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The Baltic Times: In an environment where cutting staff - or at least their wages - is the norm, it can be good to look at other strategies that are being employed to survive the crisis and prosper in 2009 and beyond.

As one analyst put it, "Estonia was managed by a group of one club golfers. Now it is time to search the bag for more intelligent solutions." 

In essence, this means that when faced with the economic downturn the first management action was to cut staff. Then, as it became the norm to reduce the wages of those who were left, many companies used the current environment to justify doing just that.

In developed Western economies, redundancy is a difficult and expensive process.  Wage cuts are very rare, as employment contracts robustly protect individual workers' rights.

If these options are not available, management has to search for other solutions. Business Process Excellence has been the mantra for many industries in the U.S., Far East and Western Europe for some years now.

However, whilst no doubt many companies in Estonia have previously employed such techniques, the current downturn requires the majority to follow.

Here is a look at a few Estonian companies from a broad spectrum of businesses that have moved past the labor cost cutting phase and are employing new strategies to move on during the recession.

DIVERSIFICATION

Jazz Pesulad is the largest privately owned car wash service provider in Estonia. It faces typical crisis-related problems, such as a fall in the disposable income of their customers and, more surprisingly, a 12 percent increase in their water charges - one of their main costs.

Managing Director Janek Mellikov explained their strategy. "Ultimately we would like to continue to expand our business despite the recession. This will enable us to be more efficient through economies of scale and introduce newer concepts as we expand."

"Clearly we will be very diligent and cautious in planning to move forward in this environment, but we feel it is still possible. As a relatively small company we are trying to develop strong partnerships to assist us with our plans."

"For example, we are going to work with large oil companies and provide car wash solutions on their petrol station premises. This allows them to share our expertise and provides us with a faster less capital intensive method of expansion," he said.

Another aspect they have tried is diversification.

"We decided to enhance our service by attaching cafes with WiFi to our sites.  We then developed a partnership with Hesburger, a large fast food chain, and they now operate on our premises. It's all part of trying to add value for our customers cost effectively."
Jazz have also considered the plight of their commercial customers.

"In view of the current problems our customers face, we have started to offer credit arrangements to our commercial clients. There is of course an element of risk, but we believe we can find additional clients through this method that will be with us for the long term."

EXPORT

Timbermeister OU is a custom furniture manufacturer based in Tallinn. Joint owners Tonu Hiob and Ivo Hein have been in business since 1991 and sensed that the real estate boom was just that - a boom. Although extremely busy fulfilling an overflowing order book they assessed the dangers.

SMART STATE: Analysts say the development of new business opportunities is vital to helping Estonia climb out of the economic black hole.

"We just felt this could not continue and if business fell away quickly we would be in trouble. So we reviewed our strategy and decided to develop new markets in Finland, Sweden and Norway," Hiob said.

"As our orders in Estonia fell over the past 18 months we have been able to compensate this with our new clients and contacts in Scandinavia."

"It's still been tough, but so far we have been able to retain our staff and not cut wages.  To achieve this though we have had to improve our quality control to ensure we minimize any loss of materials or time," he said.

"As senior managers we are now much closer to the day to day operations as we strive to drive inefficiency and waste out of the process. Our products are hand finished and of high quality due to the craftsmen we have. But we are trying to tighten control of the process to maximize efficiency," the co-owner said.

TRAINING

AS Baltic FCB, a leading advertising company in Tallinn, has also changed course.  Managing Director Tanel Paut was candid: "frankly the recession has focused all of us.  We are a service provider and there has been a very positive response from our staff."

"There is a developing environment of self education and a willingness to learn new skills and technologies that will benefit our clients. On our part we have tried wherever possible to facilitate our staff with additional time for on-site training and self development."

"As a business we have had to become more pro-active, we can't just wait for the business to come. It's certainly been a wake up call, but I feel as a company we are motivated to adapt to the new environment."

TECHNOLOGY

During the previous years of fast growth, many companies have not had the time or the need to evaluate their client base, according to Peter Priisalm, Partner and Fund Manager at Avaron asset management.

"When we established our fund we were busy and there is so much you could call ‘noise' that it was difficult to evaluate what our key revenue streams were," Priisalm said.

"However, after we went through a painful cost control exercise, we then began to really analyze our client base in some detail. We went through a process of market segmentation and this enabled us to understand better who our value clients were and what we needed to do to satisfy them and secure others."

Another aspect of efficiency can be attained through the better use of technology.

"We are a pretty e-savvy company, but even so it is sensible to review how you are communicating and interacting with clients and stakeholders. In our case we have certainly saved time and money through utilizing existing technology such as Skype to better effect," Priisalm said.

This is just a small sample of Estonian businesses, but clearly a wider review of business strategies is occurring in the country - something likely to be an ongoing process until economic growth returns.