SMEs starting to see firm glimpses of economic downturn but worse is to come

MEDIA RELEASE 15 December 2008

SMEs starting to see firm glimpses of economic downturn but worse is to come
Leading accounting and financial services firm Azure Group, says that small to medium sized businesses are now seeing the first glimpses of the tightening economy. Decision making and spending has significantly slowed. Those who recognise the signs and react now are the companies that will survive through 2009 and beyond according to Azure Group Managing Director Michael Derin.

"Opinions on where we are heading in 2009 are divergent from full blown deep depression to a slight downturn and expected recovery in 2010. The truth is that it is somewhere in between," said Derin.

"What is very clear from our perspective and the advice we are offering our clients is that SMEs cannot afford to ignore what is happening around them. Those who plan now are going to be the ones that survive and even thrive in these uncertain times.

"The big end of town is really starting to see the effects of the share market decline with redundancies in most of our more significant big companies. This will have a trickle down effect to the broader Australian economy because it's all intertwined and no one will entirely escape its effects" he added.

"In my view the financial crisis that has led to huge cuts in capital and investment expenditure will cause a significant increase in unemployment that will create even further uncertainty and most businesses will find this challenging to manage.

"In these troubled times SMEs need to ensure they remain competitive and adopt a business strategy to cope with a challenging and uncertain financial environment. The proactive businesses are the ones looking for answers now.

"We are being proactive and delivering a message to our clients on the areas that they need to focus on right now, not next year when the slowdown starts to bite.

"Firstly, all businesses need to focus on core strategies that they know will generate profitable results. This involves identifying a point of difference from competitors and concentrating solely on what makes your business money.

"Secondly, we are strongly recommending they review their business profits each month, not just quarterly or annually and ensure they are positive and that this translates into positive cash flow. The old cliché cash is king is ringing loud and clear now and is an extremely powerful asset at present, particularly because it is increasingly more difficult to borrow money in this tightening credit market.

"Thirdly, develop a financial plan for the next two years which takes into account worst case scenarios, including those that involve revenue and also address solutions such as cost cutting as you move into 2009 and 2010. SMEs also need to review contracts, commitments and key decisions arising in the New Year so that if necessary these can be cancelled or at least scaled back. This is exactly what the large listed companies have been implementing over the past six months.

"Lastly and most importantly review your balance sheet, cash liquidity and particularly your finance facilities. The huge corporate crashes around the world were mainly due to carrying too much debt. This will start to impact the SME sector as business slows and cash flow tightens," said Derin.

Derin also says it's important to keep on eye on the competition in the current market.

"In all this financial doom and gloom there is great potential for those SMEs who make the right adjustments and decisions. For example, your competitor that used to price cut is no longer a competitor as they may have priced themselves out of the market. There are also great opportunities for smart SMEs to acquire businesses at rock bottom prices.

"There may be a lot of uncertainty but what is clear is those SMEs who are able to grow, be it slowly, during this period are likely to be enormously prosperous when the good growth times return.

"What Azure Group is doing to help SMEs is providing business health checks where we go over the cash flow position and also the forecasted financial position of the business. We appoint a Chief Financial Officer to the business to help develop a budget and a cash flow forecast to help focus the company on what needs to be achieved in order to keep on track and continue to grow the business," added Derin.

Azure Group was established in 2002 by Michael Derin and since its foundation the company has grown exponentially with annual turnover increases in excess of 40 per cent. In 2008, the company continued to grow by another 20 per cent and they also expanded by opening offices in the Gold Coast.

Derin started Azure Group with the idea of offering strategic level commercial advice to SME clients. The fundamental thing that he identified was that SMEs rarely get that level of assistance because they can't afford or attract an experienced full-time Chief Financial Officer (CFO) normally only afforded by a large corporate and they can't find it in the consulting world.

As well as the CFO outsourced service, Azure Group is an experienced chartered accounting firm that provides ongoing service and handles one-off projects for clients. It provides its clients with proactive compliance advice to ensure that a client's tax position is considered throughout the year, not just at tax time.

For more information on Azure Group, visit www.azuregroup.com.au
or call 1300 4 AZURE or 1300 429 873.

Released for Azure Group by Dennis Rutzou Public Relations (www.drpr.com.au)
For further information please call Joanna Gitsham or Nicola Rutzou on (02) 9413 4244.

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