Contrarians in the Eye of the Storm

by VALERIE D. ROMERO :: OCT 30, 2008 :: COMMENTS (0)

Magazine racks are bulging with articles about where to stash your money, where to cut expenses and whether or not we're in an actual recession. When widespread pessimism about the economy abounds, the wise seek out opportunities and have planned for them well in advance.

A recent article in BusinessWeek heralds companies that had the guts to continue to spend on advertising during tough times. The article cites examples showing some of the most successful advertising campaigns of this century were launched during recession years. The idea is to stay top of mind during tough times when people are reexamining their priorities and looking for change. This is also the perfect opportunity to outshine the competition who may have reduced their marketing budget.

SmartMoney recently ran an article demonstrating how a down economy can be the perfect time to launch a business: less competition, lower rents, lower salaries, etc. It's one thing to write about it and another to take the risk of increasing spending at a time when sales are falling. The key is not to blindly wait for the bad times and simply increase spending, but rather to always seek ways to reduce unnecessary costs and create a reserve of cash. Keep this cash on hand for strategic spending opportunities and unforeseen business demands.

For Warren Buffet, the time has come to tap into his reserves and take advantage of depressed stock prices. As he said in a recent New York Times Article, "Be fearful when others are greedy, and be greedy when others are fearful."

So where does it leave those of us that are not Oracles? Simply put, create a long-term strategy based on sound principles. Plan in advance for thresholds that warrant change and make sure the flexibility is always there to do so. Budget for the riskier, strategic opportunities to advance the business and make sure you learn from them. If you really want to play it safe, you can always adopt the philosophy of one of my favorite leaders, Andy Grove, "Only the Paranoid Survive."

tags: ADVERTISING, BUDGETS, ECONOMICS, RECESSION

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