In these straightened times, the ability to source finance for investment and maintain a healthy cashflow can help businesses tough out the recession

　　One of the difficulties with recessions is that you don’t know that you are technically in one for six months, and then you don’t know when you’ve hit rock bottom and started to come out the other end until you see it in the rearview mirror.

　　The uncertainty caused by the potential presence of the ‘R’ word sees people struck dumb with fear. Banks refuse to lend, investors (other than that rare breed in the mould of US investment legend Warren Buffet) are too scared to take a punt on a long-term return and, as a result, many businesses go under through their inability to attract funding. It’s this lack of available finance that has been one of the major problems that has blighted the UK printing industry over the past 12 months.

　　As one print finance expert explains: "I’ve seen businesses go out of business this year that really shouldn’t have done and one of the reasons for this is that they have been out there running around trying to please the banks and raise finance rather than focusing on running their business."

　　While the above scenario will be all too familiar to many printers, as this year’s PrintWeek Top 500 tables show, there are still plenty of companies in the market making a healthy profit despite the trying economic conditions. (Indeed, one company that was approached to comment for this article refused to do so on the grounds that its profit margins were so large and they didn’t want their customers to know how well they were performing.)

　　So, based on feedback from printers themselves (see York Mailing and Lick Group case studies), in addition to advice from financial experts with in-depth knowledge of the sector, what sort of measures can print businesses put in place to ensure that they survive these uncertain times and plot a course for a successful future?

　　Having a flexible cost base – ie, low fixed costs – is a good place to start for those who wish to see out the current financial storm, as Grant Thornton partner and print industry expert Daniel Smith explains: "This enables them to be more flexible with the level of demand that they are experiencing. Clearly profitability is key, but more important is cash generation, which is also influenced by capital expenditure requirements and loan repayments."

　　Risk averse

　　Keeping on top of these key areas also allows management to focus on their core business, according to Paul Holohan, chief executive of Richmond Capital Partners. "Companies with cashflow issues tend to suffer the most as the lack of financial resources dominates the thoughts and stifles creative thinking," he says.

　　But while it’s crucial to keep the cash flowing in the right direction, it’s still possible to make a profit and run out of cash. So businesses must be mindful of keeping debtor days down and trade creditor days up as much as possible, advises David Bunker, director of Close Print Finance, who adds that although bad debts are a fact of life and avoiding them can be difficult, some basic good practice will help.

　　Be wary of new accounts turning up out of the blue, recommends Bunker. Use a reliable credit search agency, but be aware that this can often rely on historic information which won’t provide a true picture of the [current] credit worthiness of your prospective customer, so where possible try and make a provision for bad debt even if this doesn’t get used.

　　Another trap to avoid falling into is relying too heavily on a single account. "If your business is exposed to a large account – say more than 15% of your debtor base – and this account cuts back in an economic downturn then your business can suffer a big downturn of cashflow," cautions Bunker.

　　While the aforementioned problems are issues that all businesses need to be aware of, and wherever possible give a wide berth to, what kind of qualities will help them navigate a way ahead? One obvious attribute that many successful companies have in common is that they boast strong leaders who "can communicate their own infectious enthusiasm", according to Holohan.

　　"Strong and efficient management leads to good decision making, which is the path to success," he continues. "There are plenty of good entrepreneurs in the print industry and several opportunities for would-be print bosses to prove themselves as owners, as a number of those businesses who haven’t found their own success decide to give up the struggle and look for new owners."

　　He adds that another thing that these leaders have in common is that they have a clear strategy for the future. These strategies can take numerous different forms but one great survival tip is to focus on a niche market as "specialisation gives a company a competitive advantage", says Holohan.

　　Finding finance

　　However, if work from an industry sector that a print business has traditionally focused on has dried up, then spreading out into other areas is also not a bad option, says Murray Booker, director at BPFL. "A lot of the most successful companies that I have dealt with have diversified into other areas and become more of a service provider," he says.

　　While it’s good to diversify into other areas, it also pays to diversify the people that you borrow money from, adds Booker. The importance of this point has been underlined by the recent problems affecting some of the country’s biggest banks many of whom have reined back on their lending to consumers and businesses alike making it "more and more difficult to get credit agreed", says Booker.

　　Another well-placed financial source expands on this point by explaining that some finance firms have told him that they have "pretty much signed off this year" in terms of lending. One or two of them have even intimated that they are not going to take any more business until the new year.

　　So with finance difficult to come by and new business likely to be thin on the ground, what will unfold over the coming months? Most of the financial experts agree that further hardship is on its way as it’s unlikely that we have hit the bottom of this steep decline just yet.

　　"To date we have seen limited consolidation or fallout across most sectors in the print industry, says Grant Thornton’s Smith. There are some exceptions, but in these recessionary times there is no sign of improving margins."

　　While further consolidation will not help the companies and employees immediately affected by it, it will ultimately help the overall market and put it on the road to recovery.

　　"Consolidation has happened at a pace over the past two years and so many companies have gone bust and will continue to go bust that there will be a time when there’s enough work to go around," believes Booker. "Anyone who has survived the past 12 months and survives the next 12 months will be around for life."

[时间：2008-12-04  作者：Simon Creasey  来源：互联网|#]