The question going through a lot of business owners' heads right now is, "How much do I cut back?" There isn't an easy answer to that question. The problem is that expenses that aren't technically necessary to keep your business running are still part of a long-term investment strategy that is necessary if you want your business to grow. One example of that is marketing. One expert explained in an interview I did that if you just start cutting back on marketing, you lose momentum that can be hard to get back when the economy improves, so it might be a worthwhile investment in lean times.
Another example might be the office holiday party. The happiness of your employees is another investment that you need to be competitive. Many small businesses are finding the holiday party, as inessential as it might seem on the surface, to still be a worthwhile part of that investment.
A survey by SurePayroll from November found that six out of 10 small-business owners plan to do a holiday party this year, and eight out of 10 think they can afford it. Seven out of 10 are actually increasing the amount they're spending on the party compared to last year.
Even so, this is still most likely a down season for the office party. An October report by executive search firm Battalia Winston Amrop found that the number of companies planning some kind of celebration is at a 20-year low. It's at 81 percent, their survey said, which is even worse than the season immediately following 9/11, as well as the season during the recessions of 1991. What's more, 37 percent of the companies surveyed say the economy is impacting their parties in some way--either by forcing them to cancel them, or by forcing them to make them more modest. That's double the 19 percent affected in 2007.
Gayle Kestan at Business Know-How suggests that at the least, holiday parties should be pared back in scale this year, "out of respect for those who were laid off." The Washington Post reports that many businesses in the D.C. area are doing just that. One party planner says that a large corporate client of his went from a large, themed bash with tons of decorations last year, to a small low-key gathering this year.
Cutbacks--or having no party at all--risks sending the wrong message to one's employees. It could make them think that they need to start putting one foot out the door. The Post article quotes another party planner, who says that "when staff gets a company e-mail saying the party is canceled, the first thing they think is that things must be pretty bad. It confirms their fears about job security." That means that your attempt to save some dough could cost your company even more through decreased productivity. People don't get much work done if they're shopping resumes.
For example, the Battalia Winston Amrop survey found that alcohol is one party expense that is often put on the chopping block. Seventy-one percent of the companies they surveyed are offering alcohol. In the bright economic times of the year 2000, that number was up to 90 percent. But employees are definitely going to notice if alcohol is missing from this year's party if it was there in previous years. Such a blatant cutback might be the perfect way to send the wrong message.
What's the alternative if you need to save money for this year's party? SurePayroll's report suggests "out-of-the-ordinary parties, like pie-eating contests, bowling, or casino trips. If you do something inherently fun, you can save costs while raising morale.
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