# Downturn now worse the people are saying?



## papervalue (15 May 2009)

Everyone knows we are in a downturn. Do people really realise how bad it has gone in small business companies/self employed etc.

I have seem people let go(Normal people who just need a day to day job),people put on short time and companies unable to pay business rent etc. I know of a lot of small businesses who are bascially running out of cash. Some are well in overdraft and have loans all personally guaranteed. Others have large debtors who have no money to pay them and they have no money to pay their creditor's in turn.

In regard to govertment their is a long time lag in social welfare payments, A lot of self employed dont even qualify for payments, yet they have no work. I knew of loads of people willing to work, but no job their. It is moral sapping applying for loads of jobs, getting no reply and them being paid a rate you could have been on 6 years ago. redundancy rebates are taken to long to come back, etc.

I have seem people loan each other money eg friends, family- A lot of the time no repayment is made.

I could not imagine some of the pressure these people are under.

To me a lot of people really suffering in the down turn are suffering in silence. Maybe to embarrased to share their problems. People/Companies give out image their are trading away but the out sider has no idea how close to insolvency a lot of these businesses are. Imagine the amount of self employed debt and company debt out their in small traders.

Is the gov going to save these people- I don't think so. I talking about the normal Joe soap. 

This is not a letting off steam piece.

My question is: I believe the downturn is a lot worse and deeper than people are care to admit. Am I being to down beat and is every one else seem a rosery picture out their.

What is the true story?


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## Locke (15 May 2009)

I don't think there is a rosey picture out there. I think you have got it fairly spot on.

There is no doubt about it, the downturn is bad. However, the only way we can get through it is if each individual just puts there head down and tries to get through it as best we can.

I know a positive outlook is tough, but if everyone is negitive and keeps telling us we're doomed, then it's going to drag a lot of people down.


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## hizzy (15 May 2009)

Hi papervalue

I am self-employed and just hired two more members of staff, it is a small business that I run, I just keep my head down and get on with the work, I don't watch the news or read the newspapers anymore.  I personally believe and this is just my opinion, that some companies are jumping on the band wagon.

I have the enterprise board offering me money towards mentors, training course's for staff etc., something which I was never offered before.

I just asked some of my staff to work tomorrow and they refused (I have the work).  I do have debts, however I am able to pay them off.

Thats my brief story.

Regards

Hizzy


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## NicolaM (15 May 2009)

My boyfriend works in recruitment.

His company are now starting to see more work come in (although obviously much reduced+++ than previously)

Nicola


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## Gervan (15 May 2009)

I would agree with Papervalue that a high proportion of small businesses are in a very bad position. I give advice to a number of such, and it does depend on the trading sector. That's why the pizza parlours are doing well.
My worry is that we are in a downward spiral. Every employee laid off or having hours reduced, has less money to spend. This affects other traders, and all of it reduces the tax revenue, in reduced Vat payments, reduced employer's Prsi and income tax deductions, eventually reduced tax on profits. 
As three quarters of government spending is on social welfare, if there is less money collected, I can see social payments being cut. Perhaps I am seeing the wrong segment of Irish business, but I can't help feeling rather negative,


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## Bookkeepers (17 May 2009)

I've a number of clients in different sectors and I agree with Gervan, the recession effects businesses differently, depending on the sector they are in e.g high end item sales are on the decline whereas low end items are increasing in demand.

My service clients are finding it most difficult because they are now contending with black economy operators who are undercutting them. Unfortunately, this makes the legitimate, honest businesses look overpriced (even though they've reduced their prices) when the reality is that they are just covering costs and paying their taxes! 

What is starting to become very clear to me is that the Celtic Tiger disguised poor cash management practices because there was a steady stream of income from increasing sales. As this is no longer the case it is hitting some small businesses very hard (especially retailers who didn't manage their stock levels and cash outflows). This is compounded by the fact that banks (despite all their PR) are not releasing adequate credit.

Re getting paid, in general my clients are finding this relatively ok. However, over the last few months, I've had to barter with 2 of my clients' (different clients) debtors as they genuinely didn't have the money to pay. So instead they have repaid their debts through providing services. This is perfectly legitimate, they just send my client an invoice for the work done and we contra one bill against the other. It's not ideal but better that, then not get paid at all or go down the lengthy expensive legal route and still probably not get paid.

A positive that I've noticed is that there is a general feeling of businesses wanting to help each other out. My own ethos is that "I'm only in business as long as my clients are" so I am always conscious of promoting them when I can. 

Things are very gloom at the moment but I am (reasonably) optimistic because I know small business owners are very resourceful, we just all got very lax during the boom years. "necessity is the mother of invention"..........


