This thread reminds me of this old famous business fable:
http://www.successco.com/2008/02/here-is-a-marke.html
When times get tough, we need to keep doing what we’ve always done… make the best product we can and ADVERTISE. When things get a little slow, I often find myself thinking “I could save a lot of money if I worked an extra 20 hours at the store.” Of course that would only take time out of my day where I do marketing and advertising.
I think far too many people fall in the trap of trying to reduce expenses because things get slow. I don’t mean the types of expenses that 1995flyingspur is talking about; those are solid plans. But most people start looking to the big variable expenses: food and advertising. That becomes a suicide mission.
Maybe we are in a recession; I don’t know and neither does anybody else (at least not officially yet.) Recessions become self-fulfilling prophecies because of the types of actions in that business fable. The truth is that if it weren’t for media reports, the vast majority of the population would probably go about their daily lives and not even notice that GDP had small decreases for two consecutive quarters.
There have not been widespread job losses, we don’t have Argentina style inflation, interest rates are still low and the “housing crisis” has been very contained. Bear Stearns and Countrywide got wiped out and some people that were leveraged to the hilt lost their homes; those things don’t have widespread affect on the economy. Most importantly the stock market, which tends to predict massive recessions with remarkable accuracy, has stayed relatively stable. Outside of the financial sector, companies are still reporting strong earnings. Even GE’s bombshell earnings decline was completely attributable to their financial arm: their other businesses reported 10% to 15% earnings growth.
By all means, get those expenses reduced as much as possible in good times and bad. But you’ve got to keep your product great and you’ve got to keep advertising.
Pizza is still a very cheap meal, even at expensive shops like mine. We’re on the high-end of pricing, but a family of 4 could still easily have dinner for 25 bucks. I’d like to think that slowing times could LEAD people to our doors over higher priced full service dining. Heck, if a family of 4 goes to Applebee’s or Chili’s they’re looking at a $60 bill at least. I’m offering a lot more full meal combination offers right now because I think I can get those customers in. People may cut back a little bit and there’s no reason that “cutting back” can’t include getting pizza for dinner instead of a full service meal. Things aren’t nearly bad enough that families will start cooking all 7 dinners per week at home. During a depression maybe, but not because of 4% inflation and an extra 60 cents for a gallon of gas.
I guess my point is that things aren’t nearly as bad as we think. This could be a time of opportunity: Let your competitors be the ones to panic and pull in the oars.