Former CEO shares how to tell if a company is going down
There are a few signs of a business in trouble...
Times are tough and keeping a business afloat can be a serious struggle.
Whether it's a small business or a large company, it isn't always certain that the business will succeed.
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Glenn Orsmond, a former Comair CEO, recently published a book, 'Crash and Burn', in which he shared his experience working with Dave Novick.
Novick played a major role at Comair and was an integral part of many of the company's successful ventures.
This includes the famous green airline, Kulula.
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In the book, Orsmond shares a very important lesson Novick had taught him.
While working together in the highly competitive airline industry, Novick shared that if a company ever stops spending money on marketing, then it is "a sure sign" that the company is going under.
For some reason, Dave’s advice about marketing spend being a barometer of a company’s health resonated with me. I never forgot this lesson and during my next airline project it served me well.
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According to Business Tech, a good example of this is one of the biggest companies in the world - Coca-Cola.
Even though they are a household name, they still advertise and market aggressively.
When was the last time you saw a Coca-Cola ad? Probably pretty recently.
The company spends over $4-billion (R72-million) each year on marketing to stay at the top of consumers' minds. It also helps strengthen the brand equity and new products quickly gain traction.
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Business Tech also states that the marketing budget is usually the first thing to go when a business is failing. If a business is trying to stay afloat, they will cut costs drastically and marketing is the most affected.
The result? It is a deadly circle in which a lack of advertising means less income and sales, costs get cut, and the cycle repeats until, eventually, the business has to close its doors.
The 2024 Marketing Budget and ROI Report published by Broad Media found that 40% of South African marketing professionals said their company's marketing budget is too small.
It might be easy to think that small businesses are the only ones who are not willing to put more into their budgets but large companies are also not allocating resources to the marketing teams.
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Main image courtesy of iStock/BrianAJackson