To spend or not spend

To spend or not spend, which is the question.So we are not completely out of recession despite the positive results obtained in the markets. It is not the most inspiring to start a day is as a business owner? Knowing that the economic and financial environment has collapsed around their ears and the predominant mood is one of doom and gloom. Unless you've decided to curl up in a ball numbing apathy and decided that his business life as you known to have reached a sudden and unexpected stop commercial, then it's time to figure out what to do and develop a plan of attack to ride out the storm and begin rise again towards growth and profitability.

Economists, as we all define a recession as two successive quarters of negative growth. This is the classical model with regard to a national or global economy, but what happens when applied at the micro level, when applied to a small business? How business has in the past 12 months?, are showing negative growth in two successive quarters? If not, then you are ahead of the game, you Against national and global trends and are in relatively rude health. However, if you are currently displaying successive quarters of negative growth, your business is in recession and needs to adapt to survive.

This introduces the question of what to do? It is not an easy decision when presented in a atmosphere of chaos, concern and uncertainty. Professors Peter Dickson and Joseph Giglierano have developed an interesting concept of "miss the boat in front of the sink the boat. "Basically, it presents two options for business leaders." Sinking ship "means that a company can be destroyed by set incorrectly with funds from the company during difficult times and "miss the boat" introduces the possibility of disability business for a lack great opportunity by not investing during a recession times.In lean natural temptation is to reduce costs, reduce waste, streamline business indeed baton to corporate chicks until the worst of the storm missed us. What can companies achieve by doing this? Well firstly, that reduce the likelihood of ultimate failure and will undoubtedly become a leaner, and in theory more efficient organization. However, they also become defense in an entity, and have little or no offensive action in the market. To paraphrase the sports adage goes if you're on defense is offense, ie is creating some internal and limiting the extent of corporate earnings. It would be naive in the extreme to suggest that reducing costs is not necessary during a recession but it is also wrong to assume that assume a defensive position in response to market is the absolute correct solution too.

The truth is that the challenge for companies is finding a balance between reducing the fat and removing the inefficiencies that have accumulated during the boom years of economic expansion, and invest the funds in the conduct of the business. During the 1930s, commonly accepted as the worst of our economic debacles to date, had two major players in both markets soft drinks and breakfast cereal. Kellogg's and Post food a real fight for the breakfast market, while Coca Cola and Moxie are the main players in the drinks sector. Post Moxie food and decided that the economic carnage that was the depression of America to reign in their marketing and focus on cost reduction, Kellogg's and Coca-Cola decided to take the alternative route up its investment in marketing and advertising. With regard to the post and Moxie's fair to say that his two competitors in a kick and became the world juggernaughts today while the other two regressed in their respective markets. When Coca-Cola and Kellogg's were making the media is changing marketing, mass communication was becoming a reality, new media such as commercial radio and nationally distributed publications were allowing companies to send their message to more consumers never in a way different from what was thought possible.

We are now at a similar stage in the recession of 2008/09, the channels of media and communication methods are changing what allows us to reach people in different ways and many times higher. Who in 1930 would have foreseen the Internet, social networks, direct marketing campaigns and other such as communication channels that could improve the pages of a company and different studies brand.Various ranging from the definitive study Roland S. Vaile of the Great Depression of the famous American project Business Press 1970, the latest studies by McKinsey consultants, as they have shown a correlation between recession and growth in advertising and marketing expenses. More importantly, it shows that companies that have gone well during a recession are better than their competitors who have cut budgets to get out of the other party and seize opportunities when the economy is inevitable recovery.

This paradigm is impossible to apply universally as all organizations are different and are in various states of trade flows, but when the balance of the previous examples against the current trend of reducing costs and risk aversion must also consider the cost of doing nothing. Spend money wisely is linked to care for a tangible return on investment is of strategic importance an organization by reducing costs internally focused tactical plan. Budgets certainly be managed, but not at the expense of future growth. Bill Gates said on one occasion that if it were up to his last dollar had to spend on marketing.es company managing budgets and streamlining costs will become very good at As an organization focused on conservative cost, but it will be a company willing to increase market share?, to increase your brand identity?, or become a company prepared to understand and serve customers when the recovery starts as it surely will?.

Research after the great recession The latter has shown that companies find themselves in the top quartile of their respective markets had spend more than their rivals by up to 9% in marketing. They were spending the money to make money instead of cutting short-term costs on their strengths and L. P

The next logical step for companies are willing to spend their way out of recession is investing in training and people. The reduction of human resources or capital and firing tactics have become synonymous with safe cleaning among many organizations in the current recession. But is this a practical strategy in the long term? We will examine the benefits the formation of an organization. After the slaughter of people and the creation of layoffs for firms in a position to capitalize on the opportunies that exist within the economy now? and although they have reduced their material in a cost reduction is necessary, are positioned to take advantage of opportunities that will arise in the recovery?

