2009 was the most interesting and challenging year I have experienced. Of course the events started towards the end of 2008 with the collapse of Northern rock in the UK and Lehman Brothers in the US.
Paralysis in business decision making set in immediately. We were trapped in a lift, the cable had snapped, we had no idea how many floors we had to drop. The now infamous Sequoia presentation “RIP: Good Times” circulated from business leader to business leader urging cost cutting as quickly as possible. Several clients asked us whether they should withdraw funds from traditional UK banks!
With the arrival of the New Year business leaders finally blinked, shook their heads and awoke from the bad dream, only to find it was real. They acted quickly and with depth. Almost without exception our clients made cuts to the workforce.
Then something quite remarkable happened. Businesses and their workforces united in their battle. The workforce worked with managers, taking pay cuts (pay freezes if they were lucky), pension holidays, benefits cuts, reduced working days. There was no large scale industrial action, no tales of unrest or poor morale. Employees up and down the country were sophisticated enough to know that this was a genuine crisis requiring radical action. I have not experienced this degree of co-operation and understanding before. I believe history will show this to be a key foundation stone of the recovery. It is vital that business owners and managers recognise this contribution when the good times return.
The early summer months were odd. A number of companies collapsed, their businesses had not deteriorated any further, it’s just that their balance sheets finally gave out. Bank lending and venture funding had all but dried up. Many companies had balance-sheets in December that could only fuel six months of loss making. Were we heading for a second dip? My fear was compounded by the slowest August in terms of activity. We were almost continental.
We unexpectedly found our feet in September. Perhaps it was simply the backlog of deferred August decisions, perhaps it was confidence garnered from corporate acquisition activity (Kraft’s first bid for Cadbury’s) or it was the boost from the FTSE breaking the 5000 barrier. It was a very patchy recovery though, many of our clients experienced no uplift in orders. Our US clients also experienced a lift, but it was very regional and sector specific, but recovery seemed to be sparking into life on the West coast.
The momentum from September didn’t really build, but the economy didn’t fall back either. The first nine months of the year had separated the strong from the weak – you had taken the action you needed to or it was already too late. Now there is the grind to eventual recovery, but when?
Mike O’Connell, CEO, Isosceles Finance
Tags: Cash Management, Finance Director, human resources, Outsourced finance, Outsourced HR, Part time FD
I agree