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27 Aug 2009
Comments:1
One in four UK resellers of a group analysed by Plimsoll are loss making, according to the firm.
But of the 309 firms identified, 128 of those are making a loss for the second and third year running.
David Pattison, author of the Plimsoll report, said: “Increasingly we are seeing companies making a loss for the first time in their history and I think they can rightly claim they are victims of difficult trading conditions.
Further reading
“But the firms that are making a loss for the second or third year running are either blatantly undercutting the rest of the market to enhance or maintain market share, or more likely have delayed making the painful decision more prudent companies have made recently.
“No one wants to trim costs, lay off staff, cancel dividend payments and the like, but continuing on regardless is fast becoming unavailable. They can’t bury their heads in the sand any longer.”
Pattison said those firms that had made difficult decisions were to be applauded.
“I congratulate the management teams that have made the often difficult and unpopular decisions. They have cut their cloth according to the market conditions and as a result are more stable for it,” he said. “Those failing to do so are running out of time and cash. Without a big increase in demand they cannot support their pricing strategy for much longer.
“Watch out for a number of failures in the coming months among the companies we have identified.”
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Recalibrate your business, reap the benefits
The Plimsoll survey rings true. My own experience is that companies that go through tough trading conditions tend to emerge stronger with a better understanding of their business. At Centiq, an IT services provider, we found with a growing headcount, people had become pigeon-holed, whereas in the downturn, you have to audit your resources, review processes and give people more responsibility and expand their skills as a priority. You find you can do a lot more on fewer resources than you ever imagined. People adapt to a recalibrated business and revised workloads partly because the business' original priorities had become skewed. Companies should not shirk the tough decisions because efficiencies can be made and the business will improve and return to profitability as a result.
Posted by Glyn Heath | 14 Sep 2009
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