Posted: June 13, 2012
Stepping on the gas in a down economy
Risk now, reward laterBy Chris Coughlin
In 1990, I was the VP of Sales and Marketing at a small manufacturing business. The company was struggling in a down economy, and I found myself listening to our CFO declare, “We are in a recession. I recommend we cut all departmental budgets by 12 percent.” Everyone was shocked, but most nodded in agreement until the owner of the company vehemently rejected that advice. He proposed an alternative. Rather than cutting budgets across the company, the idea was to cut internal spending while increasing spending on sales and marketing.
The owner’s philosophy was an aggressive strategy that counteracted the less assertive approach being taken by many businesses. This provided an enormous opportunity to gain permanent market share, both immediately and when the economy started to grow again. Fortunately, the recession of the early 1990’s was short. The lessons, however, are long-lasting. Our company rocketed out of the recession with massive growth and left other competitors in the dust.
Fast forward to 2008. As the owner of Glazier Football Clinics, a company that presents a variety of educational opportunities for football coaches, I found myself in a similar situation to 1990. The economy was decimated, and our customers were hit particularly hard. Our sponsors cut back their spending dramatically, and our biggest partner went bankrupt, leaving us with a $140,000 bad debt. We also found that attendance at our educational clinics had plummeted. We went from solidly profitable to barely profitable in the course of one year. Prospects looked difficult, at best.
Glazier Football Clinics is a part of a very seasonal business. We have two months each year to analyze and plan. Prior to 2008, when times were good, we squandered much of our planning period. It didn’t seem worth the effort. The reality was that, as the owner, I was being a lazy and satisfied leader. It almost destroyed the business in which I had poured my life.
In the spring of 2009, we took time to reevaluate every aspect of our business. As part of the process, I told my team of my 1990 recession experience, “In a recession, if at all possible, step on the gas. Be more aggressive and do not become risk averse.”
Research reveals that many companies have chosen this path: Apple, Microsoft and Coca-Cola are iconic examples. Look into this subject and you will be astounded at the number of companies born or reborn though aggressive action in adverse times. For Glazier Football Clinics, a more aggressive approach meant a complete revamp of our pricing strategy, a forwarding thinking marketing campaign, and cutting many unnecessary expenses that had crept into the business. Additionally, we found much room for improvement after doing a complete review of our products. The recession also provided us the opportunity to add a high level talent to our organization at a good price. There are countless numbers of superb people who are languishing in shrinking organizations.
Fast forward to May of 2012. Our revenue and profitability have doubled from their pre-recession high. We have launched two start ups, including a company called Revenue North - a business dedicated to helping small and medium sized businesses grow (www.revenuenorth.com ). Next year we expect solid top and bottom line growth. These successes have been possible because proper planning and analysis, combined with aggressive implementation of new ideas are now staples of the business.
Therefore, don’t listen to the news; it’s a great time to grow your business! It is important to remember that the news will always be negative during tough times. We have been bombarded with negativity since the housing bubble burst in 2008.
What we have not heard is that companies everywhere are prospering. The growth curve of the S&P 500 chart, measuring earnings, has grown so rapidly that curve is now virtually a vertical line. There is plenty of data showing this same trend for small companies; millions of small businesses are seeing record sales and earnings.
Glazier Football Clinics and Revenue North work with hundreds of small businesses. Obviously some are suffering in this economy for reasons beyond their control. However, more are suffering because they pay attention to negative news and are controlled by fear. More and more companies, though, are thriving by using the current climate to lower costs and push forward product development, sales and marketing. These companies are maintaining growth while their competitors flounder.
If you are the owner of a small business or are committed to helping your employer drive their company forward please visit www.revenuenorth.com. Revenue North will be hosting a conference in Denver June 27 to help businesses increase profitability with the expertise of sales, marketing and customer-retention professionals.