Deailing With Economic Downturn For Small Businesses

CNN just keeps pounding away. Again and again, the big “R” word, Recession. Experts pose the question “Are we entering a depression?”, and other experts answer the question with full certainty.  All the time, their viewers grow more and more anxious.  In the end, people’s fears and anxiety and the constant news cycle almost make the downward trend inevitable, a self fulfilling prophesy.

I am not picking on CNN, all the news channels do it. And while they are stirring people’s fears, they are also capitalizing on the situation with huge advertising dollars.

An Honest Assessment

Make an honest assessment of your business. Take everything into account. Your budget, what projects or sales you actually have on your books and which ones you can honestly count on. What was last years sales for the first quarter? This is all information that you need to use to help you determine your projected sales.

Create a spreadsheet and compare the numbers. Project what your first quarter revenue is going to be. Is it going to be higher or lower than last years? If it is going to be lower, you need to find a way to make up the difference by either cutting your budget or upping your marketing.

Support vs. Sales

When tightening your belt, its best to cut from the support area. That is why you will see retail corporations cut corporate jobs before they cut store jobs. Why? Because the store jobs generate the revenue. Without the revenue the business ceases to exist.

I hate firing somebody as much as the next guy (although some of us seem to enjoy it, i.e. Donald Trump). But sometimes you have to shed some weight so that the whole business does not close and everyone, including you, lose their income.

Is a new computer a reasonable expense? Is it a necessity? Will having it increase your sales? If so, buy it, otherwise wait for a strong profit before making the purchase.

If your business is struggling, you have to have only essential personnel, stock and equipment. You can run the business on a skeletal structure. It may mean longer hours for you, but do not worry, it is not going to be long term.

Your Marketing Budget

Many business owners are tempted to cut marketing budgets in lean times instead of cutting back on other expenses. Its easier not to buy that ad or send out that mailing than let an employee go. However, in a lean economic time, it is imperative that your marketing budget grow, not shrink.

If you do not have customers, you will not survive. The only way to get customers is to make sales. The only way to make sales is to have leads or in store walk ins for retail locations. If the market has shrunk, you need more of the market share in order to survive, and dare I say it, prosper.

A Time Of Opportunity

The depression is famous for many things. Mainly, depression, fear, soup lines, and unemployment. But there is another little known fact about the depression that should be touted. More millionaires were made in that time period than any other time period in our nation’s history. That includes the tech boom and dot com era.

During the depression, there were men and women who were not faint hearted who laid it all on the line and went for it, they pursued their dreams when many people were just sitting around feeling sorry for themselves waiting for the government to “bail” them out.

They realized that as big business and small business alike faltered, opportunity was born. They went for it in the midst of the tragedy and it paid off huge dividends for them, their families and all the people they employed.

If you are facing a downward turn in your business, remember that your competitors are too. Businesses will close. People will be laid off, but at the end of the day someone is going to come out of the fray on top, and it minds well be you.