Help your business survive the recession

January 27, 2009 5:06:20 PM PST
It's possible to have a thriving business in these tough economic times. Associate editor of Lindsay Blakely shares tips to help your small business survive a recession.

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 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:

    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 and Business 2.0 magazine.