The Great Recession of December 2007 to July 2009 propelled corporations to slash spending. Not surprisingly, company-sponsored events were among the first expenditures to go. And the shadow of the major economic decline from nearly a decade ago still lingers today in the corporate event market.
“It was bad PR to be spending on lavish corporate parties in Vegas,” says Rob Roberts, CEO of Big 4 Party Rentals Inc., Novato, Calif. “Companies cut back big time, and the corporate side never flashed back.”
Event rental companies had to make difficult decisions to account for this loss of income, compounded by scaled-back budgets for weddings, festivals and other essential moneymakers in the rental industry. Businesses such as AAble Rents, Cleveland, Ohio, focused on short-term pain for long-term gain.
“We invested heavily in equipment throughout the recession until it hurt,” says Ramsey Duqum, CEO and owner of AAble Rents. “We knew the recession wasn’t going to last a lifetime and that when we came out of it, there would be a disparity between the haves and have-nots servicing the corporate market.”
According to Duqum, AAble Rents strengthened already solid relationships with tent manufacturers. “Because they helped us on price points, we got things for less than if the demand was higher,” he says.
The investment strategy paid off. “The corporate clients we kept, we serviced well without reducing our prices,” Duqum says. “We also garnered more corporate clients because our product was such high quality and other rental companies couldn’t service them.”
Although the Great Recession has been in the rearview mirror for eight years, dips in the economy will always occur. Event rental companies that heed the era’s lessons will be better positioned to adapt their businesses to survive, and more so thrive, during and after these bumps.
Such lessons include:
- Form partnerships and joint ventures with related businesses, but do so only after thoroughly vetting them.
- Avoid layoffs. Focus instead on creating a culture of creativity, teamwork and purpose to retain the talent you have.
- Even if you don’t have the capital to finance new equipment, you can still invest in other areas like business processes, marketing and customer service.
Research from Harvard University in Cambridge, Mass., supports this conclusion. “Companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession,” researchers wrote in a 2010 Harvard Business Review article. “Their approach doesn’t just combat a downturn; it can lay the foundation for continued success once the downturn ends.”