Preparing For The Inevitable

Economic Challenges –  Are you Prepared?

Economic challenge or recession; are they one in the same? The true definition of a recession is “a period of temporary ‘economic decline’ during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters”.

The official arbiter of U.S. recessions, the U.S. National Bureau of Economic Research, states the last recession in the U.S. began in December 2007 and ended in June 2009, lasting over eighteen months.

While the talk of the next recession has been going on for over a year, it has been greatly enhanced over the last 4 weeks due to coronavirus (COVID-19), the pending U.S. election, and now the oil dispute between Saudi Arabia and Russia. 

If and when the U.S. goes into a certified recession remains to be seen.  But if so, are you prepared?

One of the first things businesses tend to do is slash or even eliminate their advertising and marketing.  The big question is…is this a wise business move or a mistake? 

Study after study conducted after the past 5 major recessions suggests that companies that continued to advertise during the recession outperformed those that didn’t by major proportions. McGraw-Hill Research conducted a study from 1981-85. Out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256% growth by 1985 over their competitors that eliminated or decreased spending.

This rule doesn’t only apply to the most recent recessions. During the 1920s, Post Cereal leading their category.  During the “Great Depression”, Post significantly cut back on its advertising while rival Kellogg’s doubled its advertising spend by investing heavily in radio and introduced a new cereal called Rice Krispies. Kellogg’s profits soared by 30% and they became the new category leader and held that position for decades.

Perhaps the best quote about advertising during a recession came from Walmart founder, Sam Walton. When asked, “what do you think about a recession?”, he replied, “I thought about it and decided not to participate.”

Preparing in advance of a recession is the first rule in managing your business for if and when it arrives.  Rule #6 is Develop and Implement Strategies to Win the Competition’s Customers.  

To see all 10 Rules for Surviving a Recession, click here.

My own experience during the 2008 recession is interesting.  I saw a weeding out of competition and also lots of entrepreneurial opportunities. 

There were some companies that I worked with that were riding the growth wave and but weren’t really solid it their business practices and they went away.  Specifically I was working with a small mortgage broker and some real estate agents.  As a matter of fact, the number of real estate agents in our area dropped and only the very best survived.

There were also not just lay-offs but downsizing that occured in some of the manufacturing companies in the area and I had a few people that accepted early retirement buy-outs use that as seed money to fund their entrepreneurial dreams.

The group of radio stations I worked with had previously made staffing changes to become more lean and Federated Media, the company I have been with since 2013, has been pro-active in preparations for any number of situations that would affect our operations.

We have taken the steps to fulfill our duty to provide the latest, most current and local information to keep our listeners informed right now on the COVID-19 virus and are working behind the scenes to be able to continue even if we are faced with more dire situations.  It’s good to work with a team of professional broadcasters who are performing in a similar manner as first responders.

Visit https://www.wowo.com/news/coronavirus/ for the continuous coverage as we are ready to serve.