Rich Returns (article in Entrepreneur Dec issue 2008)
A few days ago, I spoke at a luncheon with approximately 500 local business leaders. I began with these words: “I have good news and bad news. The good news is you will have fewer competitors next year because many of your competitors will be out of business. The bad news is you might be one of those out of business. The bad news is you might be one of those out of business.”
I then showed them my local newspaper, pointing to the headline “Business Are Struggling”. I opened the newspaper and said, “I can tell you who will be in business.” I pointed to a full-page ad for a local appliance store. “I’ll bet money that this business will be here next year. Why? Because this business is advertising more aggressively than its competition.”
In previous issues of Entrepreneur, I’ve written about the importance of advertising and promotion. I’ve shared my rich dad’s lesson that when business drops off, many entrepreneurs listen to their accountant’s advice and cut back on advertising and promotion. That’s the worst thing you can do. When times get tough, your job is to promote more, not less.
Promotion is a six-week cycle. That means if I promote today, business increases six weeks later. Many businesses violate the six-week cycle. They promote for, say, four weeks, and because nothing happens, they stop. Two weeks later, there’s sudden increase in business. For four weeks, business remains strong. Then, just as suddenly, business drops off, because six weeks earlier, the entrepreneur had stopped promoting.
My rich dad’s lesson was to never stop promoting: Promote whether the economy is strong or weak; promote even when you may not have money. If you have no money, stand on a street corner at lunchtime with a sign hanging around your neck promoting your product or service. Not only will you meet new customers, but you might also save money on lunch, lose some weight and get suntan.
Obviously, it takes more than just promotion to do well. To be successful, a business also requires strong fundamentals and a desirable product or service. During tough economic times, though, even some good businesses fail; some businesses shrink and others grow. When a business closes, its customers migrate to the business that fights hard and stays open. Businesses that promote while others cut their ad budgets have a better change of getting bigger….even if the economy is shrinking.