Spring Gully’s Kevin Webb has revealed just how close the South Australian family company came to oblivion in April this year.
The company went into voluntary administration after a drop in sales and productivity problems at the factory, but an unprecedented groundswell of public support allowed Spring Gully to trade out of trouble and get back into the owners’ hands.
Webb told a CEDA lunch at the InterContinental yesterday that administrator Austin Taylor had given Spring Gully three days to turn around its dire position.
The Spring Gully managing director also revealed the huge role that social media played in the company’s turnaround.
Taylor, the Managing Partner of Meertens Chartered Accountants, said he arrived at Spring Gully’s Cavan office within an hour of being called in as administrator.
When he looked at the books, he found a situation which he believed was hopeless.
“I did think it was all over and I said as much to the directors,” Taylor said. “It had no cash flow. It had run out of cash; it had no more facilities…”
Webb, who paid tribute yesterday to Taylor’s role in the company’s stunning resurgence, agreed that the initial assessment was very bleak.
“As Austin came in, basically he said we had three days,” Webb said.
“The confronting statement for us was that ‘if you’re cash negative we’ll close you down’. That’s the reality of where we were.”
What happened next is likely to go down in Australian business folklore.
The media highlighted the company’s problems, with an emotional Kevin Webb featuring heavily in coverage. And the public responded in an extraordinary fashion, seeking out Spring Gully pickles and condiments from supermarkets and visiting the factory shop in droves.
We just didn’t want to lose Spring Gully: it was a company South Australians had grown up with, founded in 1946 at Rostrevor, and was still in local family hands.
Taylor described yesterday the enormous financial boost that came in just a few days, with the groundswell of public support being backed by supermarket buyers and the company’s very long-term bank, Westpac .
“There was this huge burst in sales; about one and a half million that occurred very quickly and it provided a whole lot of new invoices that could be factored, which then provided the jump in the cash flow that kept it operating,” he said.
His three-day deadline was met.
“The jump in sales occurred literally over the weekend. So by about I think Wednesday of the following week it had had $1.5m worth of orders.”
Production cranked up, and a second shift was put on at the factory. On July 1, the company came out of administration.
Webb revealed yesterday how social media helped to push the groundswell of support in the days immediately following the company’s troubles going public.
At the time, Spring Gully was not a social media savvy company.
“We didn’t even have a Facebook page, so we were not quite up to speed with social media,” Webb said.
After FIVEaa announcer Belinda Heggen devoted her entire afternoon show to the story, Webb and his family watched, fascinated, as “save Spring Gully” pages started proliferating on Facebook.
“We made a decision on Friday night, the 12th, to take control of one (Facebook page) and make it our own. The amount of likes that we got on that official page over that weekend astounded us – it was 1100 on the Saturday morning, it was 16,000 by Sunday night, and by Monday morning just under 17,000.
“What that enabled us to do was to get more messages out to the public and also understand what they were feeling, who was feeling it and when they were feeling it. And we started to then understand what was in the psyche of the South Australian people and to a lesser extent around Australia, because we were able to actually see through the demographic reports who and what was going on.”
It wasn’t the only lesson Webb and his company learned from their near-death experience.
He said the company was also reminded in that first fateful week that the Spring Gully-branded products were much more profitable than the other generic and branded lines the company was producing. That mix has now changed.
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