Six Items Business Owners Stop Purchasing During a Poor Economy

Regardless of recession, inflation or a down stock market, businesses of all sizes make tough choices to keep profitability when times get tough. Tough decisions are made, and purchases are delayed or cancelled all together, sometimes even after having budgeted for them well in advance. Every business is unique, but there are several common expenses that many business owners choose to stop purchasing during a poor economy. Unfortunately, if you are selling any of these, it could impact your compensation as well.

1. New Equipment: Copiers, phone systems, computer systems and other IT related items are typically the first to go. Even though equipment is essential to long term growth, especially post COVID-19, it may be costly in the short term. Instead, business owners may choose to repair and maintain existing equipment to extend its lifespan.
2. Travel and Entertainment: Business travel and entertainment expenses can quickly add up, especially for companies with a large sales force or remote employees. During a poor economy, business owners may opt to cut back on these expenses, reduce incentive trips, discontinue in person meetings or cancel plans completely.
3. Marketing and Advertising: In a down economy, marketing and advertising are viewed as luxuries. Sure, they are a benefit to promoting a business and the return on investment usually makes sense. During a poor economy, businesses will take a close look at advertising and determine where cuts make sense in an effort to save money. It’s more than likely that companies will explore new venues such as social media or email blasts to offset cost but still maintain a presence.
4. Non-Essential Supplies: While businesses need certain supplies to operate effectively, there are many non-essential items that can add up quickly. During a poor economy, businesses may choose to cut back on things like office supplies, decorations, and other non-essential items to reduce expenses.
5. Training and Development: Businesses may also reduce their spending on employee training and development during a poor economy. While training is crucial for employee growth and retention, it can also be costly. Business owners may choose to prioritize essential training and development programs, such as those related to compliance or safety, while scaling back on others.
6. New Hires and Layoffs: During a poor economy, not only are businesses hesitant to hire new employees, they are also prone to layoff a portion of the workforce. New hires are particularly expensive as the costs related with recruiting, onboarding, and training can be extreme and the likelihood of new hires performing at a high level isn’t guaranteed. A company will delay hiring and offer flexible hours or reduce hours before choosing the option of layoffs.

Having seen multiple downturns in the economy over the past 25 years, the one guarantee is that these items will always be first to be eliminated. While these decisions may be challenging, they are often necessary to keep a business afloat. It’s important to prioritize essential expenses while exploring cost-effective alternatives for non-essential items. By doing so, businesses can weather the storm and emerge stronger on the other side.