Subscribe to Blog ContentYou have probably heard some variation of this quote: "Those who cannot remember the past are condemned to repeat it." The quote is attributed to George Santayana. In other words, if you don't learn from history, you're doomed to repeat it. It's OK to fail. That's how we learn not to make the same mistake again. Failure is not an option if you're not going to learn from what went wrong.
The New Yorker has a great story that looks back at the Depression. The story compares Kellogg and Post and how they approached ad spending during the one of the toughest economic times in US history. Rather than taking bad times as a time not to spend money, Kellogg pushed forward and spent more working capital on advertising -- in fact, Kellogg doubled the budget.
Spending More Money in Bad Times Helps
Why would this approach work better when people aren't spending as much money? People are still buying and you might as well as get ahead of your competitors when they do buy. Then when the economy improves, you're already ahead in the game and in customers' minds. Post had to backtrack to make up for lost time. Remember that during hard times, everything tends to be cheaper -- so it's a good time to buy what you need for your business and help it grow.
Many businesses continue to thrive regardless of the economy. The article goes on to say, "... numerous studies have shown that companies that keep spending on acquisition, advertising, and R. & D. during recessions do significantly better than those which make big cuts." The message is clear: "the strong get stronger, the weak gets weaker." So you need to have cash flow to make this happen.
Do You Fear Going out of Business More Than Cashing in on Opportunities?
Despite this valuable lesson and many publications sharing the lesson, business still act more like Post than Kellogg. Companies probably have a bigger fear of going out of business than missing opportunities. They also don't like facing uncertainty. So they play it safe rather than take the risk that could lead to faster growth.
Although many companies took a risk and blew their competitors out of the water, many companies also gambled during a recession and failed. So do you have an opportunity? Are you going to play it safe and risk slowing down business and growth? Or are you going to take advantage of it in hopes it'll take your company to a new level? You have financial options to help you get the cash flow you need to grow your business.
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