As I write this, the first signs of spring and regeneration are showing all over the garden of my Devon home. The tiny daffodil shoots are coming through, buds are starting to form on branches, trees that throughout the winter have looked miserable are beginning to once again look a little more hopeful.

The Chancellor of the Exchequer has used the green shoots of spring as a metaphor for the somewhat hopeful end to our present recession — the recession we have had, and for all I know may continue to have, is reputed to be the worst in living memory. Its effect on many friends and many businesses including my own has been quite profound. I am old enough to have traded my way through both the ups and downs of the 70's and the ghastly recession of the early 80's and I can say from personal experience that I have never seen a recession quite like this one — this recession seems to be both deep and long.

Its effect upon cabinetmaking businesses such as my own is an interesting one which I hope to share with you. Three years ago we used to enjoy making relatively inexpensive furniture for relatively normal folk. I say relatively inexpensive because compared with High Street prices, our furniture was serious money but it was within the means of many middle class families who enjoyed being able to have, for example, a family dining table and a set of chairs made just for them. People would come to us and they would follow a fairly predictable pattern. They would look at the type of furniture we had available, they would urn and ah about the price, they would admire the designs, admire the timber, they would talk about finishes then they would go away. A few months or maybe years later they would come again and talk about one item maybe a table, this time they would talk about timber and finishes and prices. How much would that be if we did it in oak? Would it be less expensive in ash? Could we have whistles and bells on it? What would the whistles and bells cost? Slowly, very slowly they could be brought to the point of placing an order, maybe to be delivered not now, but in a few months time when they had a chance to save a bit more money. If the job was beyond their budget maybe they would order it in two instalments, take three chairs now and three chairs in three months time. With this type of work, I would say we would regularly take a quite serious order every month, or six weeks. I used to love doing this type of business, the kind of thing that people wanted was straightforward, well designed, nicely made, honest family furniture. I like doing business with people like this who shared my own values. I liked the feeling that they could spend some of their hard earned money on furniture from my workshop. I enjoyed making furniture for them and I was able to make it well and make it profitably. Making it well was important for my own sense of self esteem, making it profitably was important for the well being of the workshop. Profits are terribly important things for any business, for without a bit of profit there is no growth, no development, no time to take those creative risks that sometimes work and sometimes don't.

However since the recession took its hold, most of this type of work has disappeared like green leaves in Autumn. It must be two to three years since we had a young couple in here with two or three children looking for a family dining table. These poor beggars are now all worried about "negative equity". So what is David Savage Furniture Makers doing you might well ask? Well, what we are left with is true bespoke furniture, rare and unusual pieces for rare and unusual individuals. Bespoke furniture by its nature is labour intensive and the prices one must charge are as the French would say "tres serious . Fortunately the kind of clients who would involve themselves with this kind of work are generally less affected by recession than you or I would be. But wealthy people almost by definition are tricky characters to deal with, and being wealthy doesn't mean they are prone to throwing their money around. In many cases the truth is just the opposite, so you will see that I am sad to have lost for the foreseeable future a client base of relatively straightforward and ordinary folks.

When I was contemplating an article about the effects on my business of these terrible times, I was advised very strongly not to write the article, for in recession it is essential to "keep up appearances". For example when one talks to colleagues and competitors about their current order book, everything is always "oh just fine we have been hit a little bit but no, no problems at all we have got loads of work". Whereas in reality the situation maybe very different. We have all seen these High Street shops that have apparently flourished and remained open without a hint of trouble and then suddenly they weren't there any more. For them it is essential to keep up appearances — for you wouldn't go and buy something from an organisation that might not be there next week to deal with a problem should it arise. However I have chosen to ignore this worthy advice. Having dealt with the known effects of the recession to date on my own business, I feel relatively confident in my own position. So if my experiences can help someone else in a similar position then that's a good reason for writing.

