This recession has been hard on everybody, especially the small business owner. For many, when they can’t make it on the top line, they have to reduce costs in order to make it on the bottom line. Advertising is often one of the first line items to go. The business owner may believe that they can save that money now and then plug it back in when times get better.
This article is not about the risks to a small business owner’s market share when they cut back on advertising. There are lots of studies that show that cutting back on advertising leads to market share loss. This article is about positive new signs that the economy in on the road to recovery.
Advertising is often a reflection of business sentiment. When negative, advertising spending levels trend downward. On the other hand, when business sentiment becomes positive, the advertising spending levels trend upward.
In hindsight, we can see that the seeds of the current recession really started to sprout in July 2007 when the financial problems at Countrywide Homes Loans became public. This is months before the government officially called this a recession. Advertising spending began trending downward around the same time.
While many traditional media continue to struggle with declining advertising revenues, radio finally saw some positive year over year revenue growth in January. This is positive news and a possible indication of improving business sentiment, especially on Main Street USA.
Advertising spending on Radio has been improving since July when it was down 25%. Advertising categories like financial services (+5%), grocery stores (+12%) and automotive (+9%) were up in fourth quarter. While retail remains mixed, brands such as Kohl’s (+37%), JC Penny (+23%) and Target (+9%) added to their radio spending in fourth quarter.
Home Depot and Lowes, the nation’s largest home improvement retailers, posted better-than-expected earnings in the three months ending in January. They said that they did not have to turn to discounts as much as they did last year, and that some customers splurged on higher-priced goods and services like carpet installations.
After more than a year of not spending money on their homes, consumers began refurbishing their kitchens and painting their living rooms in what appears to be the early stages of a comeback for the home improvement industry.
While the rebound isn’t robust and widespread, we are living in a recovering economy.
Now is not the time for small business owners to get cold feet on their business dreams. Now is precisely the time to dust off those old business goals and reevaluate those goals in light of the most recent economic news. Now is the time to make new plans to achieve those goals. Now is the time to start working on those plans every single day.
Remember this, more than half of the businesses on the current Fortune 500 list were started in a recession or bear market. They had no idea at the time that they would be successful let alone end up on the Fortune 500 list. They had a dream that they believed in so they risked everything when credit was tight, unemployment was high and the future was unclear.
They had a dream. They set some goals. They made plans to achieve those goals and they worked on them every single day until their dreams came true.
I am seeing an improving sentiment among the hundreds of small business owners I get to meet every month. They share their own personal stories about how they’ve been getting by and what they are planning for the future. There is still a little fear and anxiety among some small business owners but the mood is clearly turning more positive every day.
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