Top 5 Business Blunders During a Recession
Times are tough. The recession's hitting businesses where it hurts: cost, service and growth. We've all heard the struggles, but tough times don't mean you have to go lean. They mean you must get smarter. Cross the board cuts will provide short-term relief, but the wrong reaction and you could be poised for tougher times when the recession rebounds.
Top 5 business blunders during a recession
Good talent's a dime a dozen
Sure cutting the salary of a 10-year veteran with 2 annual sales awards for a cheap eager, straight out of college recruit seems like an easy choice. The recruit is cheaper, younger and will have less health insurance overhead. But don't try put a price on the veteran's tricks of the trade. They know what makes your business run and what sells in bull or bear markets. They know the names of your client's children and spouses. Cutting them not only sends the wrong message to other standout performers, but also clients. For what? A gamble on a new recruit that may save hundreds monthly in salary, but costs you thousands over the long term.
Shelving customer service
Cost is on every one's mind. Your competitor just cut costs 2 percent. How will you respond? You slice customer service jobs to shrink prices. You've matched their price, but lack the service backbone to stand out. They stick with your competitor or you're caught in a price war. All the while, you forgot you don't have to be the cheapest to win, just be in the ballpark and have the customer service that plays catcher for their hardest pitches.
Piercing prices
You've decided to beat your competitor at the sticker price. You've cut the price so low to the floor they'd need a magnifying glass to find it. You're selling. They're not. You've won, they've lost. Right. Not so fast. Recessions rarely last longer than 5-10 years. When five years is up and prices soar, you'll be hard pressed to explain to your customers why you're raising prices. They'll be upset you raised prices and you'll turn around and your competitor will need a magnifying glass to find you.
Assuming marketing's expendable
Just because the economy has stopped growing doesn't mean your business can afford to. Marketing is your identity. It's your brand. If you lose it, your business becomes like the clown proudly showing off his poodle balloon, next to 10 similarly-dressed clowns blowing up poodles for children.
Marketing is your outreach to tout new products, reel in new clients and expand. Expand your business now, see exponential growth during the rebound.
Shrinking retirement benefits
You're afraid to cut poor-performing employees because of the backlash and loss of productivity. So you cut every one's 401k matches. You've saved $100,000s. But now your best talent feels unappreciated, demoralized and anxious about their company and financial futures. Productivity takes a nose dive. Still think saving the jobs of 10 poor performing employees was worth the ire of the 100 employees too valuable to lose?
