The Recession Mistake That Cost Me $1.5 Million

There’s some chatter about what is going on to occur with the economic system based mostly on all the latest modifications. I personally suppose we’re heading for a growth and never a recession, however I perceive that some are nervous about what might occur.

I believed this may be a very good time to share my very own expertise on this subject. I have been in enterprise for 27 years, and we’re at present doing over $110 million in income. I’ve virtually 400 salaries to pay each week and haven’t any buyers or raised capital to fall again on. We’ve to make the income each week, no exception.

I’ve led this firm by means of two recessions and located one thing fascinating about my very own enterprise that will apply to yours as nicely.

Hear me out: a powerful economic system is nice, however a tough economic system calls for the same roadmap. So, do not cease your advertising and marketing or growth plans in anticipation of what might occur.

Let me clarify…

In 2008, I made a mistake that price my enterprise, PostcardMania, over $1.5 million.

In 2020, I made sure to not repeat that mistake, and we really ended up rising income 10% that yr.

At the moment, our financials are more healthy than ever. We went from averaging 5% annual income progress within the decade pre-2020 to averaging 17% annual progress post-2020, a 239% improve in progress fee.

I credit score plenty of our latest progress to creating higher choices when 2020 obtained powerful. Because of these experiences, I now really feel prepared to fulfill any economic climate, and I need that for you and your small business as nicely.

So, this is my expertise and recommendation on what you are able to do to really feel prepared no matter what might come.

Associated: How I Turned a Marketing Mistake Into $1 Million in New Business

Throughout the Nice Recession of 2008, I lowered my advertising and marketing, and it price me hundreds of thousands

For years, banks permitted high-risk mortgages to under-qualified residence patrons. When sufficient of these householders defaulted on their loans, it cascaded right into a housing market bust and banking emergency. The occasion triggered one of many worst recessions in U.S. historical past.

On the time, my enterprise closely relied on shoppers in the true property and mortgage industries — 46% of our income got here from these shoppers.

One in all my monetary advisors instructed that I cut back my advertising and marketing to protect money. I went towards my higher judgment and adopted this recommendation. The next yr was our worst financially. Whereas we solely misplaced about $150,000 in 2008, these losses ballooned to $1.5 million in 2009 due to the injury we did to our advertising and marketing.

By 2010, I raised our funds again as much as pre-crash ranges and even a bit extra to rapidly right the issue. Consequently, 2010 ended up setting a brand new all-time-high income document for us.

Associated: What I Learned From Spending $5.9 Million on Marketing Last Year

I corrected my mistake by advertising and marketing extra and advertising and marketing smarter

Once I corrected course and elevated our advertising and marketing, I additionally diversified it. I dove deeply into our firm knowledge to research the place our leads and income have been coming from — or as deeply as I may.

As a small enterprise proprietor who began out with zero funding, I did not have many instruments to determine this out, and worse, I hadn’t correctly hammered residence the significance of monitoring to my employees. You’d be shocked at what number of shoppers’ industries have been categorized as “unknown” once we clearly knew their business — we had designed postcards for them!

We turned to these postcard designs to inform us which industries have been shopping for probably the most from us and bringing in probably the most income. We discovered that, whereas we had beforehand been fairly reliant on the true property and mortgage industries, there have been dozens of various kinds of companies that have been shopping for direct mail from us that we had by no means actively focused.

So, to right my huge recession mistake, I not solely elevated my advertising and marketing, however I additionally began concentrating on new industries that have been confirmed to be patrons. With these two changes, our numbers rebounded and at last improved.

I swore to myself that I’d by no means minimize my advertising and marketing once more — and this was put to the take a look at 12 years later.

Associated: Don’t Slash Your Marketing Budget to Shreds in a Recession — Use These 3 Cost-Cutting Measures Instead.

In 2020, I saved my advertising and marketing steady, received leads from the competitors and completed the yr 10% up

The Nice Recession was fairly scary, however the pandemic of 2020 was even scarier in some methods. Companies have been closing left and proper due to the shutdowns, so a lot of them stopped buying from us, too. Our weekly income plummeted by a median of 41%.

The knee-jerk response was nonetheless to cease spending, however I had discovered my lesson, and I knew these price cuts have been NOT going to come back from my marketing budget. We drew funds from our financial savings to maintain payroll and advertising and marketing going.

It was a terrifying six weeks. Extra money was going out each week than we had coming in, and our reserves have been being steadily depleted.

However we not solely survived — we flourished!

Within the six months following, our leads shot up 9.24%, an extra 186 leads per week with out doing something in a different way. Whereas everybody else round me gave in and reduce, we stayed sturdy and saved going, and that allowed our advertising and marketing to be more practical than ever. It led on to extra leads and income for us.

Earlier than the shutdowns, we averaged $1.25 million per week, and after, we averaged $1.3 million. In spite of everything was mentioned and carried out, PostcardMania’s annual income was up 10% that yr regardless of the chaos.

It wasn’t straightforward, and sacrifices have been made, but it surely was price it as a result of in the present day we’re a lot additional forward than a lot of our opponents who did the other.

So, what am I doing proper now to be recession-proof? I am investing closely in my advertising and marketing and persevering with to broaden the components of our advertising and marketing that drive top-line progress. For those who’re involved in regards to the financial local weather, I extremely counsel you look into your advertising and marketing and shopper knowledge now so you can also make knowledgeable advertising and marketing choices to make sure you have the momentum needed to beat any recession.