This year many companies should be able to find some “extra” dollars around to reallocate. The question is whether they reallocate them to investments to drive business, funding for incremental COVID-19 related expenses that they would do “beyond” what was planned or seek to take it to the bottom line (and perhaps use to satisfy Wall Street).
The “extra” relates to “benefits” companies are now realizing through changes in travel and industry meetings (conferences and tradeshows). The funds that remained in the budget for conference registrations, hotel, air, T&E, tradeshow booths and promotions and similar.
Industry conferences such as NECA and various lighting conferences, NAED conferences as well as marketing group meetings have all been canceled (and are moving online) within the past two weeks. As have many end-user market conferences that manufacturers planned to physically attend.
Distributors also planned to attend industry and other conferences.
This represents discretionary funding that companies can choose to reinvest into the business, can use to acquire incremental COVID-19 tools (and there is some interesting technology being deployed and temperature check equipment that is available) or, if corporate “beancounters” capture to enhance the bottom-line (in operations / finance-oriented companies).
Attending webinars / virtual conferences is much less expensive.
In March / April companies recast their budgets and made financial adjustments. Many made headcount decisions, slashed travel budgets and other discretionary items. Decisions were made to ensure survival or acceptable profitability.
Additionally, for “smaller” companies that received PPP money, for some that money was critical to sustain operations. For many others, it is turning out to be a nice cushion. Many feared that business would be worse in April than it was (nationally) and that shutdowns and business as -30 to -50% (or worse) would last longer. It hasn’t. A percentage of profit, that would have normally been allocated to fund payroll, rent and utilities from current revenue streams can be reallocated to invest knowing that there is an interest-free, forgivable, investment. This is the reality for small to mid-sized companies that received small government loans. It was taken on good faith, and may still be needed given the fall uncertainty, but if you can use the funds to accelerate growth and forestall declines … it would be a good usage of resources.
And yes, there is incremental costs due to PPE and other COVID-related expenditures, however, … and this is well documented over the years, companies have never cut their costs out of a recession and research has shown that companies that invest during recessionary times come out of them sooner and at a higher level relative to their competition.
- Here are some postings we had in 2008 regarding recession marketing:
Not saying companies should over-invest if the were not seeking to be aggressive and saw specific opportunities or desired to take share, but the “windfall” from conference / meeting cancellations could represent some funding that can be reinvested.
Where to put the “conference / tradeshow” money?
Consider performance-driven promotions / initiatives, new sales / marketing hires, market research, market information, enhanced customer / prospect information, eCommerce investments and other technology, enhanced rep / sales incentives to capture share of mind, creative digital marketing, video snippets and more that are designed to give you customer insights and market information or enable you to differentiate yourself. While none of these may generate immediate results (defined as the next 30-60, maybe 90, days), they are all designed to support continued, sustained, growth that will help you thrive during in the COVID era.
Because you can’t cut your way to sustainable profits and growth. Reallocating conference funds can be a funding source to start.