IMPACT OF RECESSION ON BUDGETS
STRETCHING YOUR BUDGET
During the tail end of last year I attended a conference where a reputable economist addressed the masses. He was speaking about the economic climate and the likely duration and severity of the same. The mood in the room amongst the two hundred or so delegates was palpable. His predictions (and sadly he has proven to be right in the past on numerous issues) was that the downturn was going to be with us for several years – with recovery coming in about 2012. It will be a ‘U’-Shape recession. Don’t shoot the messenger!
Like you I do not relish the prospect of several years’ hard graft just to stay in business. I do have to say at times I feel like taking lessons from an ostrich when I listen to the news or switch on the television. But what does it really mean for us and for the event industry? What can we learn from the past and how best to go forward? I have to say that it is really not that complex – or should I say it’s common sense but not always common practice.
We do know that in troubled times we need to be face to face with our customers. The need to exhibit is stronger now than in the happier times when we were awash with spare budget. We need to offer value and remain competitive. Discounting is not the way forward nor is cutting the usual suspects of training and marketing budgets. Discounts weaken your offering, undermine your margins and generally are a recipe for disaster. History is littered with facts about recessions and how to best survive them. We know that those who enter a recession maintaining or spending more on their marketing and their staff are those businesses that will come out first and will come out with better market share than they entered. Those who tighten their belts and try to ‘survive’ are worshipping a false god. In any event, if the predictions are right, three years is an awfully long time to maintain a belt tightening regime and hoping things will pick up!
Running my own business I realise that there will be tough decisions and economies to be made but it is important to realise that I am not an accountant and do not run my business as an accountant might. In a boom businesses are run by entrepreneurs whereas recessions herald the advent of more accountants and financial directors gaining power in the boardroom. Traditionally it’s the marketing budget that gets slaughtered, together with staff development and training. These have been seen as ‘discretionary’ spend and therefore suitable for cutbacks. All the evidence we have suggests that increasing these budgets are the best thing you can do to weather the storm.
If you plan on exhibiting you should still do so. Calculate which events deliver your target audience and focus on them. Make cuts in areas that will not affect your future performance rather than by cutting the event or reducing your presence there. Consider bringing your own furniture for example, or your own floral displays rather than hiring them. Bring one or two less staff to the event perhaps but train up the ones that are attending. Give them the tools and confidence to maximise their meetings. Share a hotel room or use a budget hotel rather than cut their ‘entertainment’ budget. In short keep spending where you know it generates business and cut back where you can safely do so.
On a more positive side we also know recessions are good for clearing out our weaker competitors (sadly it can also kill some hitherto sound businesses) and so once things normalise we can look forward to an even bigger slice of the cake as there will be less players in the market. The question is what can you do in the meantime to get through? Sell. Sell. Sell. Sell face to face and sell better and more professionally than your competitors. Be at the events where once there were seventeen competitive stands and now there are only seven.
Remember also that visitors to events have to increasingly justify their time away from their office harder than ever and so those who do make it to the aisles are much more likely to be hotter prospects. Do not let them pass you by – engage them and develop relationships. Yes their own budgets may have been trimmed but they in turn will spend something with you and spend more later once their reigns are loosened. Focus on the simple fact that companies will and do spend money even in a recession – what can you do to make sure they spend it with you?