2008 vs 2009 Budgets

One thought that has been circulating in my pea brain the past few months centers on the budget cycle of companies that typically takes place in Q4.

Are you, as a promotional products professional, planning 2009 based on your clients’ 2008 budgets?

This time last year (Q4 of 2007) companies broke into their respective management teams to define their budgets for the upcoming year (2008). I can assure you that in Q4 of 2007, a low percentage of companies across the country anticipated the depth of the economic meltdown we are currently experiencing.

My personal opinion is that things are actually worse out there than we can truly appreciate. Both companies and people are slow to respond to change (especially negative change), and many people during the past nine months have had a “wait and see” attitude, hoping things would get better. They haven’t.

Right now companies are finalizing their 2009 operating plans. Going into these executive planning sessions, their overall mindsets will revolve around fear, survival, cash preservation and cutting all non-essential spend.

For you and me and the rest of the promotional products world, it means that companies will be looking to take costs out of their budgets. Promotional product spending is classified as “discretionary” by many executives. It’s hard to justify buying $50,000 worth of logoed stuff while you’re in the midst of layoffs… that math just doesn’t work. Expect to see a serious review of historical spend within your accounts across the board.

Answer the following questions:

• Are you planning 2009 based on your client’s 2008 budget?
• How are executives going to alter their operating plans in 2009?
• Are you adjusting your expected revenue based on possible budget cuts?
• What are you doing to retain customers and market share?

I posted this topic for discussion on the New Economy forum. Click here if you want to read what others are saying, or better yet—sign in (or sign up) and post your thoughts!

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