If you're not convinced we're in a recession, don't worry about it. You and Federal Reserve Chairman Ben Bernanke can confirm or deny in a couple of months. If however, you think it might be prudent to just assume it: good on you. It's often small businesses that bear the brunt of an economic slowdown, and are more susceptible to cracking in times of economic recession. Particularly prone are small businesses that haven't ever experienced an economy that isn't growing.
Here are a number of solid tips that can assist you, the small business owner, in weathering the recession, and profiting from a situation.
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Everyone's been to a Chinese restaurant with 120 items on the menu and wondered, "is their chef really b?" Think of your business - you should be good at what you're doing. Diversification is healthy, but spread your company thin, and your company will look like the confused Chinese cook - throwing everything together, hoping for the best, and serving an inferior product. During a recession, your company should focus on what it does best, what's most profitable, and what will further your aim of weathering the storm.
Cash Flow Management
Cash-flow is important. Even if your company is just starting, and you're prepared to lose money, attempting to grow and spending during a recession or economic slowdown, when money is tight and credit is more difficult to accrue is dangerous. Find ways to increase cash flow in and decrease cash flow out is. As well, transferring excess cash that your business might have to a holding company is a wise move that will protect you later.
Take On The Competition
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During a recession, you've got to expand, and you've got to expend more energy than normal to get growth. Do what you can to gain a larger market share - set yourself apart from the competition by offering special services and discounts, and ensure that your customer relationship management (CRM) program is in place.
Consolidate Your Base
Keeping your current customers satisfied is just as valuable, if not more valuable, than gaining a new account. Doing good by your customers will ensure their loyalty throughout the tough times, and as they grow, you'll benefit. Focus some energy on maintaining healthy and positive relationships with these customers, and as they succeed, you'll profit from increased sales.
Don't Stop Marketing
It might seem like a frivolous expense when times are tough, but reducing your brand visibility in such a case is signing away your business. During a recession, consumers and customers are looking around for deals, trying to maximize their buying power. This is a perfect time to take advantage and win new customers, by using aggressive tactics.
Why not approach old customers and woo them back?
Examine Your Credit
Small businesses loans disappear during an economic down-turn and interest rates are prohibitively high. Have you thought about your personal credit? If you have a decent credit rating, you might be able to extend it to your business. If your business accounts are in good standing, try to negotiate a lower interest rate on any out-standing loans.
Save Money on Business Expenses
Cut down on office expenses, such as furniture and supplies that aren't immediately needed. Installing compact fluorescent light bulbs are a great way to save on energy costs, and have the added benefit of being ecologically friendly. If your lease is up, you could try to re-negotiate with your landlord - if other companies are moving to smaller and more affordable spaces, you could use your status as a remaining tenant to have your rent decreased.
While these aren't fool-proof ways to recession-proof, they are good places to start, and have been shown to be effective in times past. Shifting fortunes and changing economic times are frightening, but an effective small business owner takes the challenge head-on, and her or his business will be the better for it.