Increasing Advertising During A Recession: A Timely Move Or An Easy Way To Go Bankrupt
Topics: advice, current affairs, recession, economy, business, small business, finance
Over the last year the US, once flying high, has fallen and face planted into a somewhat ugly recession. For people with steady jobs the fear is of course the dreaded pink slip. But as long as they can keep their jobs their paychecks in most cases will remain the same. For small business owners a recession is often felt in the pocketbook. With less people buying their goods and services their revenues and profit margins can start to sink. And it can be painful for a number of reasons.
First many business owners have an emotional attachment to their business. When the business starts to flat line its hard to readjust to the new realities of your surroundings. If you are a restaurateur it might be hard to scrap plans for opening a new location across town even if the economic realties of the market make it clear that continuing ahead with previous plans is illogical. The second difficulty is that it’s hard to readjust ones life to deal with a lower take home pay. So while a small business might see a 20% drop in revenue that could translate to a 40-50% drop in profits. And while you might have lived on a smaller revenue 10 years ago it’s hard to go back to that. Living without regular out of states vacations is one thing going back to that point is even more difficult. And these somewhat harsh realties are what drive people to look for something, anything that can restore their business to its previous health and prosperity.
First I want to point out that in some cases advertising in a recession can be a wise move to increase market share and take advantage of a bad market. But more often what I see is this.
“Our revenues are way down”
“That’s horrible”
“Let’s spend a ton of money on advertising and hope we can put this behind us”
The problem is that the difficulty for this business is not that they didn’t spend enough on advertising last quarter. The problem is that we are in a world wide economic depression caused by billions of crappy loans real estate loans given out over the last few years. And yes everything is interconnected but putting out more ads for a local restaurant is probably not going to change this.
Simply put sometimes business owners make asset allocation decisions based on emotion instead of their current economic realty their business exists in. A few reasons that increased advertising might be a bad idea for your business.
1) The number of potential customers is decreasing
2) In many industries your competitors are increasing advertising to “spend their way out of a recession”
3) Increased advertising and decreased customers is a bad market to ramp up your advertising budget
4) Spending more on advertising can mean advertising in new venues. Often when testing new venues you can wasn’t a lot of money discovering mediums that simply don’t work for your business.
5) You can increase your expenditures and your cash burn rate. So basically the economy might eventually turn around but your business might not be there to see it.
Ok so if the answer is not doubling or tripling your advertising what is the answer? Here is my advice
1) Cut Expenses that are not needed. Comb through your budgets for extras you added during better times but are not needed.
2) Keep current advertising that is working. Whatever is currently providing you business I would stick with.
3) Cut advertising that is not working.
4) Adjust
Number 4 is probably the most difficult but important. If ones business is affected by the recession (and most are) it might be a good idea to simply accept the possibility of a reduced monthly income for awhile. I am not saying people should give up on their business or not attempt to increase profits. But during a recession it might be a good idea to keep working to achieve higher goals but at the same time when you are doing your monthly personal budget accept the possibility that a weakened economy often results in less customers and lower revenue. This means if you planned on buying a new car or taking an extra vacation it might be a good idea to change those plans.
In the end by operating in a logical manner a business can survive a recession and hopefully be in a position to flourish once the economy recovers.
Ki helps buyers interested in Austin real estate www.escapesomewhere.com his website has a free search of the Austin MLS www.escapesomewhere.com along with updates on his Austin real estate blog www.escapesomewhere.com
Previous Articles Highlighter:
Essential Soccer Skills - Penalty Kicks (1)
This technique was tried by Roma's Francesco Totti during a Serie A game but was misjudged and the goalkeeper simply caught the ball. The success rate of this style relies on the taker's ability to trick the goalkeeper into diving, making them unable to shift position and save the ball.
Get Online Information For Trains To Wakefield (2)
Long distance services using this line as part of longer journeys are run by GNER, East Midlands Trains and CrossCountry. Parts of the line over which the Wakefield Line trains run are also used by the Huddersfield and Pontefract Lines.
