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Three Critical Mistakes Manufacturers Make During A Recession

By Barrett Riddleberger, Founder of Resolution SystemsWhat are three common fear-based mistakes that manufacturers tend to make during a recession -- and how you can avoid them?

During a recession, fear is in the driver’s seat.  On the retail front, fear keeps consumers from spending and drives the economy further into a downward spiral.  At the broader business level, fear fuels devastating decisions that can impact your firm’s long-term viability. 

Here are three common fear-based mistakes that manufacturers tend to make during a recession -- and how you can avoid them:

Mistake 1:  Cutting Your Prices

It can be tempting to cut prices to drive new sales, especially when others in your market are doing so.  But remember that margin rules the day.  Cutting prices can attract the wrong kinds of buyers and can create a precedent that is hard to overturn when the economy rebounds.  You may find your revenues shackled for years to come. 

Smart organizations maintain their price points, and protect their margins.  Many even gain market share during an economic downturn.  How?  Weaker competitors who fail to hold the line on margins may lack the resources to fulfill their orders.  Some may even be driven into insolvency and have to close their doors.  If you hold the line on prices, you’ll be fiscally healthier and better poised to step in and capture new clients when your competitors fail.

Mistake 2:  Cutting Your Sales Development Budget

Hiring and developing successful salespeople is rule one for staying afloat during a recession.  But far too often senior executives decide to cut sales budgets when times are tough.  The rationale is that they need to hold down costs in order to keep their doors open.  If your salespeople aren’t selling, though, no budget cut -- regardless of how steep -- can keep your company afloat.

Smart manufacturers remain calm and focused and leave the panicking to their competitors. Instead of cutting sales, they sell their way through a recession.  They take the opportunity to assess their team, retrain to build skills, identify high probability opportunities for new business and streamline their sales processes.  They also take advantage of the rich unemployment field to hire new talent. 

Whether you have a dedicated sales force of your own or use a network of representatives, the lesson is to invest. These are the resources that will help you keep your doors open.

Mistake 3:  Cutting Your Marketing Budget

If you want to sell your way out of a recession, even your best salespeople will need marketing support -- the “air cover” that helps them to soften the market and close sales.  Instead of cutting your marketing budget, focus on refining and retooling your marketing messages.  Promote the differential value your firm delivers and use testimonials to paint a picture of success.

Email campaigns, information-packed Webinars and other technology tools can offer a low-cost and effective way to stay close to your customers and best prospects during tough times.  If you do so, your company will be top of mind when the time is right for customers to buy.

Making the Right Choice

Ultimately, you have a choice to make.  Will you give in to fear?  Will you slash your prices, cripple your sales team, and decimate your marketing budget?  Or will you confidently invest in your business and sell your way through troubled times? 

Smart executives keep a laser-like focus on the future and keep their fear in check.  If you can do that, your firm can thrive and emerge from tough times stronger than ever.

Barrett Riddleberger is founder of the sales consulting firm Resolution Systems and is author of “Blueprint of a Sales Champion:  How to Recruit, Refine and Retain Top Sales Performers.” For more information, visit