Take the example of GPS insight, a business providing truck companies with GPS tracking devices so they can monitor their vehicles and ensure drivers are being productive. While many competitors focused on simply trying to ride out the recession without bleeding too much money, GPS Insight invested heavily to innovate their product.
“We took every available dollar there was and rather than hoard it, we spent it on development, on inventory, on new customer acquisitions and on advertising,” said Robert Donat, the company’s founder and CEO.
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During the recession years, GPS Insight increased its advertising budget tenfold, turned the number of computer servers to 60 from two and doubled the number of product developers working at the company, all while refusing to lay off any employees.
As a result, they were able to market to a wider audience, participate in many more technology conferences and continue to update its product based on feedback from consumers.
Donat says the company’s customer base has expanded significantly, and the budget for 2011 is 10 times what it was the year before. Perhaps most impressive of all, GPS Insight made it onto this year's Inc Magazine’s list of the 500 fastest-growing companies.
Ultimately, what led Donat to invest more in his business was not a faith in the future of the economy (which he still thinks is in trouble), but rather a belief that customers would continue to need his product in a bad economy, perhaps even more than in a good one.
While this belief worked out for Donat, some experts urge small-business owners to be more cautious with their investing during tough times and avoid putting every dollar on the line, as Donat did.
“I think that in a tough economic period you need to be more careful and do more testing, so maybe you won't go ‘all in,’” Schoenfeldt said. “It’s about baby steps. As one of my close entrepreneur friends says, ‘You aren’t lost until you run out of gas,’ and in this case, gas is cash, so you need to watch your cash flow.”