Tuesday, April 22, 2008

Recession? Saving? Spending?

If you have not analyzed your business expenses in the past quarter, there is a maximum of 10% savings in your expenditures. This is not bad money, but it's definitely not enough to make you rich. The REAL money is in the top line.

You'd think most CEOs would know this, but I'm constantly surprised by the variety of attempts made to "save your way to success." It doesn't happen, and it's the ultimate in laziness. Trimming expenses is step one in a two-step process and will only solve 1/2 the problem. Increasing the top line is the second, and most vital, step.

From Robert Scoble's blog, Scobleizer, January 26, 2008: "Most people here believe we’re in the midst of a recession, which technically is two quarters of negative growth. There’s certainly many here who are gloomy about the future, but there is definitely lots of positivity too. I spoke with Steve Forbes last night (yes, that Steve Forbes) and he thinks that the doom and gloomers shouldn’t be listened to. He sees one quarter of bad news and then sees the economy coming back in the second quarter.

That second quarter is NOW. Again, people, we haven't yet had one quarter of negative growth... let alone two. I think the only recession we’re heading into is a media contrived one. So, spend lavishly on strategic investments. Invest in sales and marketing. Be wise... spend on any/all business development activities now like picking up those excellent sales and marketing people that your competitor stupidly fired. Yes, monitor and keep tabs on your expenses, but profitable topline growth will always trump expense cutting.

1 comment:

Anonymous said...

I think you're probably both right and wrong on this one - yes, the recession the media is presenting is probably primarily contrived.

However, the recession that we're running up on due to the housing/mortgage crisis is real, scary, and radically underreported.

I heard someone yesterday call it a "shameful national crisis the likes of which our country has never seen". Yikes.