Four Ways to Recession-Proof Your Business

It seems as though every day there is another discouraging news article about the economy. Small-business owners are more at risk than ever when their customers' purse strings are pinched. Although many pundits predict things will get better in 2009, your business might be struggling right now — leaving you worried about how you will make it through. Here are four business-saving tips for recession survival:

1. Cut the fat; build the muscle. Are your products and services working as hard as you are? Are you holding onto any duds out of sentimental reasons that aren't actually doing anything for your business? Analyze everything that you sell, and consider whether it is really profitable. If there are unprofitable products or services, cut them or at least stop spending your time and money promoting them. Instead, focus on the profitable portions of your business and add features and benefits so that they become more attractive to your customers.

2. Involve employees. In a small business, employees are just as aware of the economic pressures as you are. If your employees are wondering whether they will be laid off, it could negatively impact their work. They could become so stressed that they can't focus, or worse — they start looking for another job. To avoid either situation, be open and honest with your employees about the company’s status — but not without having a clear plan in place to tell them how they can help improve the situation. For example, if you need them to work 20 percent harder, write down exactly what that means for them. You may be surprised by how well everyone will come together in tough times — all it takes is actively and purposefully involving them. Don't make the mistake of complaining to them or sharing any feelings of hopelessness. Instead, come up with a plan, and be optimistic about executing that plan with employees.

3. Trim expenses. Analyze every marketing activity on which you spend money. Create a list that includes where you are spending (Google Adwords, magazine advertisements, newspaper ads, etc.) and how much you are spending. Now, in a third column, rank your activities in terms of return on investment (how many sales dollars each generates), and consider what would happen if you cut out the bottom 50 percent. This will allow you to cut back your marketing expenses without cutting down on the activities that bring you the most customers. Now, figure out how to apply 25 percent of the budget you just saved while doubling your return on investment.

4. Increase your marketing know-how. It is natural to hunker down and reduce your marketing during tough times, but that is actually the worst thing you can do. Rather, cut your marketing spending while increasing your marketing intelligence. Find ways how to better use the money you cut out in the previous step, and get a better bang for your buck in the process. For example, if you cut out a $500-per-month advertisement, consider spending $250 per month from that savings to pay someone to make sales calls. Some of the best marketing activities require nothing but time, including sales calls, press releases, e-newsletters, networking, asking clients for referrals and reconnecting with past customers.
Whatever you do, don't panic. Recessions come and go, and the businesses that make it through to the other side are often well-situated to out-perform their previous expectations simply because they were forced to take a different look at their activities. To quote a completely over-used but appropriate saying: When the going gets tough, the tough get going. Get going on your business, and you will reap the rewards today and tomorrow.
Virginia Ginsburg, MBA, is a business consultant specializing in small-business growth. She runs a number of small businesses, including a full-service marketing firm, Accordion Marketing. Visit www.accordionmarketing.com for more information.