.
 
Unfortunately, my fear is that many printers are in the debt and denial phase, and in some instances are trading in solvently. Add to this what I see as the present state of the industry and it becomes a little more worrisome that:
 
•         As print sales fall, there is more competition to fill the presses and this has lead to lower prices / reduced margins.
•         Those with hungrier stakeholders / shareholders are more aggressive in the market place
•         Conventional offset printers are facing more competition from more efficient business models and non print media such as the web
•         The conventional print market is shrinking – don’t let anybody kid you otherwise
•         Market values of plant and equipment have fallen heavily in the last 12 months
•         In 2009 the ATO, banks and other creditors were more lenient than normal many printers, and let them trade out of normal terms. This is starting to stop and they are tightening up.
•         Paper suppliers have been burnt big time by the liquidations – much of these debts are covered by insurance. So it follows the insurance companies have been burnt worse than the paper suppliers. In turn paper suppliers are likely to pay higher premiums, and collect money faster. This vicious circle has some lag time. It is just about to catch up with the printers who will have there terms of trade drawn in, or be moved onto COD. This will in turn to lead to worsening more cash flow problems for many printers
 
We hear in the press that there are some green shoots, but this isn’t happening fast enough for many printers who simply can’t continue to put their hand in their pocket to prop themselves up. This will lead to more closures if something is not done to address their plight.
 
I’m not trying to be negative, only trying to tell it as it is, in the hope that proprietors recognise and acknowledge where they are and seek early help. If your business’s trends are bad, ask yourself, what is the chance of turning this around by doing nothing?
 
The first step is to recognise and admit you have a problem and seek help (as Worrells suggest at the end of phase 3). You need to have the business independently appraised – and once appraised, develop options and then chose a course of action and act on it. Who you choose to help you and conduct the appraisal is up to your own individual circumstances, perhaps with your accountant being the first port of call from a financial perspective. If that leads to seeking an appraisal on what your business may be worth, and the development of options then we and other industry specialists can assist.
 
I think there are ways to successfully consolidate, and for many to avoid closure – the key is early admission, and recognition that there is a problem.