It’s a matter of trust

Purplex CEO Andrew Scott discusses recent industry events and explains why companies should choose their partners carefully.

Recently, two of the industry’s biggest names – retail giant Everest and trade supplier Customade Group – both crashed into a pre-pack administration, sending shockwaves throughout the entire supply chain.

Meanwhile, Synseal’s pre-pack administration and re-birth as Aperture Trading lasted barely 12 months before collapsing again.

But is this the tip of the iceberg?

In my Glass Times column last month, I wrote about the latest findings from Insight Data, with over 1,200 firms rated high risk or very high risk by a credit rating agency, and that was before Covid-19 struck.

As the pandemic wreaks havoc across the economy, the window industry will not be immune, despite an unexpected surge in sales following lockdown.

Companies are already taking measures to buffer the financial impact and to mitigate against an economic downturn. Veka is one company that must be applauded after it announced a ‘prudent approach’ as part of a business re-scaling and redundancy process.

The economic impact of Covid-19 will result in unprecedented job losses so it is wise to take steps to protect your business and ensure it survives – and thrives – during these uncertain times.

It isn’t enough just to credit check trade customers at the start of a trading relationship. Setting up a credit monitoring system, like that built into Insight Data’s Salestracker system, will flag up business and financial changes that could act as an early warning system.

But don’t just think about customers: how stable are your suppliers? We’ve already seen some of the biggest and well-known brands collapse, so it makes sense to review suppliers, and the owners/investors behind them. What would happen to your supply line, warranties and order pipeline if your main suppliers collapsed or walked away after a pre-pack?

Relying on your supplier to provide marketing support or sales leads is like playing Russian roulette with your business. Aside from the fact your competitors may also be using the same literature or template website – which could undermine your credibility and result in a ‘race to the bottom’ on price – what happens if the supplier cuts back on marketing support, makes redundancies, changes their branding or marketing strategy, or ceases to trade?

For some suppliers, providing digital marketing or websites is a great way to tie in customers. It gives them a degree of control and some retain ownership of their customers’ websites – either directly or via their marketing agency – making it difficult to switch suppliers.

Protecting your brand is crucial to maintaining a good reputation and building a sustainable business. Developing your own unique ‘story’ and marketing strategy with an independent marketing agency will help you stand out, allow you to take control of your own destiny and avoid your reputation getting tarnished if a supplier – or your competitors who use the same supplier – runs into difficulty.

Recent social media coverage highlights how quickly news can spread and reputations can be damaged.

But equally, great companies with strong brands can achieve extraordinary growth and success even in the most difficult times, because people are more likely to gravitate towards brands they know and trust during periods of uncertainty.

There is no doubt it has been a difficult few years for the industry, and some business owners and directors have become disillusioned, or no longer have the passion or investment that is essential to build a strong, sustainable company. This can lead to a downward spiral and, ultimately, the business suffers, which isn’t good for staff, customers or suppliers.

Now may be an ideal time to review your personal circumstances, priorities and ambitions; seeking investment to re-ignite the business, bringing in a new business partner, or selling the company may give you the opportunity to do other things. And there are plenty of buyers out there if you know where to look.

The glass and glazing industry has always been a uniquely close-knit and entrepreneurial sector that is vibrant and fast-paced with exciting opportunities. But now, as we look to the fall-out of private equity-backed firms such as Everest and Customade Group, it is more important than ever to have partners you can trust.