Somebody told me many years ago that businesses go broke because they spend in the good times and can't cut back in the lean times. Money is borrowed to buy equipment to fulfil an order — that is fine so long as that machine is running, but when the order is no longer there you still have to pay either the monthly leasing agreement or return the machine. Usually returning the machine is not an option and you are left with a monthly bill and an angry creditor. Two years ago I wrote in the pages of this magazine of how I was buying a second workshop and showroom in addition to our main cabinetmaking workshop in Bideford. This expansion cost me and Lloyds Bank an arm and a leg and was whizzing and whirring away for 18 months after we bought it, but right now I am scratching around to keep it occupied. In the summer when I began at last to take note of the dropping of firm orders, I had to take the terrible decision of sacking people. In industrial relation terms its called "rationalization~~ or "natural wastage" or "downsizing". But in reality it comes down to putting people you know, and

quite often care about, through pain and anxiety. The pain and anxiety is not one sided. With a small business such as this, employing a dozen or so people, cutting the wage bill in half which was my objective was a painful and unpleasant task, yet it is often very necessary that a business manager faces these problems at an early stage in order that his or her actions can be effective. My objective at that stage was to retain key skilled makers sufficient to service our existing order book and service orders that were still coming in, but less frequently than before. The bottom line in a situation such as this is that you can't have people sitting around twiddling their thumbs or making pieces of work "on spec" not unless you have very deep pockets or a very silly bank manager.

Cutting staff is effectively cutting what is called variable costs. Variable costs are those costs that should vary with the amount of work that goes in and out of the workshop. For example, if you have got a big order for a boardroom table, your material costs may well go up that month — these costs are variable. Wages also fall into this category. If there is a big order coming in you may well take on additional staff to fulfil this order. However there is another category that needs very careful attention and this is the fixed costs or overheads.

The fixed costs in my business consist of mortgages, business rates and all the expenses involved in keeping workshops in a fit condition to produce work. These are costs you have got to pay anyway even if the workshops aren't producing anything. That is why they are call fixed costs. If you add to the cost of running and just keeping a workshop standing still, the cost of running an office with an administrator and an administrators assistant, running a posh motor car, the cost of exhibitions and brochures it can add up to a pretty penny. All of these costs need to be very carefully reviewed. The thing you are attempting to conserve in this critical situation is cash. I appreciate that it is very difficult for many people to understand this. Businesses don't go broke because of lack of work, they go broke because of lack of cash. It is possible for example for a small or large company to have a full order book, a factory ready to produce it, staff ready to produce it and theystill go broke. What they lack is the cash to finance the work in progress. Its at this stage usually that the bank closes them down. Frequently banks receive considerable criticism for action of this kind, but I suspect that banks don't pull the plug on companies without good reason. One can usually blame poor management and the consequent lack of confidence in that management as the real reason for these failures.

However I was determined not to fall into the "poor management" category so a period of viscious and unpleasant pruning took place in my business in the summer of last year. We now are a very much tighter organisation and certainly more efficient and more cost conscious. I am sad that overall we make fewer pieces of furniture but those pieces that we do make more than cover our costs, so in a curious way, life is rather easier for me. Because I have to spend less time racing around sorting out peoples problems, I can spend maybe a little more time developing new personal work that always gets pushed to the bottom of the list when there are more urgent clients work to attend to.

I can't say I have enjoyed this recession, but I have certainly learnt a great deal from it. I have learnt that an awful lot of money can very easily be wasted on unnecessary administration. I learnt that sacking people is very painful but is often very necessary if you were to consider the long term health of the business. I have learnt that you can't put off unpleasant decision if they are to be effective.

All these points I suppose apply to most small and even medium sized businesses, but as furniture and woodworking firms are I believe particularly badly affected by this recession, I hope that my experience can be of some use to some other poor devil. I am however feeling very positive about the future. At the moment of writing, we have work that will keep No. 1 Workshop occupied into 1994 whilst Workshop No. 2 will, I hope, be occupied a large part of the time with production work for many months to come. However I keep telling the machinery sales representatives that keep calling on me that it will be along time before I start spending any money. For unlike to Chancellor of the Exchequer I don't believe in "the green shoots of spring", not, at least, until it turns into a flower and grows a few more leaves.

first published in The Woodworker Magazine by David Savage in the series CRAFT OF CABINETMAKING 21

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