How a Pickle Factory Got Out of a Pickle (or What to do when your company is in serious debt)

Posted on 29. Apr, 2013 by in Business Wealth

Company voluntary arrangement

You know it is really sad (and a little scary) to see so many companies struggling at the moment. It is big news where I live in Australia and some well known companies have disappeared after falling into financial trouble that they just couldn’t get out of.

Recently a local company called Spring Gully Foods found themselves in this very situation. They are a fourth generation family-run business that had been trading for over 65 years selling pickles, jams and chutney and doing quite well out of it. Until one day, when sales just seemed to stop.

Over a period of 6 weeks the company sales dropped a staggering 60%, leaving them $3 million in debt and unable to pay their creditors. The only option available to them was to enter into voluntary administration and have a company voluntary arrangement drawn up to find ways to pay their debts.

I can’t speak for the company, but I expect it would have felt like the situation was hopeless and just couldn’t be salvaged. It is difficult to think of anything positive when things are dire and you feel like you are sinking further and further into debt.

How to make the best of a bad situation

As with many other companies that have gone this way, the news was there to tell the story. The Managing Director of the company was interviewed and put out an emotional plea for the community to help by buying their products.

As it turns out, this was a critical tipping point. Instead of merely asking for people to help them, the Managing Director went a step further and asked people to help keep Australian products alive. 

Very smart move.

I don’t really know if it was intentional or not, but to his credit he didn’t play the pity card, he played on a much stronger emotion – loyalty. Not just loyalty to his company, but loyalty to a country and the products that it produces.

That is when the magic happened.

The story was picked up all over the country. It was talked about on television, broadcast on radio and written about in newspapers. People began sharing the story on social networks like Facebook and the company fan page had thousands of new ‘Likes ‘ overnight. Shoppers flocked to supermarkets and bought Spring Gully products in bulk, almost clearing entire stocks.

The week that followed was the biggest sales week in the company’s history. Local supermarkets joined in buying additional products and making them more visible on shelves. Product sales totalled more than $1.5 million and offers came in from interested parties wanting to buy equity shares in the company.

How to keep your company alive

Fortunately for Spring Gully Foods the future looks a lot brighter. They still have some work to do in order to work their way out of administration and begin trading as a company again, but I think they should get there if they continue to remember what helped them get out of trouble in the first place.

The fundamentals of any business are the same, no matter what the size. You need to serve a purpose in some way, that is a given, but more than that you need to continue to remind your customers why they need you.

It really isn’t enough to just make pickles and expect that people will continue to buy them. Your pickles need to come with an emotional trigger that make people want them over anyone else’s. If you can create a feeling, or connection with people then your customers will look for you no matter where you are.

P.S. This doesn’t just apply to a business, the rules apply just as much if you are an employee of one (let me know how you have taken this approach yourself in the comments below).

Image by garryknight

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3 Responses to “How a Pickle Factory Got Out of a Pickle (or What to do when your company is in serious debt)”

  1. Endeley

    30. Apr, 2013

    Wonderful vision. There are usually very low and high periods in any business. Whats more important is the entrepreneurial drive to get business restored on its rails when the tides are low.

    Reply to this comment
    • Money Cactus

      02. May, 2013

      Completely agree with you. It’s easy to quit a lot of the time, but it won’t help your cause. Riding the ‘bumps’ along the way is a key business skill.

      Reply to this comment
  2. Chun

    02. Jun, 2013

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