Help your business survive the recession | ABC7 San Francisco

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By ABC7

Wednesday, January 28, 2009

Tips for small business and at-home businesses:
As the recession deepens, it's going to test companies' resilience and savvy. Whether you're scrambling to adapt and looking for a lifeline, or searching for ways to take advantage of soft markets and weakened competitors, now is the time to learn how to play offense and defense to survive the downturn.

Here's a look at some common recession scenarios and the tactical maneuvers small businesses can use to handle them:

Play Defense
The Scenario: Customers are slow to pay, and unpredictable cash flow is disrupting operations.

The Tactic: Sell unpaid accounts receivable to a factoring company that will trade them for cash.

The Scenario: Insignificant assets are hogging resources - without a clear payoff in sight.

The Tactic: Keep the parts of the business that will help the company grow; get rid of those that likely won't.

Play Offense
The Scenario: Hard-sell or luxury-oriented ad campaigns are starting to sound tone deaf to recession-wary consumers. Some competitors are pulling back on advertising.

The Tactic: Increase communication with customers to show how your product can ease the difficulties they're going through.

The Scenario: Over-leverage consumers have less disposable income now that they have in past recessions.

The Tactic: Offer affordable and inconspicuous products that will give consumers a lift without making them feel guilty.

Tips for Larger Companies:

Defensive tactics include:

"Prioritize Your Debt" - Steal a page from the Chapter 11 handbook and follow strict priorities in paying debts in their order of importance.

"Re-Structure the Balance Sheet" - Refinance your debt by renegotiating debt terms or exchanging debt for equity to conserve cash - or even grow.

"Re-Balance Compensation From the Top Down" - When morale flags, use a sacrifice at the top to send a unifying message and keep a company's forward momentum.

"Use 'Factoring' to Stabilize Cash Flow" - Sell your accounts receivable to a third party that will trade them for cash.

"Price-Optimize For Your Best Customers" - Segment your core customers from the deal seekers and offer goods that will appeal to each.

Offensive tactics to encourage growth include:

"Land a Private Placement to Back Critical Investments" - Private investors who know your industry well are a better bet than the public markets, especially in this jittery economy.

"Lure Top Talent Away from Rivals" - The current economy allows for greater flexibility in salary negotiations. To lure a new generation, use online tools to convey your company's appeal.

"Draw Down on Credit (While You Still Can)" - Use your good credit if you have it. Pull cash from revolvers to have it on hand, so you can make other payments or pursue growth when your competitors cannot.

"Exploit Leadership Training" - Invest wisely in programs that will help you hang onto "A" players and prepare your company to rebound after the recession.

"Capitalize on Affordable Luxuries" - Look for market opportunities with small consumer pleasures - such as lipstick and coffee - that tend to pop during a downturn.

About BNET.com:
BNET.com suggests prioritizing your debt, by paying them off in the order of importance and re-balance compensation from the top to keep morale up. To grow your business during this time, BNET says it's a good time to lure top talent away from rivals. You can find more of BNET's tips below and here: http://www.bnet.com.

About Lindsay Blakely, Associate Editor BNET:
Lindsay is an associate editor at BNET, where she covers management, strategy, and work life issues. Prior to joining BNET, she was a reporter for FORTUNE.com and Business 2.0 magazine.