Bryan Goldsack – Managing Director Damar Industries

Background:

•18 Years management experience in the meat processing industry.•General Manager - Douglas Pharmaceuticals, Auck)•Operations Director for Fletcher Challenge Forests (Tenon)•Director of Operations for Carter Holt Harvey (17 NZ sites)•Managing Director – Damar Industries Ltd Damar:

• $50 million annual sales, 120 staff, Rotorua and Auckland operations.• Road marking products • Aerosols - 9 million cans• Ecomist – direct selling franchise model• Consumer products – Hardware and supermarkets• Pool Pride - • Technical coatings -• Liquid filling/manufacturing - • Industrial solvents -• Own brand products -• Multiple channels to market including retail, supermarkets, hardware, on-sellers, franchise networks

•Where do you fit in today's economy.

•It is bad for most….not for all, but certainly the majority …..and very likely to get worse before it gets better.

•Can’t be immune to international economic climate impact•Globally synchronized•Unemployment 8.0% ???•Risk of job losses = low consumer confidence•Unfavorable FX impact for importers impacting prices.•Low commodity export demand•The share market is at the lowest in 5 years. •GST take over the last 2 months (down 1.2 billion)•Borrowers are shy to take on new or increased debt.•Banks perceive high risk remains in the NZ market.

•It is not going to improve for quite some time (maybe 3-4 years) so we have to learn how to work successfully in this new and unchartered environment.

•There is no magic bullet…. But doing the basics well will help you and your business.

A quote from Graeme Hart…… “always take actions to protect profits”!

•Consumers won't stop consuming, (but they will be a lot harder to persuade to buy goods, services or holiday here)

•Companies will have to be extraordinarily astute.

•Pricing is shifting from boom to budget. (When people felt wealthier, they cared less about bargains. Now acutely price sensitive)

•Discounting is the easy option! A study by McKinsey of 1500 major US companies showed a 5% price cut needed a 19% increase in volume to pay for itself.

•It's far better to understand the price sensitivities of your products and, where possible, offer customers better value rather than lower prices.

•Will the market size get bigger for you? Opportunity in this recession is to take market share off incumbents who respond too slowly to the change in the market's requirements - incumbents who keep pumping out the same stuff when the customer wants

greater value.

•Take control of the things you can influence.

•Costs are in your control to manage. You can and should influence them.

•Right-size your business. When necessary, cut to the bone. Cut in the right places, and where necessary invest.

•Do not under any circumstances leave any stone unturned. Should be “NO” sacred cows.

•Squeeze your suppliers, find new ones, negotiate (price and terms). (If you don’t ask you will never know)

•Know how costs contribute to your business

•Know supplier price drivers and monitor them that way you keep them honest.  Help make them efficient and share the gains.

•Review your costs daily, weekly and monthly, know them inside and out.

•Put rules in place and take control. Make sure you are the one making decisions on what you spend at all times.

• Be accurate and spend the right amount of time putting your budget together. Don’t assume anything! Make sure your assumptions are based on facts not dreams or misplaced optimism.

• Bank in your budget only what you feel certain you can deliver .

• Use history and current performances to guide you

• When you have finished your budget spend time assessing again and again.

• Look closely at the gross sales revenue assessments. Are they real?

• Look at your cost of goods. Are prices trending up or down? How will FX impact you. Where do think costs will be in 3, 6 and 12 months from now.

• Know what your margins are. Know where and how you are making money and why

• Review, review, review….

•Know the cash cycles for your business.

•Know your key customers and what their cash cycles look like. Make it your business to know their business and performance.

•Talk to your bank manager about what your budgets and your cash flow looks like through the year. Front foot issues.

•Review your cash position regularly.

•Communicate with customers frequently and confirm when you are getting paid. 

•Maintain a good relationship with key suppliers.

•Constantly review your inventory position. Inventory is your money! Review stock turns, consignment stock.

•Lock in certainty where it makes sense like FX and interest rates hedging and commodities. Review terms of trade, bad debt

•Its too late to cut when you run out of cash. Be ahead of it.

• Identify how revenue is generated in YOUR business, • What type of activity generates sales . Who in the business generates revenue? What do you spend your time doing.

• Ensure that the maximum time and effort is spent doing “stuff” that contributes to generating revenue .

• Complete a time management assessment for yourself and your staff. Do something with what you learn. Change your focus. Spend time doing different things.

• Make the time to review performances against what your expectations were (against plan and budget) Involve people in your team.

• Have KPI’s for your business and your people. Productivity levels, costs, attendance, quality, sales, performance to plan

• Make sure there is no ambiguity in your team. Communicate clearly and regularly

• Love the people you keep. Some of you will end up working with less people.

• Spend some time researching and learning. Trends, customers, opportunities, competitors new developments and technologies.

• Bring in people that can bring you customers.

• Don’t be scared to give things a go.

Whilst things are serious, the sun will still come up tomorrow and we should remain optimistic in our thinking but definitely not ignore what is happening around us.

Over the next year, things will happen that will stimulate a modest increase in private consumption.

• lower interest rates than in 2008, • lower petrol prices, • still relatively high wage inflation, • further tax cuts in April 2009 and • growing immigration • USA and China stimulus packages

There WILL be opportunities during these times. Go looking for them!

• Is there a chance I can differentiate my service or product• Can I better demonstrate a value proposition that makes customers prefer me.• Can I make, sell or supply products or services that have synergies with my business model.• Who can I take market share from?• How can I bring more customers to my business.• Are my competitors losing ground or no longer with us. How can I dominate them.

•You have spent a huge amount of time, building your businesses, and managing them. Spend the right amount of time doing the basics well.

No matter how big or small you are, if you

• have a plan, • have a budget, • manage your cash flows, • manage your time, and • measure your performance

then………..You have the minimum basics in place to succeed!

If you don’t……good luck!