With all of the uncertainty about the economy these days, one of the smartest things you can do is cut back and keep your overhead low.
It is also one of the dumbest things you can do.
Let me explain: I would venture to say that back in the day, your deals were probably bigger and they came easier, your customers probably had more to spend and they spent it more freely.
But cash is tighter right now, and as such, these days, we have to be especially smart with our money. But one thing is also certain – there are both good and bad ways to cut back, that’s why it could be either a smart or dumb move.
Good way: Cutting back on your overhead. Whether it means finding cheaper digs, or starting to use a virtual office, or tracking your expenses easily, affordably, and accurately, keeping your overhead low is smart, especially right now.
Bad way: Cutting back on your marketing. If there is one mistake I see far too often in times like these it that small business owners think cutting the budget means cutting the marketing and/or advertising budget.
That is a big mistake.
Sure I could give you plenty of examples, but let’s just consider the conclusion of a survey done by the consulting firm Meldrum & Fewsmith:
“Sales and profits can be maintained and increased in recession years and in the years immediately following by those who are willing to maintain an aggressive marketing posture.”
Notice they didn’t just say that you need to maintain a marketing posture, but rather, “an aggressive marketing posture.” So if I were to give you one piece of advice to succeed in business right now, it would be this:
Advertise and market your business… and then advertise and market it some more.
The reason is two-fold:
First, you simply must continually replenish your customer base. When I first started in business, a wise man told me that there are always three types of customers:
1. New customers
2. Existing customers, and
3. Departing customers
Customers leave for all sorts of reasons: Good, bad, valid, silly, whatever. By staying vigilant with your marketing, you need not worry (too much at least) about departing customers because you will have new customers coming in the door to replace them.
Second, customer loyalty is almost an oxymoron right now. What are people looking for these days? Let me suggest that discounts and good prices are near the top of the list. So if that is what they want, then give it to them. Have a sale. Cut some prices. And then advertise those lower prices. I can almost guarantee that people will beat a path to your door.
So the moral of the story is this: Be smart about your money, realize that other people are being smart about their money, and then give them a reason to be smart at your business. You will end up with more money to be smart with.
Have you cut your overhead? Did it work? Let me know, below.