Posted on 07/11/2010 9:21:47 AM PDT by Entrepreneur
Private enterprise is under assault in America to a degree not seen since the Great Depression. While Hollywood and the media attack business with rhetoric, the government uses rhetoric, regulation, and taxes. It doesn't bode well for those struggling to find employment, though it might present an opportunity for your company.
While the current recession may have technically ended, the recovery is anemic when compared to most other recoveries. It doesn't feel over. Plus, talking heads keep talking up the potential for a double dip recession. If so, the cause will likely be a result of the same reasons the recession endured so long … bad economic policy and "regime uncertainty."
Historian Robert Higgs is among a growing number of historians taking a fresh look at the Great Depression. He wrote in The Independent Review that regime uncertainty arose during the Depression because, "given the unparalleled outpouring of business-threatening laws, regulations, and court decisions, the oft-stated hostility of President Roosevelt and his lieutenants toward investors as a class, and the character of the antibusiness zealots who composed the strategists and administrators of the New Deal from 1935 to 1941, the political climate could hardly have failed to discourage some investors from making fresh long-term commitments."
It sounds like déjà vu. A Business Roundtable report, "Policy Burdens Inhibiting Economic Growth" warned that "Many regulations and legislation — both existing and proposed — exacerbate the uncertainty created by today's volatile economic environment. Virtually every new regulation has an impact on recovery, competitiveness, and job creation. Often that impact is negative. Businesses are acting cautiously to forestall any negative impact. These actions are squelching economic growth and job creation."
At the Baird Industrial Outlook Conference, Emerson CEO, David Farr said, "Washington is doing everything in their manpower capability to destroy U.S. manufacturers. Cap and trade, medical reform, labor rules. What do they want to do? Raise taxes. They're just going to destroy jobs. Jobs are going to be created offshore. They're going to be created in India and China, places where people want the products and where the government welcomes you. They actually do something."
Farr took heat for talking about the elephant in the living room, but was right. Verizon CEO Ivan Seidenberg, told the Economic Club of Washington that, "A new survey by Ernst & Young found that, whereas 48% of global investors saw North America as a desirable location for investment in 2006, by 2010 this percentage had fallen to just 22%. The most attractive market is China, favored by 39%. To quote the Ernst & Young study, "we’re competing for capital in a 'new multi-polar world' in which investors can shop the globe for ‘growth, talent, technology and productivity.'"
Federal Express' Fred Smith told the Wall Street Journal's Stephen Moore that, "The United States has a completely uncompetitive tax structure in general and it has a particularly onerous tax structure for firms that are asset-intensive."
Even the press is beginning to notice. "You've got nobody in the inner sanctum of the president's advisers who has ever run a business. And that's a real problem," said NBC "Meet the Press" moderator David Gregory recently. "The rhetoric and the policy substantively, a lot of people feel, is anti-business and getting to a point where it could really discourage businesses in the United States and certainly the multinationals working here as well."
Not being multinationals, contractors can't move off-shore or flee to Galt's Gulch. So what's your solution? Dave Chase, chief marketing officer for Altus Alliance studied companies that prospered during the Depression. He found, "Generally speaking, those companies that not only survived but also thrived during the Great Depression were those that continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised."
Ted Turner once famously declared the key to business success was, "Early to bed. Early to rise. Work like hell and advertise." That’s especially true today.
Let your competitors cringe. Ignore them. Ignore the news, market like never before, and prosper in spite of the economy and government actions (or lack of actions). That’s how you win the war on business.
Matt Michel is CEO of the Service Roundtable, HVAC’s largest alliance. The Service Roundtable helps contractors improve their marketing and reduce costs. Learn more at ServiceRoundtable.com. You can reach Matt by email at Matt.Michel@ServiceRoundtable.com or toll free at 877.262.3341. Get his new book, "The Power of Positive Pricing" at Shop.ServiceRoundtable.com.
In many markets, advertising is highly expensive. The people that run the advertising could do the country a favor and lower the costs of advertising and and make their profits in volume. In our business, it can cost from $6,000.00 to $10,000.00 a month to run a full page ad in certain magazines. In todays world, companies can’t afford that. Small business is strapped for advertising cash. Getting the word out about a product is key, I agree, but for a small business who’s back is against the wall, they have to hold off............unless something is done to help them and the advertisers can help with this.
Advertise when your a business person who is afraid to spend any further cash/money due to the continued idiotic anti-business and regulatory policies of this idiot-ridden administration? Riiiiiight.....
