How I rescued my business after being wrecked by the financial crisis
Matthew Sampson and Adam Brown started engineering recruitment firm Aspect Personnel back in 2008, after moving from a comfortable, steady job in HR. So far, it’s been a good bet – Aspect is turning over $5.2 million with growth of over 130%.
But it didn’t take long for Sampson to find out how difficult business can be. The global financial crisis left Aspect struggling, and at one point, he had just five weeks’ worth of cash. To recover, Sampson and Brown needed to diversify the business.
So how’s Aspect Personnel travelling right now?
We’re now up to 12 employees, and we’ve grown from seven to 12 in the last 12 months. It’s been our biggest year of growth so far, and we’re really trying to diversify. I think we’ll hold back and get people up to speed and get them where we want to be in a few months.
Could you describe a bit of background for this period you had during the GFC?
The period in question was from June 2009, when my running costs were about $25,000 a month. It actually started around September 2008, and lasted for about nine months. So it started about the height of the financial crisis and lasted through all that time.
The next April, we made about $8,500 in gross revenue, and our running costs were, as I said, around $25,000. We made even less the next month, and then on June 1, we had about $14,000 left in the bank. We had some people owing us money, but not a lot.
How did you approach that with your employees?
We had four staff at that point. Literally the week afterwards, one of my consultants came and said he was going back to university to study IT. My thinking that time was that it was okay, it was fine, it was a hard economy and there were no hard feelings.
But then I went to tell my administrator what had happened. And then after I had described all that, she pushed the envelope across the table and said she was homesick and she was going back to Perth.
So you’re down to just two.
So now we’re down to two of us. Adam, who is still with us today, and has been there from the beginning, was there. But he was about to go off on a six week honeymoon, so really it was just down to me again.
There was a crap economy, no money, no staff, and there was just me. When you talk about it like this, it sounds really glamorous, but it wasn’t like that at all. But it’s good to go back and think about what you learnt from this period.
So you’re down to just you. What did you do then?
I went out for lunch with my Dad, and not only do I trust him but he had an extensive career in HR and management at a senior level. So I sat him down and asked what to do, and he said, “Well, you’re 95% dead anyway. You might as well recover, or be 100% dead”.
He pretty much said that I had not many chips left so I might as well just get on with it.
What was the first plan of attack?
The first plan of attack was getting cash. I can’t remember who said it, but there’s this saying that if your business is a body, then cashflow is the blood. If we can’t pay our creditors then we’re just in deep trouble. That was the first thing we did, we chased our debtors pretty hard. We took a new approach, we were just trying to get cash as fast as possible.
What was the next major thing that you did?
The second thing was, how do we get some quick cash? So we were running a recruitment business, and the fees we charged are moderate, but the distance between doing your job and receiving that money can be two weeks, ideally, but it’s often two or three months.
So we started doing what we thought was a career counselling service. I sat down with Adam and brainstormed how we could get some cash really quickly through this.
We thought at that point there could be demand for a service where we describe how to best look for a job, how to search properly, another was one resume and cover letter writing – that sort of thing.
Was that experience frustrating? I’d imagine it would be, given it’s not part of your original business model.
In retrospect, it wasn’t a long-term business plan. We didn’t know how it would go, but it bothered me in the sense that for our usual service we would charge 20 or 30 times what this temporary product was. And all of a sudden we’re providing a service that we didn’t originally plan, and doesn’t really interest us, and would never be a long-term thing.
But it sounds like it served its purpose.
We didn’t really make a lot of money, no, but it served its purpose and it was a great learning experience and added value to job seekers within our network of professionals now. It was beneficial.
You also changed your financial structure to non-financial incentives. Does that mean you were giving away more stock?
Not so much, it was more incentivising people based on other things. So our commission structure is quite good, and it was amended a little bit so it could assist us, and be a little bit easier on the cashflow.
It gets somewhat trivial, but apart from our commission structure we have things like, you meet targets and you get things like a free day of annual leave, or the ability to arrive late one day, and so on.
They’re incentives, but they’re not really costing us anything.
You also expended your market, right?
We expanded our market a little bit. We were doing civil and structural engineering, so we moved in to traffic, environmental, rail, different types of engineering.
And how long was it until your business started getting back on track?
Probably a couple of months. It was a hard couple of months, and we did place one senior bridge engineer in July of that year, which tided us over for three or four weeks. But in terms of getting back to where we were, we recruited a consultant who is still with us today and exceptional at her job.
So what do you think are the major lessons you learned from that period?
There are two main things I’ve learned. One, is to plan for a rainy day. Stick some money under a mattress because there will be times when you need to fall back on it. You need cashflow if everything goes pear shaped.
The second is that you need to focus on things that are in your control. Make sure you have a business plan that’s flexible enough to handle everything that you can’t plan for.