How are you going to spend your company’s money in 2009? With such a dismal U.S. economy, we all naturally want to hold on to every dollar we can. On the other hand, a bad economy means real opportunities for those businesses that have the smarts and the courage to take advantage of it.
If your company is on the brink of disaster, you naturally have to save every penny. But for those entrepreneurs who want to strike while the economy is cold — who are planning on taking advantage of weakened competitors and customers seeking alternatives to grow our businesses — the question remains: Which are wise expenditures and which are not?
So here’s Rhonda’s guide to where small businesses should spend or save money in 2009:
Hiring: Spend — The United States is leaking jobs like an employment Titanic. In just the last two months, nearly 1.5 million jobs were lost. That means there are incredible people out there looking for work, more willing to work for a small company than ever, at rates you can afford. In particular, look for salespeople who have their own contacts with prospects. If you’re afraid to bring them on as full-time employees, consider hiring them as contractors.
Rent: Save — There’s going to be a glut of retail, office, and industrial space available, so if your lease is up or you’re shopping for new space now, drive a very hard bargain. Even if your lease isn’t up but you’re having financial difficulties, try to renegotiate terms, especially if you never gave a personal guarantee on your rent. If your company goes under, the landlord loses everything. If you’re expanding, now’s a good time to lock in low rents. But since it’s likely that the commercial real estate market is actually going to get even worse, don’t lock in a long lease unless you get an amazing deal.
Marketing And Customer Service: Spend — In tough times, the first thing big corporations cut is marketing. As they reduce staff, they also cut down on customer service. That means you can steal customers away from them. Studies show that the companies that step up their marketing in tough times come out of downturns with significantly improved market share.
New Product Development: Save — Now’s the time to squeeze more out of the products and services you’ve already invested in. If you’ve got an existing product line that can be competitive in this environment, you need to get the most out of it you can. If necessary, see if you can create a lower-priced version of your current product/service without much investment.
Critical Technology And Equipment: Spend — If you’ve been using 15-year-old computer systems or 30-year-old equipment, you’re probably wasting time and money. Look for Web-based services with monthly fees so you don’t have to invest in infrastructure, such as equipment or technology staff.
New Furniture, Cool Electronics: Save — Cut out every frivolous or unnecessary expenditure. Go through every bill and see what costs have crept up. Make sure every dollar works for you. But keep up staff morale. Remember to find inexpensive ways to acknowledge, reward and motivate.
Going Green: Spend — Cutting out waste is not only good for the environment, it means more money for you to spend on critical business functions. Reduce energy consumption, streamline your processes and use less paper.
Reserves: Save — Budget now to save some money each and every month. Cash in the bank will make you feel more secure, help you get the credit you need when you need it, and help you survive any bumps in the rocky road in the year ahead.
Rhonda Abrams is the author of “Six-Week Start-Up” and “What Business Should I Start?”
