Motivating Change: Thrive Despite Economy
November 18, 2008
By Joyce Harper
In recent weeks, the economy has become a daily source of fear, apprehension and dismay. As the markets continue their roller coaster ride, unemployment figures rise and consumer spending slows, business leaders and economists alike are trying to figure out, how to stop this wild ride. But, with no easy answers and no end in sight, the global economy resumes its seemingly relentless exchange.
So the question plaguing business leaders and market watchers appears to be, what do we do now when economic uncertainty is up and consumer spending is down? The textbook answer is, offset slumping sales by cutting spending and reducing waste. Although the textbook answer is simple, the application of this principle is anything but easy.
Whittling Waste Away
It's not easy to review a working budget and identify areas of waste or "fat"—especially if the budget is already tight. In fact, even the most experienced executives can mistake cutting costs for eliminating spending, thereby removing expenditures from the budget that ultimately lead to sales. For example, line items like marketing, business development or employee enrichment that don't have an immediate return on investment are usually the first expenditures to be cut. However, eliminating these line items from the budget could affect the long term success of the business if customer leads become cold or low employee morale negatively affects customer care.
This is the dilemma facing business leaders during times of market volatility. It can be daunting for CEOs and CFOs to strike the best balance between decreasing expenses while maintaining and increasing sales. Therefore, it is important for executives to consider the following as they develop their short term business stabilization plan:
• Identify real, rather than perceived, areas of waste through an operational audit. During tough economic times, it's especially important for organizations to invest in an audit of internal controls to evaluate the effectiveness of their operations. Thousands of dollars can be saved each year, without adjusting the budget, simply by detecting underutilized systems or making cost-saving process improvements.
• Slash the marketing budget last, not first (even though it does not provide a direct return on investment). A consistent marketing presence during a slow sales season maintains name recognition, brand awareness and positions the company for exponential growth when customers are ready to buy again. When marketing is neglected during slow growth seasons, it takes twice as long to recover during strong economic periods because consumers remember what they consistently see or hear.
• Seek new opportunities to redevelop or repackage a product or service for greater value or lower price points. The misconception during an economic slowdown is that consumers are not buying. The truth, however, is that consumers are making purchases, but they are being much more thoughtful and taking greater care in making their purchase decisions. A new spin on an existing product or service could make it very appealing to budget conscious consumers.
• Recognize the value of a well-trained, well-equipped staff. During a slow economy when sales are down industry wide, encourage personal development through in-house training. Online seminars, pod casts or brownbag peer trainings are great low-cost opportunities to invest in the longevity of the valued employees through morale building and loyalty cultivation.
Keep Moving Forward
Decreasing expenses during tough financial seasons is prudent business management, particularly when sales are slumping and accounts receivables are moving from 30 days to 60, 90 or even 120 days. Yet, with a little forward thinking and careful planning CEO’s and CFO’s can tighten fiscal control while still making good decisions for the long term health of the organization.
Joyce Harper is an online columnist for Sales & Marketing Management. She is the Founder/CEO of Sharper Solutions, LLC, a management consulting firm specializing in organizational development and strategic management. She works with companies nationwide helping them create organizational effectiveness and increase their revenue building potential. Joyce is a sought after speaker, trainer and business consultant. Contact her through the company Web site at www.sharpersol.com.
Sales & Marketing Management Magazine
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