It’s expensive for me too. I spend 17% of my budget on advertising. I do a WHOLE LOT with PR and social media. This has take years to build, so there’s no quick answers, but try writing for the magazines. Try letters to the editor. Try creating a blog. Start building a following on Twitter, LinkedIn, and Facebook.
I’m building microsites right now because they’re cheap and can help drive traffic and impressions. I need to do more with YouTube, Slideshare, and some of the free article websites. I’ve had mixed results with podcasts and iPhone apps because of Apple’s censorship (hey, it’s their product and they can do with they want). I’m moving to the Android and we’re going to try building apps for it, which we see taking share from Apple.
Old media advertisers are unlikely to cut prices. They’re struggling. It costs $X for a page and they need advertising to support the cost of the page and the accompanying editorial. Still, you can request to be contacted for remnant space (i.e., unsold ad space that’s typically 50% off). The problem with remnant is it’s sporadic.
Consider classified display adds. For a publication that charges $6K to $10K, you can probably get a classified display ad for $500 to $800. Surprisingly, I’ve found that classified display can outpull full page ads because my ads tend to be highly targeted and people peruse the classified display when they’re interested in buying.
Regardless, build a press list and send something over week or two. Call these guys and ask them what they want. They do respond.
Don’t overlook direct marketing through mail or the phone. And don’t overlook the opportunity to speak in public. I speak at a number of conferences and meetings every year. Not only is this free (i.e., you’ll get travel costs picked up), but they’ll often pay you a fee if you’re any good.
You're right. You should quit and close down your business.
Yes, you can advertise and indeed sell more stuff and get more clients. In this environment, you can even show higher net profits. But the obvious problem is that as an individual you will not realize an increase in net income because of higher taxes and fewer deductions. In effect, the treadmill just goes faster and in some sense, it’s harder to get off.
Sheltering income will be the obsession of small businesses. Want to go on a vacation? Well make sure a big chunk is a business trip. Are your kids on the payroll-they better be and at Christmas time I think you might want some gold coins or some jewelry as a present (Junior makes $40k, pays little or no income taxes and gives you a $9k gift). Make sure that your office is decorated with fine antique furniture and some nice (but not too nice) paintings should be on the wall. Perhaps your business should diversify into a favorite hobby. One could start selling rare firearms, boats, coins, or whatever tickles you fancy as a side business. You can legally lose some money for a few years on such a business.
Sure, we will not give up, that is give it up to the socialist government.
Grump, I think you’re right. But this is already going on. Maybe we’ll see a little more of it.
It may seem like a treadmill, but I’ll run on a treadmill that’s getting bigger. The pendulum will swing and I’ll have a lot of momentum while my competitors who are hunkering down will be in my rear view mirror.
Finding the right medium to advertise in is a huge question mark. Newspaper readership is down. TV reaches more people than anything else, but it is cost prohibitive for many businesses and finding the right channel to advertise on can be another huge question mark. Radio advertising is less expensive, but to get a good deal, you find your company’s ads being run in the middle of the night rather than during rush hour. You have no time to reach a large audience on radio. Pick your poison.
I've found this to be the winning formula in my own business. I have watched competitors shrivel and die, simply because they didn't understand the simple principle of promoting their services broadly.
I tell people all the time, "promote or die."
Stop promoting your business and you soon won't have a business to promote. It's that simple. Advertise or die.
You may not be paying for glossy ads in some local magazine, but you're still getting the word out in some fashion. That's promotion, which is absolutely vital for any business to survive.
One factor you may have overlooked is how much more successful your business would be if you actually did advertise. A lot of business owners merely own their own job, instead of managing an organization of front line producers and leveraging their efforts into personal wealth.
It's a choice that all business owners have to make at some point. If you've been in business for 15 years, then your business reached a point about ten years ago, where it wanted to expand. It's a phenomena that happens to every business.
Lots of business owners don't recognize this natural expansion point when it comes, and continue to run their operations as they always have, not noting that by doing so, they're actually choking off the growth of their business.
One of the key factors in seizing that moment is the introduction of expanded advertising and promotion to help forward the expansion that is naturally occurring. In a case like yours, where word of mouth has been your primary promotion method, continuing to rely on that person to person mode of promotion probably kept your operation from growing larger at that key point in time.
All that being said, I applaud you for still having the doors open. Believe me, I know what that takes.
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