Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine and we’ve developed this podcast in cooperation with BMO Bank of Montreal.
You have to spend money to make money is an adage most entrepreneurs would agree with until the economy tanks. When recession hits, managers across the business spectrum begin to question the value of any investments that don’t benefit the bottom line in the short term, and when I say short term, I mean between now and next pay day. But by doing so, they could be sacrificing the long term competitiveness of their companies and maybe even diminishing their long term fortunes. On this episode of the Business Coach Podcast, we’ll try to identify the best strategic investments you can make in a recession with the help of Mark Wardell. Mark is the founder and President of Wardell Professional Development, a Vancouver-based management consulting firm. Mark, welcome to the Business Coach Podcast.
Mark: My pleasure.
Ian: So recession is typically a time when business owners avoid any discretionary spending whatsoever. Why is recession not such a bad time to be investing in your company’s future?
Mark: The stronger your brand, the stronger infrastructure, the more fixed your cash flow, all that stuff, the more likely a business is going to ride the waves of success when we come out of this recession. This is going to end, I don’t know when, if I’d knew, I would be selling that to a lot of people. But it’s going to happen and you got to position yourself to take advantage of that. Now, just like you said in your introduction, we get into a recession, people go into this survival mode, right? They go into this “close the doors”, “don’t spend any money”, “don’t do anything” kind of mode. But I think of it this way. Think about you’re out in the ocean, you’re swimming, you’re threading water, you start to sink. You know, maybe you are not a good swimmer. My advice, try anyway. Try anyway, because doing something in a recession is always a better strategy than doing nothing. I think the trick is that it’s not just about investing in your company in a recession, I think anytime is a good time to invest in your company’s future, you know, and that is an important point. A recession puts a magnifying glass or a microscope or something on the economy. But we should always be having good practices. The doom and gloom that everyone talks about, and it’s there, it’s real, I mean it’s absolutely real but, you know, focusing on good practices is always a good idea. Right? And one of the great things is that the tools that you need to build this great company, they are all on sale right now, the world is your Wal-mart or something, you know. So yes, we need to avoid wasteful spending but we always need to avoid wasteful spending. There are opportunities right now to improve your company and if you’ve got the cash and the wear-with-all and maybe the guts to do it, now is the perfect time.
Ian: So let’s talk about some of the potential investments companies might make in a recession and why don’t we just discuss some of the typical places where companies would cut their spending considering these areas discretionary. What about training? Training is always very important to competitiveness but that’s often the first to go.
Mark: Good example, OK. So you know the huge benefit you get from cross-training your employees for example, right? When you have cross-trained employees, you have the ability to reduce over-time because you can put people in different places that you couldn’t before, when you focus on sale that an obvious one I suppose, when you focus on sales training, you have the opportunity to increase your sales, it is just something you absolutely want to do in a recession. When you focus on customer service training, you are going to develop stronger relationships with your customers, by keeping your customers because what happens during a recession is when things are tough for everybody, that’s when people are most likely to look around. You know, maybe prices go up a little bit and maybe service slips a little bit, they are going to look around for alternatives. So you focus on customer service, you grab a hold of your customers, you get more referrals and on and on and on. The benefits are enormous we just close up when recession comes around and I really try to encourage people to keep focused. And another thing this investing maybe is to realize an investment does not have to necessarily mean money, right? Investment, money is certainly an important part of it, but we can invest ideas into our company, we can invest effort in the work and all those kinds of great things that help make a company stronger.
Ian: And I should probably point out bartering services which help you get services and goods in exchange for things that you’ve already got on hand.
Mark: Absolutely, that’s a perfect example.
Ian: Here is another big one, marketing. You always see marketing and advertising budgets get slashed during recession, is that a place where people should be emptying up their spending?
Mark: It is not about emptying up spending in my mind. Although if you are going to focus your budget anywhere, I would encourage people to focus it into marketing for sure. But it’s definitely about getting the most highest return investment. So when you are marketing, make sure you are doing as much as possible direct response marketing for example. So you can measure the return on your investment. Make sure you are super clear about the target, about who your customers are. Again, stuff you should be knowing in good times and bad, but now in particular, really really focus hard, who are my very best customers and make sure you are positioned well. Another aspect of marketing, as I said, is positioning. I mean marketing isn’t just about spending money, it’s about positioning your company in a way that resonates with your best customers. And positioning is an incredibly powerful tool for doing that. We have a client, for example, in the banking industry, they sell to the banking industry. And what we are doing now is we are able to walk into a bank and say “We can sell you this particular product, anytime you want, we can get it to you the very next day and we can do for no shipping cost.” We’ve learned that this customer is thrilled about that so much that if a sales person walks in and said that, it is almost guaranteed that they’re going to get some level of sales. So spend money on marketing and it will come back to you. No questions.
Ian: One of the counter-intuitive strategies is that some companies employ during a recession is hiring people rather than laying them off. Now of course, that costs money, is that a way to increase your competitiveness quickly during a recession?
Mark: Like I said before, everything is on sale during a recession. Right? That does include, you know, human resources, not to dehumanize it but great people are more available right now potentially for less money. We put an ad, just for our company, we put an ad on craigslist, just a single one ad on craigslist, got over 150 resumes and some of them were really strong candidates, I mean, the percentage of people that came through was unbelievably high in terms of the qualities of those people. So, now is a great opportunity to, if you have employees for example, I am not saying just to fire people for the sake of it, but there are opportunities that if people are not the right people for your company, go out there and look for opportunities to upgrade your employees. OK, the other thing about employees, I think would be culture, right? I mean, now is a tremendous opportunity to improve the quality of your culture. If you can get a sense of urgency in the people who are working for you, motivating the people who work for you or hiring as, you know, Brian Scudamore said in 1 800 Got Junk, he only hires motivated people, right. So make sure you’ve got people in your company that are motivated and excited and have a real strong sense of urgency inside your culture. Because it doesn’t have to just be the business owner who’s responsible for improving the company. In fact it shouldn’t be, everybody who works for a company should be responsible for improving it.
Ian: Now, we got time for one more and I am going to suggest that we talk a little about technology. We know that technology can help increase a company’s output per hour or per dollar. But of course, a lot of technology requires an initial capital outlay that might not be available during a recession, especially during a credit crunch. Is technology a wise investment or should people just kind of hold off until the recession blows over?
Mark: There are lots of things we can do. I mean I am not a technology expert but, think about Search Engines Optimization, I mean, what does it cost to really focus and spend some work on your website to make sure that it’s properly optimized. And what kind of return on that investment are you going to get? Probably strong, right? The more you are attracting people to your website, or email based marketing, there’s all kinds of low cost strategies you can use to get out there and generate a really solid targeted list that you can use. And then you can email people for very low cost. CRM tools you can get right now for really low cost. There is really really powerful stuff that you can get for really low cost. You may not be investing right now if you don’t have the cash into some large automated CNC machine and stuff, unless you have the cash flow to do that kind of thing, but absolutely, there are all kinds of possibilities. We live in a technological world and if we don’t take advantage of it, we might miss huge opportunities.
Ian: Mark, thanks for sharing your ideas about fighting the recession with the Business Coach.
Mark: Thank Ian.
Ian: Mark Wardell is the founder and President of Wardell Professional Development in Vancouver.
That’s’ it for another episode of the Business Coach Podcast. Be sure to check out other episodes which you can download from BMO.com, profitguide.com and iTunes. If you have any comments or suggestions about the podcast, then please send them to me at firstname.lastname@example.org.
Until next time, I am Ian Portsmouth, the Editor of PROFIT Magazine, wishing you continued success.