“So remember son, stick with your business for as long as possible. Because in business, boom and bust come in waves. This is not something you can control. If you stick around long enough, eventually, you will get your golden era. You just need to be ready when it hits you.”
That was what my dad said to me around 12 years ago. He had been in business for more than 30 years, so I thought it was great advice. Until of course I came to my senses and realised being an entrepreneur is all about being able to control my own destiny. I mean who has time to wait for this ‘golden era’? He was in business for decades, and we still lived in a modest 3 bedrooms house. Surely he would have come across his ‘golden era’ already?
Back in 2009, we were importing rags from a Canadian company. It was high-quality rags where the raw materials were collected from local charities around the country. They were not the cheapest, but we had been dealing with them for years, and they were always professional and reliable. Other suppliers tried to get our business, albeit we were never interested. We were one of the most prominent rags dealers in our state back then. We were small, but we were fierce.
There was a guy, Paul, who came few times to purchase our rags. He was an importer too, but he never said much about it to us. Mind due, his primary business was not in import. He told us about his plan though, going to Pakistan and India to search for new suppliers.
The Canadian company that we dealt with only worked in US dollars. Which meant being an Australian company we had to be careful with the currency exchange. Few percents off could mean few thousand dollars loss. I even established a foreign exchange account with a local financial institution to improve my overall exchange rate.
The strategy was to purchase US dollar when AUD dollar was stronger and put it into the forex account. At one time we accumulated more US dollar in the forex account than our own business account.
You can see how risky this currency exchange stuff was.
We managed the business pretty well. It started from one container every three months, then every two months, and in 2009 it was one container per month. We had a few of them on order at any one time. All because it took approximately two months from the time we put the order in until we received them in Perth.
I said to my wife that we were selling rags like peanuts. They just flew off the door. Looking at the way we were growing, we would reach our first ever $1 million sales that year, all from rags alone.
But of course, fantastic results did not come without its own risk.
You see, I never thought it would come to that. I prepared everything, trying to control every little area of my business. I had enough US dollar in our forex account to purchase two containers. Never did I know that AUD dollar would decide to plunge itself against US dollar and stayed at the bottom, for a long time.
But it happened. AUD dollar fell from a high 97c to a US dollar to a mere 61c in only a few short weeks.
We used up all of our US dollars to purchase two containers. And then things got worse because AUD dollar dropped even further to 50c. We did not have any choice but to pay the next order based on the weak AUD dollar. We tried to increase our price, but at that rate, unless we raised the price by 80-100%, we were still at a loss. An increase that much would only give our competitors an incredible window of opportunity to steal our customers.
The market would react, and the price would correct itself but not until another few months at least. We didn’t have the luxury of time. Our modest price increase was nothing compared to the profit we lost to the weak AUD dollar. We were running out of cash, very very quickly.
We lost at least twenty thousand dollars per container at that time. And we had a few of them on order. At the end of the day, we decided to cancel everything unless they were already on the sea. As a result, unless we started to purchase from our competitor, within one month, we would have nothing to sell. Our $1 million sales target were reduced to $0 within five months of AUD collapse.
I was sitting in my office trying to get my head around this dire situation. I could not believe only five months ago we were doing so well. Now we just had a little bit of stock left, maybe enough for few weeks.
I tried to think my way out of this, but my brain just couldn’t get into gear. I called everyone I knew to get advice from. Unfortunately, AUD dollar did not collapse against US dollar very often. In fact, it was one of the rare moments that it happened, and even more unusual because it stayed at the bottom for an extended period of time. It almost like AUD dollar found its happy place at the bottom.
One of the guys that I called said he never saw this happened before and this guy was a furniture importer for ten years before he became a pastor. I felt somewhat unlucky after that conversation.
My closest friend reckoned I should update my resume because the end was near. We didn’t talk much to one another after that.
And then I realised. This was beyond me.
This was out of my control.
OMG, my dad was right. Boom and bust came in waves. I was never in control. All these time I was just lucky.
The time finally came for me to face the worst in my journey as a businessman.
“Fred,” Paul suddenly appeared through my office door.
“Hi Paul,” I waved to him.
“How’re things mate?”
“Good,” I said, trying to hide my apparent stress.
“Remember I told you about sourcing rags from Pakistan?”
“I did. I went there and had dinner with rags suppliers.”
“Wow, that was great.”
“Yes, one of them decided to make me their sole distributor for Perth.”
“Sounds like a great deal.”
“Which is why I am here now,” Paul sounded a bit nervous. “Well, are you interested in getting rags from me?”
“What sort of price are we talking about Paul?”
“Look, I know I am new with all these, but the quality is very high you wouldn’t believe it,” Paul replied.
“Yes, but at what price?” I was getting impatient.
And I swear to you if I could record the next five minutes conversation I would play it every day until such time that it was time for me to meet my creator.
“Fred, the price is excellent,” Paul smiled.
And it was. The price that Paul said was 20% less than the cost of rags we paid to the Canadian company when AUD dollar was strong. I couldn’t believe my luck. Paul appeared just at the right time with the right product, and the right price (better even).
There must be something or someone up there helping me out.
I was screaming in my head: “Look, if there is an intelligent higher being up there, thank you, thank you, thank you. Although next time, please don’t wait until the very last moment before sending the cavalry. A slightly faster help would be great.”
Our business was saved from disaster. Paul had been an excellent supplier. He was always ready to help. His company grew multiple times afterwards. I guess AUD dollar collapse meant he could sweep struggling rags dealers like me within a short few months. Now that I think about it again, it was a brilliant move by him. Well, I couldn’t complain. He did save my company.
And for us, we are back on track.
I am done trying to control everything. I know I have to be ready for incoming boom and bust. But deep inside my heart, I know someone is looking after me.
Somehow, I thought about you, dad.