Ways To Get A Bad Credit Loan (3)
So when you see that home you want, it is worth putting in a little effort to try to get a loan approved. The Author's website guaranteedbadcreditloanstoday.com features articles, tips and advice about finding loans to suit your credit history.
Benefits Of Good Customer Service (4)
These are not discrete categories. Most business theorists see a continuum with pure service on one terminal point and pure commodity good on the other terminal point [citation needed] Most products fall between these two extremes.
Building Your Web Site Traffic - Link Building And RSS Feeds (5)
Readers subscribe to RSS feeds so that they can get website updates directly to their desktops. As a content provider, you would submit your web site to RSS directories.
What Are Translation Agencies For? (6)
Try it the next time you want a translation, use your language and the language you want it translated to and then revert it back to the original language so you can see the low quality you get!
Here's How To Make Sure That You Hire The Right Translator (7)
Moreover, when you attend business conferences overseas, you will also need to hire a professional translator. With a translator around, you can then communicate effectively with the people over there.
Would You Like To Earn Residual Income From Home? (8)
Oh, you thought you would have more time off huh? Well in the beginning that's not the way it usually works out! At first your going to need to be there all the time, you're going to have to answer a million questions, you're going to have to get people to trust you, and the only way you can do that is by being trustworthy, reliable and honest.
Kitchen And Bathroom Remodeling Basics (9)
Things go in and out of style frequently, so if you're considering selling and the home is over 5 to 10 years old, you may want to take a look around and see what's in style now.
Would You Like To Publish An E-book In Another Language? (10)
Instead, what I would suggest would be to visit a few paid inclusion translation agencies which specialize in this type of content. Translation agencies are business that are made up of interpreters and translators that can translate English into any language as well as inter-language problems like German into Spanish or French into Chinese.
Newer Articles Highlighter:
UK Student Visas & Student Dependent Visas (1)
Citizenship and Immigration Services (USCIS) to immediate family members (spouse and children under 21 years of age) of the H-1B visa holders. USCIS allows immediate family members of H visa holders (H-1A, H-1B, H-2A, H-2B, or H-3) to get H-4 visas to lawfully come and stay in the US.
Tips On Loss Mitigation Leads (2)
These insurance surveys are designed to provide the homeowner with a substantial homeowners insurance reduction in the state of Florida. The surveys provide critical information about the homes construction and features of a home.
The Benefits Of Help Desk Software (3)
Some help desks may have phone systems with ACD splits that ensure that calls about specific topics are put through to analysts with experience or knowledge on that topic. Many help desks are also strictly rostered.
Your Strategy For Finding Career Change Ideas (4)
It is no longer expected that employers stay with the same company for life and when people enter the workforce they can usually expect to change careers every five to ten years.
The Campaign Trail And Email Marketing (5)
It's really this easy. Using email marketing solutions is a great way to get personally acquainted with voters during your local elections. By coming up with an email marketing plan for you campaign, you will achieve better results as a candidate.
A Car That Can Run On Water (6)
Their car, if it manages to get into mass production, would retail for about U.S. $4,600.00. No, I didn't leave out a zero after the 4 -- that's actually what they said!
How To Find Legitimate Home Based Businesses (7)
Many forum members are experts who have been in the online business industry for several years and will be knowledgeable about what companies are legitimate and which might be scams.
E-mail Marketing Is A Great Strategy (8)
Topics: email marketing E-mail marketing was the first marketing strategy that was used for online marketing purpose. E-mail marketing since then has come a long way. Today while e-mail marketing one has to pay considerable respect and attention to the laws and regulations of e-mail marketing.
The Vampire Movies With A Lot Of Bite (9)
Starring Josh Hartnett, the film centres around an Alaskan town that has no sunlight for a whole 30 days. During this time, vampires arrive to feed off the townsfolk and take advantage of the lack of sun.
External Doors: What Does Yours Say About You? (10)
They also favour towards sandblasted glass instead of decorative and are usually painted in a contemporary colour. Other considerations for jazzing up your door could be adding a new letterbox.
Permalink to Increasing Advertising During A Recession: A Timely Move Or An Easy Way To Go Bankrupt