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Crunchy times – how are you?

Broken-Piggy

There’s been lots of talk of impending global doom and recession following the financial crisis in the developed world, but what does it all mean for you? I think as consumers we’re starting to ‘feel’ the impact a bit more with sales decline, job losses etc., starting to affect more people. In the UK the Federation of Small Businesses has suggested we “use the internet to increase sales during the downturn”, which we’re seeing in our results as more and more people are buying sites with Moonfruit to start trading online.

When the dotcom crash came in 2001 Moonfruit was a large and bloated company. We had been built to grow very fast, which we did by offering all of our products for free, and had been kept in business by raising venture capital finance. When it became clear that we weren’t making enough advertising income to support the company, and that the VC money was drying up fast, we had a very clear choice: radically change the business or die.

We chose the first option ;-), though it was not without pain. We lost 50 staff and closed offices in Paris and New York. Most importantly we started to charge our customers for the websites they had built. As wonderful as it is to give away services for free, unless the business is sustainable, nobody will survive in the long term. (There is probably some pain to come for the ‘free’ social networking sites as they struggle to generate sustainable income…watch this space…)

By confronting our problems early on we were able to save the business and start to grow again from a profitable base. Many of the dotcom companies who were our contemporaries didn’t react until it was too late and suffered bankruptcy and liquidation. The changes we made allowed us to become profitable in 2002 and we have continued to be so ever since.

We learned our lessons well and have never expanded faster than we grew or could afford, nor expanding faster than we needed. So in this crisis, we feel fortunate to be well prepared.

We’re also grateful that the kinds of products we offer are actually a benefit during difficult times. We’ve found that as companies cut back on costs, they don’t cut the channels that generate sales, e.g. websites. Especially the low cost options. We’re also seeing evidence that as people look for ways of earning a bit of extra cash, setting up a website to start selling things, or generating advertising income and creating a low cost/low risk start. These factors mean we are seeing sales 50% higher than the same period last year, which means we can continue to invest in our business to provide you with improved features and better services.

If we have any advice to give, its to look at things early and take action before it’s too late. By moving early you give yourself room to manoeuvre later down the line. I’ve read lots of inspiring stories about businesses who know they need to take action, offering staff the option to work fewer days or take pay cuts, rather than having to sack everyone. It means everyone tightens their belts a bit and shares the pain, rather than one person being the unlucky one to lose their job.

So, how are things affecting you?


Vicki Shiel
Editor at Moonfruit. Likes food and smoothies.

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