Posted by Paul Hargreaves on
For many of us last week was a bit of nightmare. Both for retailers trying to find enough staff who could make it to work, so they could open, to producers and distributors trying to deliver their orders to customers. They reckon £1bn was wiped off our economy for each day that the snow fell last week. Even my local supermarket still had no bread on Saturday, and websites like eBay and Gumtree had chancers selling milk and bread for £100. Though if customers were cut off from the shops, it would be unlikely vans could make those deliveries! It’s been a while since we have had so much snow over a wide area, and I expect this week when the phones start ringing there will be many community-based customers that have done very well from the snow. This is what I remember from last time we had widespread snow, so it is not all doom and gloom
Whilst last week’s snow was widely forecasted and should not really have caught anyone out, it did and always seems to. This started me thinking about contingencies within our businesses. We all should have them, but how many of us do? It is a good exercise, for example, to imagine having your largest debtor going out of business: what would be the impact on your cashflow? Would you survive? Or imagine your largest customer in terms of revenue de-listing you: do you still have a business without that chunk of turnover? Would you have to cut staff? I am not really of the disposition of imagining worse case scenarios as I tend to be a glass-half-full person, but the financial people within my business think about such things, and are wise to, and so should you. Our financial year-end is at the end of this month, and we will always make provision for some bad debts or the cost of an IT upgrade for next year, so when something does go wrong, it is not a surprise and we are prepared for it. I have been in the game long enough to know that “s**t happens” on a regular business and I no longer go into panic mode when it does!
What does concern me though within this sector at present are the number of small producers who are living right on the edge. They have not gained that listing that would make a huge difference to their business, they have not seen orders increase that would give them economies of scale and paying their suppliers on time or at all is a constant struggle. Some are taking other jobs to make ends meet, others are considering packing it all in. There are simply too many very small brands within the sector, which is part of the joy of working within it, but also could trip some of us up. Just as there is consolidation happening within the wholesaler world at present, I expect there to be more mergers and acquisitions in the speciality sector this year than any year before. Keep your ear to the ground!