Strategic business decisions can turn a recession into an optimistic upturn for a company

By Wayne Britz, Financial Director at OutSource Digital

01 June 2010, Johannesburg-Despite talk of economic recovery, many office automation companies across South Africa have been, and will continue to be, affected by the economic recession. However, despite this, office automation companies can offer innovative services to clients to ensure sustained growth for the company and ultimately reduce costs for their clients.

While Outsource Digital enjoyed growth of more than 80% year on year and defied the norm of downsizing and increased its staff capacity by 120% last year in order to expand its TeleComms division, the company strategies have yielded some remarkable outcomes despite all the economic doom and gloom. One must understand that the office automation industry most often do not work on ‘Cash on Demand’ (COD) basis, and as a result we have noticed many companies in the industry suffering major profit loss and many losing foreign investment and downsizing their company.

Many of our clients are only showing signs now of how bad the recession was, with their financial year ends for 2008/2009 only being scrutinised by the banks now. To buy office automated equipment, companies must be able to prove healthy financial statements, and with banks clamping down on approving finance, many companies are unable to finance office solutions.

Banks regard this as monthly expenditure and not capital expenditure and therefore they are not prepared to take the risks associated with that. As a result the collateral damage is still very much evident as it is more difficult to get products out into the market. However, we predict that companies will start to see an upturn when they are able to produce healthier financial statements in 2011 and 2012. We at Outsource Digital adopted a different attitude towards the recession and instead of accepting the situation, we looked at ways to innovatively ensure our survival as a young company.

Perhaps the most significant benefit the recession has shown us as a company has been to find new avenues of growth and potential strategies to sell equipment to cash strapped companies. It has forced us to focus on core competencies like equipment maintenance and educating clients. Our strategy, which worked extremely well with new and existing clients, was to show clients cost-saving techniques with our equipment. For a cash-strapped company, reducing their day to day administrative costs by 30% is quite substantial and we were very proud to be able to assist our clients in reducing costs and saving money.

Outsource Digital also acquired three smaller office automation businesses which was quite a risky move. All three companies were struggling under the economic climate, and with our existing client base and maintenance structure we were able to absorb the companies under the Outsource umbrella and transform these companies into profit yielding businesses, which also helped maintain a healthy cash flow for Outsource Digital as well as build a brand name in the market.

Ryan Pickford, Outsource Digitals MD negotiated divisional director positions for all the previous owners for all three previous owners which resulted in them retaining their jobs.

Our aggressive marketing tactics and increase in staff capacity ensured our brand was very much present in the market. It is important to strike while the iron is hot and this is the attitude we have adopted which has helped ensure further growth for Outsource Digital.
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