To paraphrase a not-too-former liberal leader, it’s not easy to set priorities when it comes to reducing expenses. But many firms give short shrift to the downside of common cost-cutting moves, and neglect the upside of sustaining that spending. Here are three recession-fighting strategies worth reconsidering:
Don’t stop donating
Across Canada, non-profits are feeling recession’s pinch as consumers slash discretionary spending. If you feel the urge to rein in your firm’s charitable activities, saving money or man-hours in the process, consider the benefits of corporate giving. Increasingly, Canadians are factoring the ethics of potential suppliers into their purchasing and employment decisions. And in one recent consumer survey, 68% of respondents said they would remain loyal to a brand through the recession if it supports a good cause—even if a lower-priced brand were available. Also, involving your staff in fundraising and volunteer efforts is a low-cost way to lift their spirits, build rapport and foster teamwork—which should be on every entrepreneur’s to-do list.
Don’t stop marketing
Few products sell themselves—fewer still in a struggling economy. So, when recession diminishes the supply of prospects in your sales hopper, you need more or better marketing to replenish the supply. Yet many businesses will slash their marketing budgets this year. It might not be worth the risk. When David Ogilvy, the so-called Father of Advertising, analyzed the marketing strategies of companies during the early-1970s recession, he discovered that companies that maintained their advertising in those years not only outran their rivals during the recession, but moved further ahead in subsequent years. A separate but similar study of the 1981-82 recession came to the same conclusion. If you must spend less on marketing, try more cost-effective methods first. Reminding customers that you’re the company that cares could be a logical first step to boosting your marketing ROI. (See No. 1, above.)
Don’t cut staff
Less work requires fewer workers. At many firms, that means eliminating staff—only to hire people anew when the economy rebounds. At what price? Severance pay. Workflow disruption. Loss of external relationships. Training costs for redeployed workers today and new hires tomorrow. And the diminished productivity and loyalty of layoff survivors. (See “Guilt. Anxiety. Anger.” on page 13.) A better option: reduced work hours for reduced pay, allowing you to save money and staff. Besides, you’ll need those people to keep your lead over the competition. (See No. 2, above.)
Finally, don’t get depressed. Many an entrepreneur will tell you that life goes on and even gets better after your company goes belly up, but chances you won’t even come close to that. And as our cover story full of shiny happy veterans of past economic wars reveals, you can kick recession’s ass. Don’t not try to do that.