John Linton .....the "envy of the World" and......so why doesn't it feel that way in Sydney business?
I read the mega column inches in the financial, and general, press yesterday and again this morning about how amazingly well the Australian economy is doing but, after dismissing the hyperbole and mis-reporting, it seems to come down to two things. Exports of minerals to the PRC are up in volume and way up in pricing and Australians are gambling much more than they used to - now spending more on gambling than they do on food by quite some margin. I'm sure that is a stupid over simplification but it actually makes more sense to describe the situation in those terms when you spend your time in an industry where your major competitor (who is also your second largest major supplier) has ensured that you get less money per customer than you used to and that you have to provide more (and therefore have more cost) than you used to.
The other aspect of business that has become noticeable is the reluctance of residential customers to pay their bills on time. Since 'day one' we have been very strict on collecting money owed to us (no start up can ever do otherwise) and because we automated our 'collection' functions well before our second year in business was finished we have never had any problem with 'uncollectable' money. Basically our automated systems suspends a user service if their payment defaults and then gives them three days to fix the problem and restores the service once they 'click' to acknowledge they will make payment within the three days. If they fail to do that then the service is again suspended until payment is received. No Exetel personnel are involved - it's completely automated. Over the six plus years we have been in business we have billed well over $150 million and total 'bad debts' over that period are less than $5,000. Even when we fail to collect an unpaid bill our debt collector agency manages to recover nearly 100% of the defaulted payments. However we have noticed that a slightly higher amount of money has to be referred for outside debt collection each month of 2010 which is a genuine indication that there are more people unable to pay basic bills than you would expect in a 'miracle economy'
Similarly we are finding that a greater proportion of the few corporate customers we allow to pay via invoice rather than via direct deposit are not paying within the limited trading terms we provide to them. This is mainly our fault for not being as insistent on payment as we are with residential customers and, while I am not particularly concerned about it at this time, it is some sort of signal that business is not as easy for more than the communications industry outside WA. Perhaps it's just my overly sensitive perception that business conditions "on the East coast" have tightened but a recent conversation with one of our two bank managers confirmed that business for them was "not that good at the moment".
http://news.smh.com.au/breaking-news-business/sharp-fall-in-sme-credit-growth-in-june-20100902-14ob2.html
So, apart from being so stupid not to start a career in mining all those decades ago, we will have to address the 'business conditions' we are stuck with in NSW and the other parts of the "East coast" that are not currently being blessed with rivers of gold. The only issue is to find our equivalent of the 'mining boom'. Once you look at the issues from that perspective the gloom surrounding the residential ADSL marketplaces at the moment begins to dissipate and you, again, realise that if you put a great deal of effort in to a business and have only a modicum of good fortune you will produce better results for all concerned than if you continue to "mine a played out ore body' (to keep in context with the mining analogy).
Providing residential ADSL services 'today' is about as rewarding as attempting to bring usable ore from an exhausted seam at great depths. Moving those highly skilled and knowledgeable resources to an 'untapped ore body' is really the only way to go - a self evident fact. The problems of doing that are, of course, also self evident. The arrest in the churn aways in August and the slight increase in overall new customers via the Telstra ADSL2 services has lessened the need for 'instant' change but the major issues remain - that ADSL is a dying market and sooner rather than later a company of Exetel's size needs to find other things to do with its investments in infrastructure and its personnel.'
Then again - perhaps the 'miracle economy' will extend beyond mining and gambling as industries and eventually reach the "East coast" geographically?
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