John Linton ......business continues to get a little bit stronger as the days of this 'recession' continue to tick by. As many financial writers continue to say - "we have yet to experience any real effects" (and unless you work for Pacific Brands or BHP that's probably true for the overwhelming majority of Australians) and the $A20+ billion of Krudd handouts may have ameliorated some of the more urgent blocked credit cards for a number of people who have been forced/chosen to live 'hand to mouth'. I had to laugh at this particular stupidity by Krudd when I opened the mail last Thursday and there, lo and behold, was a Commonwealth cheque for $900.00! What is that man thinking of.....and why didn't I get the last one! Talk about an ill considered, total waste of money.
(I'm not a hypocrite so I'll either tear it up or donate it to something that needs the money more than I do).
Back to real business - the other issue that we have been tracking since late 2008 is the customers who default on their credit card/direct debit payments. Interestingly while these have risen slightly on the major bill run on the first working day of each month the number of people who fail to clear that debt by the end of the month has remained virtually static (perhaps that's partly due to the Krudd hand outs?). We have had one business customer who had 8 SHDSL connections go broke which was an expensive mistake on our part (who would have thought that pubs can't make money in tough times?). So we currently see little affect on our particular customer base but then, as everyone keeps saying, "it's early days".
So, assuming it is early days and that things are going to get worse in the future (Whine will need a strong reason to not only 'delay' the promised tax cuts but actually increase taxes on the "rich" - and I hope all you wealthy Lane Cove voters who decided a 'TV personality' was a more suitable candidate than a long serving MP choke on your muesli when that little 'surprise' puts another dent in your ability to pay your private school fees - you stupid, stupid idiots) we have a few months to further "batten down the hatches" or whatever term is appropriate for harsher financial times.
We fortunately increased our prices last December 1st for new customers and added the $3.00 surcharge for 'old customers' which has meant that we will not have to increase plan prices over the coming months (and for those that remember we have actually added a significant number of 'value adds' over the past four months). The reductions in IP bandwidth charges will kick in in July and then again in August together with a range of other supplier price reductions over the next three months which will further 'shore up the defences'. Our premises move, while requiring capital injection will also reduce our operating costs and keep them reduced in terms of making us more efficient as well as paying less rent for more space (which we need to grow our 'sales force'.
So we have pretty much done everything we can possibly do to ensure we are as protected as we can make ourselves 'recession proof' at least by taking actions over areas of expenditure and income that we can control. Also, as the lowest cost provider of the services we offer we believe that provides 'innate' protection when money for all sorts of people and organisations becomes 'tight'
What is actually going to happen? Probably only 'The Shadow' knows and I don't have his cell number.
PS: I have to share with you P J O'Rourkes summary of the two party political party process he used in his address to the CIS last Wednesday:
" The Left is the party of government activism – the party that says government can make you richer, smarter, slimmer, taller, and take a dozen strokes off your golf game.
The Right is the party that says government doesn't work. And then they get elected and prove it."