[broken link removed]


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## meatmonger (17 May 2009)

I run a company with 22 employees been going since 1991.
five years ago this was 32 employees, but we worked efficiencies and introduced technology to be even busier in 2007/08 with less (expensive) labour input.

Thank god 15 months ago, when sterling started to weaken, we knew we had to relook at everything.  reviewed every cost, negotiated with every supplier, built new long term / good paying relations.  We sourced more (sometimes same goods/materials) from the UK, which is ultra more competitive than Ireland.  Sales volume and prices are down quite a lot, margin however is up, and cash management has been King for a while.  There are no silly expenses or waste.  We use Free PR rather than advertising to get the word out.

We will survive this downturn and we love what we do, even if it is bloody hard and long work.  but there is no help from anyone out there.  Water, rates & the costs of operating a business are such that they discourage me from employing more people.  Every time the annual increases come in (water up three fold this year to 8k) i have to look to reduce wages.  simple.  I don't believe anyone in government actually understands this.

Reduce the cost of doing business, and i can create jobs.  Others in my sector are bleeding cash, many have started up in last 5 -7 years and they will struggle most.  They are starting to make similar changes, but it will be too late for some.

With a positive note, we do have expansion plans to create a similar "satellite" facility, but this will now be set up in the UK, but i will keep the Irish operation going. More jobs lost to the Irish economy.  Only I am passionate about where I live, the logical move would be to set the whole thing up in the UK.


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## Padraigb (17 May 2009)

It's bad. The acknowledged picture is bad. But I don't think it is worse than is already recognised.


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## path (18 May 2009)

Bookkeepers said:


> What is starting to become very clear to me is that the Celtic Tiger disguised poor cash management practices because there was a steady stream of income from increasing sales. As this is no longer the case it is hitting some small businesses very hard (especially retailers who didn't manage their stock levels and cash outflows). This is compounded by the fact that banks (despite all their PR) are not releasing adequate credit.


 
Am a Non Food Retailer, I got my stock down, put in the IT to help run the business and up my stock turnover but cannot deal with the Landlord. Tennant next door paying 20k less than me so I am now bleeding cash. Turnover seems to be down 25% - 30% on non Food Retailing.

To say that the Celtic Tiger disguised poor cash management is too wide a statement


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## Bookkeepers (18 May 2009)

path said:


> To say that the Celtic Tiger disguised poor cash management is too wide a statement


 
Fair point;

To manage your cash flow more effectively, the aim is to have more money coming in at any one time, than going out. However, it’s wrong to think that just because you’ve more money coming at any one time, than going out, you've effectively managed your cash flow, as this is easily achieved when sales are on the increase. 

Problem is that during the boom times, business cash flows appeared healthy. When the reality for many businesses was, that costs (especially indirect costs such as wages and rent) were spiralling out of control and were actually being financed out of future sales rather than current sales. 



path said:


> Tennant next door paying 20k less than me so I am now bleeding cash. Turnover seems to be down 25% - 30% on non Food Retailing.


Rent is a fixed overhead. During the boom even if businesses were managing their cash flow and current sales income covered this cost, now many businesses sales are substantially lower but their rent hasn't been reduced or not reduced enough so as not to erode profits and cash. Path, on price per sq ft are you paying more than the other tennant and if so have you tried renegotiating your rent?


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## path (19 May 2009)

Bookkeepers said:


> Problem is that during the boom times, business cash flows appeared healthy. When the reality for many businesses was, that costs (especially indirect costs such as wages and rent) were spiralling out of control and were actually being financed out of future sales rather than current sales.
> 
> 
> Rent is a fixed overhead. During the boom even if businesses were managing their cash flow and current sales income covered this cost, now many businesses sales are substantially lower but their rent hasn't been reduced or not reduced enough so as not to erode profits and cash. Path, on price per sq ft are you paying more than the other tennant and if so have you tried renegotiating your rent?


 
Have tried to talk to the Landlord but the reduction on offer is nowhere near what is needed for my survival. All Costs have been shredded, I have now work for 3 months with one day off per month but the larger decision will be made this evening.

Retailing is becoming unsustainable and imo small retailers are looking at choices such as pay rent or buy the dinner.


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## ccbkd (20 May 2009)

NicolaM said:


> My boyfriend works in recruitment.
> 
> His company are now starting to see more work come in (although obviously much reduced+++ than previously)
> 
> Nicola


 
I am really surprised the recruitment industry still even exists, who wants to go through a middleman and pay a premium to get staff surely qualified staff are banging down the doors of employers with CVs.


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