Manizesto

Should you axe your marketing spending in this slow economy?

Q&A with Beth Goldstein

With the economy showing signs of a possible recession, many small business owners are starting to feel the pain and thinking about cutting back. Should your marketing budget be on the chopping block?

I recently asked Beth Goldstein, small business marketing expert and consultant, and author of The Ultimate Small Business Marketing Toolkit, what small business owners should do about their marketing programs in these tough economic times.

Here’s what she had to say:

Manizesto: How can the average small business justify investing in marketing when money is tight and other expenses seem to soak up the budget?

Beth: There’s a huge difference between investments and expenses. Marketing and sales are definitely not expenses and should not be put in this category. They are investments toward growth and shouldn’t have to be justified any more than paying your employees or serving your customers should be. Good marketing is about meeting customer needs and providing value and are the lifeblood of an organization…neither an afterthought nor an expense.

Manizesto: The forth milestone you list in your book is about seizing opportunities. How can small business owners recognize good or bad strategic business opportunities, especially now that the economy has slowed down?

Beth: Opportunities are always related to customer needs. Therefore, good ones should serve the needs of your current customers or provide you with the ability to bring in new customers without risking the loss of your current customer base. For example, if you’re a graphic designer and you currently only offer print design work, a good opportunity might be providing web design services or another related service that offers value to current as well as prospective customers. You might want to partner with a company that provides complementary services to the same target market that you serve. However, beware of straying too far and offering unrelated services, perhaps opening a cafe, which might detract from the value, benefits and experience you already offer.

Manizesto: Large companies seem to have the advantage during tough economic times since they can find ways of cutting expenses that don’t hurt the day to day operations of their business, but most small businesses don’t have that luxury. How can the average small business owner learn to survive in a difficult economy?

Beth: Small businesses (which represent over 99% of all businesses in the US) need to be prepared for difficult times…because, like taxes and death, they can’t be avoided. While many small businesses run lean they need to be prepared in advance for the challenging times and make sure they have money and other resources set aside to survive these times. When they hit, it’s too late because small businesses simply don’t have a lot to cut.

Manizesto: What advantages do small business owners have over large companies when it comes to marketing? Many small business owners worry that their marketing efforts can never compare to those of big businesses.

Beth: Marketing is not about having expensive brochures or ad’s during the Super Bowl. Marketing is about identifying customer needs, meeting them and showing your customers and prospects the value you offer. You don’t need to have a multimillion dollar budget to achieve that goal. And, if you do need to spend a large amount of money to attract your customers you need to think twice before you get into the business. Marketing effort is entirely customer-related and smaller companies are more nimble and can change more rapidly, which can be critical during down times as well as up ones.

Manizesto: Is now a good time for small business owners to expand their product line or service offerings? Expanding might be a great way to offset the slow economy, but at the same time, is it wise to incur those costs when money is already tight?

Beth: Expansion is all relative to the company and industry. Some owners might decide that the time is right for an investment into their product offering, even if things are tight. Perhaps they realize that there are additional customer needs they could meet because economic conditions have changed. For example, a dog food manufacturer might offer only high-end products but realize that its customers’ disposable income during lean times creates a demand for less expensive dog food. This expansion into a lower end product might work in their favor for the long haul.

Manizesto: How often should a small business conduct research on target customers? Is now a good time?

Beth: Research on customers is ALWAYS a good idea. Nobody should wait until times are tight to understand customer needs since this is the cornerstone of every business. I highly advocate that all companies continually communicate with current and prospective customers to understand what their needs are and how they can meet them. They should study not only their customers but the changing needs in the marketplace so they’re ahead of the curve.

Manizesto: If business is already slowing down for a small company (as many entrepreneurs are finding right now), what specific steps can they take to keep from having a “Going out of Business Sale”?

Beth: This is a very individual decision. Companies need to look carefully at their product and service mix and check to confirm that what they offer makes sense and provides value. They might find they want or need to cut out a few items to focus on those products that offer a higher profit margin or greater value to their customers. Are their products ‘nice to have’ versus ‘need to have?’ Ideally, they’re all “need to have” and recession proof but if that’s not the case then this internal assessment is essential. Entrepreneurs could also look at their partners and suppliers and see if there is room there to make changes so the numbers work in their favor.

Manizesto: How can a small business owner put his investors at ease with the economy struggling the way it is?

Beth: Typically investors at small firms are friends and family and they hopefully have a strong enough knowledge of the person’s business to understand all the factors that impact that company’s success…and downfall. Everybody is impacted in one way or another during rough times and being taken by surprise because you didn’t plan for it is dangerous—-so make sure everybody is on the same page before the investment (even if it’s a few hundred dollars) is accepted. Honesty and open communication before and during the process is they key to successfully getting through rough patches.

Manizesto: Some entrepreneurs with seasonal businesses (e.g. landscaping) basically close up shop during certain parts of the year. Is it ever a good idea to temporarily close up shop because of a slow economy?

Beth: Seasonal businesses generally have off-season products or services they sell and they plan to do so in advance. So thinking like a seasonal business owner, all entrepreneurs should have a plan in place for when things go wrong and are slow. Closing shop makes it really hard to pay the bills and to keep loyal customers so I don’t advocate this as a strategy. Instead, when times are good plan for the worst of times so you don’t lose customers and future revenue.

Manizesto: And something we like to ask all small business marketing experts: What is the most hair-brained marketing tactic you’ve seen a small business use that actually worked?

Beth: Years ago companies like Half.com started using fortune cookies to advertise their website. It was very clever, not outrageously expensive and because they included a call-to-action (discount coupon) they could measure results. To succeed, small businesses need to think creatively like this (it’s not hair-brained but very smart). On a recent visit to my parents’ home in NJ, they ordered pizza from their local pizza parlour. When it arrived the pizza box not the normal plain box with the menu taped on top. It was an advertisement-full color- for a new show on one of the major TV stations. Clearly this was not cheap but it was different, eye catching and clever enough to make us read it (I actually stole the box from my parents and show it to my students now to encourage them to think outside-the-box.

Beth Goldstein is President and CEO of Marketing Edge Consulting Group. As a consultant, educator and author of The Ultimate Small Business Marketing Toolkit, Beth Goldstein has empowered hundreds of entrepreneurs and companies to create successful marketing and sales programs for their businesses. In addition to running her consulting practice, Beth oversees Boston University’s Online Certificate in Entrepreneurship (recently recognized by Fortune Small Business Magazine as one of the best e-learning entrepreneurship programs in the US), teaches Entrepreneurial Sales and Marketing at the Boston University School of Management and is the Instructor for the InnerCity Entrepreneurs business growth program in Massachusetts. You can email Beth or call her: 508.893.0976

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