Sweat The Asset

Last night’s pub conversation with pals, sitting outside in the rarity that was balmy England, kicked off with the latest UK recession figures.  Due to a revision in assessment of Construction industry performance, it turns out we’ve been in the slump for an extra Quarter than we first thought, and the 09Q1 dip was more severe than initially calculated.

These facts have profound significance.  Quoting from broadsheet The Independent‘s analysis shows why:

Between January and March the economy shrank by 2.4 per cent rather than the previously thought 1.9 per cent. Those 12 weeks thus witnessed a more severe contraction than occurred in the whole of the recession of the early 1990s.

At 4.9 per cent [the current aggregation for this recession] comfortably beats comparable figures for the slumps of the 1970s, early 1980s and early 1990s – at 3.5 per cent, 4.6 per cent and 2.5 per cent respectively.

So this credit crunch shrinkage now dwarfs each of the last three recessions.  And we’ve got quite a way to go.  Especially if you believe the “double-dip” doom-merchants that say we’ll see a “W” shaped-graph, rather than a “U” shaped one, meaning any initial recovery will prove merely a temporary respite.

Given a gloomy outlook, the naturally perky souls that the assembled cast were decided to think of selling remedies.  The recollections of my friend that provided heavy-duty building plant during the last recession triggered my thoughts on what I remember being called “sweating the assets”.

If the solutions you sell, as many do, have two elements – the initial outlay requires ongoing attention – then diverting resource to help clients maximise the performance of their ‘asset’, so that it lasts longer and staves off any hint of any replacement purchase, could in theory allow such ‘maintenance’ revenue to take the place of lost capital equipment sales.

Such dedication we considered would go down very well with customers.  Setting up a team that devotes itself to a long-term goal of reducing client expenditure whilst unleashing even greater returns from what they’ve got sounds like a winner.

Thinking it through, the main objection we conjured was that clients might be miffed that either such a team was not already in place, or that the current set-up purports to do this anyway.

It wouldn’t take a lot of imagination and new packaging/pricing to prevent these doubts appearing.