Yes, the economy is in the tank and will be for some time to come. Yes, the credit market is tight. I am hearing from several customers that all projects in their companies are frozen, even those projects that have a pretty substantial return on investment and a pretty quick cost recovery. There was even one project that was projected to generate annual savings of more than $10 million dollars that has been put off until after 2Q, 2010. The project was to start in January of 2009 and go into production by July of 2009. Let’s break that down a little bit.
The project was to go live in July, 2009, but has been postponed until July 2010. The projected annual savings of $10,000,000 will not begin to show results until the new projected go-live date of January, 2011 (18 months after the originally scheduled go-live date). During the eighteen months, the company could have been recognizing the results of $15,000,000 savings in operations – savings that would have gone straight to the bottom line. Additionally, even with a modest 3% investment, the company would have earned $450,000 on the $15,000,000.
More importantly, that money could have been used for research and development or for marketing activities that would have made the company more competitive. When the economy is down, buyers should think about how to use the money they have so that they get long-term benefits, recognize results quickly, and grow. For some more ideas on how to grow your business during a recession, please see this article.