Human capital is undoubtedly the most important resource a company has, and like any other resource to be managed and optimizing. Companies that adopt a defensive position and run the risk of being stagnant and able to adapt in the future if their culture is one of reduction and suppression. Managers need to become leaders and drive performance, saleforces need to become professional sales and capture more market share, innovators need to be allowed innovate and launch new products or new ways to serve customers to the table.How lot of this is feasible within a culture of money pinching and regression?

There is historical statistics or empirical relations between training and recessions as training and coaching is a relatively new, but it only has to look at companies that have had their great leap forward in previous recessions to identify its importance. Hewlett Packard, IBM, Domino's, Toys R Us all companies emerged as vibrant periods of recession, the iPod and iTunes became a reality during a recession as Apple continued to spend despite being in a not particularly physically fit, Southwest Airlines in the U.S. trained almost out of the last recession, Viacom and Dell as well. The point is that training is an easy option for Penny Pinchers during a recession, training is seen as a luxury when in reality it is a necessity. If the old adage that "repeat the same process in hopes of different results is one definition of insanity" then there are plenty of madness in the market today. In short, companies do not get the same results with the same people (or fewer people) doing the same when the market has changed dramatically. This applies equally to a people starting new businesses in terms of global conglomerates.

Consider a sales force, if asked for better results during an economic downturn, but not given the tools to do it, then they would not inevitable. But add an element of sales training to the mix and suddenly you allow your sales team to discuss different approaches to innovate in these spaces, build stronger relationships with customers, develop a greater understanding customers, the ambition to build through the change of internal belief system and inevitably create a 'strong culture within your organization. Customers have not completely stopped spending during a recession, what they have done is to be more cautious and value hunters. Undoubtedly, the creation of value in a product, service or brand is a fundamental marriage of marketing and sales teams. If you are a professional company in search of fees or a retail operation seeking to drive footfall, the message is the same, if you can afford to train their people to sell / innovate or simply to motivate, then do it, the long-term rewards will be greater than the short-term risk if the training is correct.

Understanding spending patterns of customers and prospects will be key in coming months like equipping your sales force with the necessary tools to sell their products and services while improving the customer experience. Training brings you closer to achieving this.Secondly know that increases the moral formation of an organization. Development of human capital of a company is linked to output. The challenge for business leaders is the position of their office and organization to be in the best position to exploit opportunities that arise. If some companies go to the wall in the coming months what happens to your customers? They still have a need that must be repaired. Who will service you need? Are you able to do so? Are your sales teams informed and trained enough to take advantage? Do you have the skills and knowledge to capture and keep these floating customer?

Training provides the tools necessary to capitalize on this. In a less dramatic level, what about those companies that due to internal cost cutting not to serve its current customers or clients in the way these same customers have come to expect. Where are disenfranchised customers will have their purchasing needs service? Training allows you to service these needs and create a loyalty to your brand or organization. A culture of learning facilitates innovation and improvement of service and this in turn allows you to maximize business opportunities.

Finally consider the medium to long term risk of neglecting his home in the stars? These are the people in your company who hit well above their weight and deliver tangible benefits above average in the bottom line. These stars are unlikely to desert him times of uncertainty and obstacles for organizations are changing so high, but when an economy begins to grow again, you will find opportunities for progress in other places and you start to incur the dreaded cost of employee attrition. If you deal with people and develop professionally morale is high, the culture of the company or firm is stronger, and as customers have brand loyalty, and also have employee loyalty within your organization that allows you to plan and build more efficiently. For example, if the cost of training someone say that produces £ 100,000 for essential thing is £ 5,000 this year, Is not money well spent if they stay with you and produce £ 120,000 next year (through a combination of increased skills, perspectives and innovative improved motivation), rather than save that £ 5,000 investment in training and make the desert of his organization when the transfer market employees is more vibrant, which require a search of candidates (of cost), the integration of a new employee (cost) with no guarantee of producing the same results (cost).

In short, we know that smart companies do things smarter. We know that successful companies do things very well. The question for business leaders today is whether the cost reduction and the adoption of a defensive position is either the smartest or what to do.

There is no doubt that reducing costs and breeding prudence is essential in the coming months, cash is king and we're in an environment of survival of the fittest. However, we can support marketing and training spend on this? As leaders we are missing the boat or sinking the boat by reducing?

History shows us that large companies do not miss the train and many of the icons of business and professional world have reached their current positions of greatness to be different, dare to try an aggressive approach for outwardly focused a recession and being ahead of the game when the green shoots of recovery, eventually flourish. Not all businesses suffered during the recession, but any firm still and with a mentality of survival decrease your chances of "kick in".

Managers and leaders need to have this mindset and make enlightened that the requirement adjustments. It is possible to sell your way out of recession, but will not sit and wait for it to happen. His source of income is the instantaneous their ability to win and retain customers, this is a measure of how well they are growing, reducing costs on the other hand is not a point of reference for how well being carried out as a business, is a measure of how much you saved.

Great marketing strategy and quality training to accompany this strategy are two of the most powerful commercial catalysts we have. Do not allow yourself as a business leader to regret, in the coming years.

Simon Kenny Skills4Sales September 2009 (coach of the businesses in London UK)

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