Astracast – are we all just one bad deal away from disaster?

John Peolsi, owner of Caldicot Kitchen and Bathroom Centre in south Wales, reflects on the recent misfortunes of Astracast and what we can all learn from it to ensure our businesses survive

 

I have just read the sad news about the demise of Astracast. It must be heartbreaking for Darren and some 40+ staff in the company who have worked hard to keep it going despite extremely difficult circumstances.

We have used Astracast products in many of our projects and have always found them to be of great quality, backed up with excellent support from the team.

To see a good company go to the wall is particularly sobering. My thoughts are with all those affected, and I hope it won’t be too long before the unfortunate victims find other good opportunities within the industry.

This, coming on the back of the recent news of two other independent retailers ceasing trading at the start of the year, is certainly depressing. I only hope that we do not see many more falling by the wayside, though traditionally the post-Christmas period is often the time when problems catch up with struggling companies, tipping them over the edge.

While we are finding that enquiry levels remain high, and overall prospects seem positive – particularly at the premium end, I do feel that we are at a challenging time for our industry, with many customers taking considerably longer to decide on major purchases, with the spectre of the internet ever-present and driving a culture where low cost can trump real value. If ever there was a time when the phrase ‘knows the price of everything and the value of nothing’ was true, it does seem to be now.

I find myself reflecting on what it means for the industry and, of course, for our own small business. In my own career, I’ve worked in everything from big, international corporates to mid-sized, highly specialised national companies selling globally to, now, a small independent selling predominantly within a 30-mile radius.

In every case, I’ve come to realise how even good companies are never more than one or two bad deals or unlucky events away from disaster. I’ve seen mediocre companies strike it lucky and great companies surprise everyone when they come a cropper. It certainly focuses the mind.

So what lessons, if any, can we take from the shutting of these companies’ doors? Each seems to have had its own set of contributing circumstances and, if I learned anything in my time in the aerospace industry, it is that disasters are rarely down to just one thing, but often a series of individual problems, each of which adds that bit more pressure until that final straw causes the proverbial camel’s back to break.

John Pelosi

“Disasters are rarely down to just one thing, but often a series of individual problems, each of which adds that bit more pressure”

John Pelosi, owner, Caldicot Kitchen and Bathroom Centre, south Wales

I suspect each of the companies was probably well-run and supported by great staff, so I would not dream of passing any comment on their individual circumstances. Reading the various reports and statements from them, however, I still think it worth trying to see what might be learn, and there are a few lessons I myself will be taking from these events:

  • Firstly, the importance of cash flow as the lifeblood of any company. The old saying that ‘revenue is vanity, profit is sanity, but cash is king’ is as true today as ever was. And a core part of that, for us, is ensuring we do not become too reliant on the banks to underwrite that cash flow. That other equally famous saying, ‘a banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain’, seems equally true. With the current uncertainty of Brexit, a generally fragile UK economy in the wider world and exchange rates that continue to slide, it would not surprise me if a few bankers were lining up to grab a few loaned brollies as clouds appear on the horizon.
  • And related to this, we will continue to take a very cautious approach to the contracts sector of the business. While the promises of the riches possible by selling larger volumes of units to developers and house builders has its allure, with previous experience of some pretty sharp practices by the heavyweights in this sector, expecting unreasonable payment terms and reneging on retentions etc, we will not be rushing to rash decisions. It never fails to amaze and disgust me how many main contractors seem to use deliberate tactics of abusing small independents – who generally do not have the financial firepower to fight back – as fall guys for their own underpricing.
  • And finally, it again reinforces our continued resistance to the ‘race to the bottom’ on price that has become so prevalent in large parts of our market. While we will always seek to give good value, we’ll continue to do this by focusing on great design, high-quality products, excellent, attentive service and long-term aftercare, while still charging a sensible margin for the privilege. If we pitch it right, hopefully we will have a little fat left to sustain us through the leaner times. Not easy when some of the big internet players with deep pockets are selling at single-digit margins – or even at a loss – to cement market share or dominance. But I still think it is the right thing – for our company, at least.
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And so we face the start of another new year of trading. If the first week of political shenanigans and mixed retail news is anything to go by, I suspect we’re in for a rollercoaster ride.

Who knows which of us will still be clinging on at the end of the year? If nothing else, at least we still thoroughly enjoy our own little corner of this crazy industry – never knowing quite what strange requirement the next customer might have, which long-lost rep might turn up at our door or which courier might decide to try to roll a 1.1 metre-wide range cooker off the lorry and into the customer’s house (a word of advice – range cookers do not roll as well as wheels).

Fingers crossed we’ll still be around to tell a few more tales and with a few more grey hairs, and that for those affected by recent events, in time it’ll be just another story to look back on. I’m sure these are tough times for all those affected, but I genuinely hope that good will come out of it for all and that the next exciting opportunity isn’t too far away.

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