Ten signs it is time to reinvest

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If you were on top of your game, you made some deep cuts to your budget in the first quarter of 2001 and got through the next three years in decent shape. Those who waited until 2002 to make those cuts paid the price. By 2003, most publishers were operating as lean and mean as they could get. Last year, most of us had turned the corner and were seeing business return to our operations, although it will be quite some time-if ever-that we experience the giddy highs of the "Internet bubble gift."

No matter when you made the cuts, they were painful. And publishers today (well into another recovering year) are loath to add expenses, especially in head count, unless they are convinced the economy will support the additional cost. So how do you know when it is time to reinvest or just plain start investing in your publication? If you can answer "Yes" to all of the following 10 questions (in no particular order) it may be time to open the purse strings.

1. Are your circulation efforts starting to show signs of momentum? If you already have paid circulation, you know that renewing subs and getting new ones over the last four years has been a tough challenge. Many publishers cut circ spending to save money and frankly decided to stop throwing good money after bad. If you see any sign of improvement in circulation, it may be time to spend more to get more.

2. Are your margins too high? Yes, that is possible. If your margins are in the stratosphere, it could mean that your investment spending is lagging this indicator. And you will eventually pay the price for this short-term luxury.

3. Are your employees not using all of their vacation days or at least a good portion of them? Are sick days up and hours longer than they were, say, three years ago? While the pain of making deep head count cuts is recent, the fear of adding to head count could cause some of your best-but overloaded-staffers to start looking elsewhere as the market for good talent returns.

4. Are the books of business for your salespeople too big? To keep good sales reps in place, many of us consolidated business in fewer reps to keep them whole. While it is always painful to cut territories, many reps are now managing too much business and not prospecting for new accounts. It may be time to take a really hard look at adding to the sales department.

5. Are you using old ad campaigns? Like our customers, many of us put a big-time hold on this area of spending; but there is no substitute for smart, fresh creative and the marketing dollars to support it. Period.

6. Are your service complaints up? My guess is yes. Whether it is from customers who complain that they haven't seen their rep in a long time, a subscriber who can't seem to get an answer to why his publication is delivered late or a larger-than-normal number of errors in editorial pages, you simply may not have enough people to serve your customer base.

7. Are new competitors starting to invade your turf? With investment capital loosening up, money is once again flowing into our sector ... and we all have niches to protect. It may be wise to consider that those features you cut to save money, the editorial growth plans you shelved or the risk you had once thought might be fun to take are now the centerpiece ideas of a new competitor's startup.

8. Do you have diversity in your work force? (This is a trick question. If your answer is no, you can count it as a yes for the investment test.) The demographics of our country did not stop changing when the economy went south. And new readers and advertisers-growth-must and will come from this change in the population. It is critical that we write, advertise and market to this opportunity with voices unique to them. Building a diverse work force is expensive, but it will pay off in the long run.

9. Do you wish your Internet operation was profitable? And if it is, is it operating at the same or better margin as your print product? Don't be fooled by naysayers. This is the future. Not that print will go away-that is ridiculous. But your Web sites are every bit as important to your reader and customer base as your print product. And for some, it is the most important way to stay in touch with industry news. These sites are only as good as their content and navigation. And good content, as we all know, costs.

10. Finally, do you have a plan for growth? There can be only one answer to this question. See items 1 though 9 if you need help.

Gloria Scoby is senior VP-group publisher of Crain Communications Inc. She can be reached at [email protected]

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