You may recall my earlier post where I referenced a letter to the editor by a Twenty-Something (implied) who was out of a job and was very frustrated that he couldn’t find work with his associates degree. And then the next post where I discussed his suggestion that the economy is in shambles. Today, I want to address the business perspective.
As I was preparing this post, I serendipitously ran across a column by Ed Wallace, host of Wheels radio show, columnist, and long-time authority in the automotive business. In his column titled “Yesterday, Today, and Tomorrow, Part 1″, Ed provides some analysis that fits between the “Shambles” post I wrote and today’s post.
Ed opens his piece
As long-time followers of this column may remember, for years in front of the financial meltdown I was reporting that the economy was not exactly as it was being presented. Today, we’ve been hearing for almost a month that the nation is slipping back into a second recession or worse, but that reporting doesn’t really align with facts that have been validated.
And later
Likewise, did anyone notice that after three and a half weeks of solidly negative economic predictions, often from the analysts closely aligned with Wall Street, suddenly the stock market posted its strongest gains in a year? That was the only signal we got of the huge disparity between the positions these entities were espousing from June 10 to July 3 and what they were doing with their own investment monies.
And then
This brings up the real question, that being the debate on government spending during an extended, widespread downturn in demand.
….
While it is true that excessive government spending kept the most recent downturn from becoming much worse, it has not returned full economic health and more normal spending habits to those families earning $50,000 or less a year. Additionally, keeping federal deficits massive does seem to fall into the category of “kicking the litter down the road” for someone else to clean up at some unknown point in the future.
For those demanding fiscal austerity, that’s exactly what individual states are being forced to do right now as they try to balance their budgets; and here we find this strategy’s downsides. Mainly, it won’t improve our overall economy anytime soon. The tough and sadly necessary cuts being made everywhere from New York to Texas to California will lead to higher unemployment (of good-paying jobs) fairly quickly. And the withdrawal of billions of dollars in state spending could further slow down the states’ recoveries for years to come.
I’m not going to tell you where he goes after that… I encourage you to read it yourself.
I’m not telling the rest of his story because I want to veer a different way here. I want to apply this to your business.
Can you make a case for cost-cutting in your business? Absolutely. Will cost-cutting make up for a lack of sales? Never. You can cut costs to a certain point but after that, you are no longer “lean and mean” but “starving and cranky”. Certainly, pick the low-hanging fruit of cost-savings in your business. By all means, give some attention to doing more with less.
But, more importantly, spend most of your attention on getting more customers to buy from you. The lion’s share of your efforts should be in marketing, creating value for your customers, and winning their business.
Why? Because you can’t save your way to increased revenue. But didn’t Benjamin Franklin say “A penny saved is a penny earned.”? Yes he did. And it is true… to a point. After that point, if you don’t have revenue coming in, you will be saving yourself (earning your way in Franklin’s terms) to bankruptcy.
Balance is that key here… but not a 50-50 balance. I would suggest you apply the 80-20 rule. Spend 80 percent of your available time and efforts on increasing revenue and 20 percent of your available time on cost-savings. When you do that, you get the best of both worlds.
What are you doing in your business to maintain that balance? Are you using a different formula? Is it working? Use the comments and fill us in.
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