I was reading this great article in a national newspaper recently. And it's taught me a big lesson about the economy. Not about stocks or bonds. Not about interest rates, mortgages or exchange rates. I've been taught something much more important. Penny pinchers take note: we've got the best, no-guilt, tailor-made excuse for cleaning house. It's the economy! For example, a couple of surveys were done recently by some large human resources firms. More than 1,000 companies were asked about paying their employees. Forty percent of them plan to reduce amounts allotted to raises in 2009; 62 percent said bonuses will be smaller this year; and 25 percent are planning a hiring freeze. Another 25 percent are planning on increasing employee's contributions to health care. Pay raises are being cut. So are severance packages. Why? It's the economy!
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Another survey forecasts spending on technology to decrease by almost half than expected in 2009. Saks Inc., the luxury retailer, plans on cutting its capital spending from $125 million to $75 million next year. The City of Philadelphia is closing libraries and fire stations. My wife is cutting back on hair appointments to only twice a week.
Oh, and by the way, the number of companies doing holiday parties will fall to a 20-year low. Maybe they've been reading some of my columns about what a waste this is.
And everyone's accepting these huge reductions. Every day we're expecting to hear about more companies reducing their expenses. Employees seem to be taking the cuts in stride. They're just happy to have a job. Even my wife is learning to face adversity with a smile and a baseball cap.
Why? It's the economy! You know what? Recessions can be a pennypincher's dream.
Now's the best time to get rid of the deadweight. That guy in shipping who can't seem to remember how to load a skid properly twice in a row? Gone. The cost accounting assistant that seems really busy but you can never really quite figure out what she's doing all day? History. The sales guy who spends more time hitting on your receptionist than the actual phones? See ya.
Running a business is tough when you have to be the bad guy. Many of us accept mediocrity because we don't have the energy left to fight or fire someone ... our spouses and children sap it all out of us. But suddenly, like manna from heaven, God has brought upon us the best excuse ever. The economy! The Recession. The downturn. Aah! What a beautiful way to weasel out of our promises. It's the perfect rationale for making some long-needed changes.
And it's not just about changing the deadweight employees. You can feel comfortable getting rid of that 87-year-old cleaning lady who doesn't clean. You can call your key suppliers and beg for a cost reduction. You can call your phone company and beg for a little help with your monthly fees.
Everything's negotiable because everyone's skittish. No one wants to lose the business over just a few bucks a month. But a few bucks saved a month from a bunch of different places adds up to more money in the bank. And why?
It's the economy!
I'm blaming my baldness on the economy (the anxiety has caused my hair to fall out). I'm blaming my rudeness on the economy (these tough times are fraying my nerves).
I'm blaming this season's lousy "Heroes" on the economy (gee, they must have cut back on writers).
Pennypinchers, it's time to act and act now. We must get rid of underperforming people. Renegotiate contracts. Beg for price reductions. Lock in lower monthly payments. Plead poverty. Scream for assistance.
Why? It's the economy! Because in a few months the opportunity will have passed us. Things will turn around. The Dow will start going up. Prices will rise. Unemployment will fall. The sun will shine. And we won't have the economy to blame anymore. Rats.
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service and financial management tools to small and midsize businesses.