Okay, so we are in a recession. That feeling that we had in the Fall of 2007 when people began to talk about the failings of the economy, the upcoming burst of the housing bubble and the eventual slowdown that would soon follow has now turned into the worst downturn since the Great Depression.
So what is a small business owner to do? Well, first you want to remember that a drop in overall GDP will affect your business, but it likely won't eliminate your business. A drop in revenue of 20% while bad, should not destroy a healthy business.
The main goal is to come out of the recession with what you went in with. In other words, you want to keep your net worth the same. That means your assetts should remain stable as should your debt. Just keep it together and weather the storm. This is easier said than done.
Rule 1: cut out all dead wood early and quickly. If you have an employee who is not productive and will likely never be productive, stop carrying them along. The livelyhood of your good employees are at stake when you keep around a lousy one. Just cut your losses and drop them. They will have to adapt and become productive on their own dime, not yours.
Rule 2: Review every expenditure. Look for monthly recurring bills that can be eliminated. Ship things ground instead of over night. Turn down the heat. Cut off lights. Put off purchases until you really need them. (Never cut corners when it comes to serving your clients.)
Rule 3: Invest your time in revenue growth. Now is the time to reach out and get more business. Any idiot can make money in an up economy, but your prove your worth in a down one.
Rule 4: Stay up on the economic news. You want to know when the Fed meets and what they are likely to do. Pay attention to your interest rates and where they are heading. Pay off the high interest rates first.
Rule 5: Talk with your banker at least twice a month. Let them know good and bad news. Be sure they know what you know. Your banker likes knowing who you are and what you are doing. Right now, you need them and they need you.
Rule 6: Be honest with yourself. Don't fudge your income statement. Take and honest assessment of the business and how it is truly doing. Look at cash flow and pay attention to the little things.
You can and will survive this downturn. Like most small businesses, you are a dreamer and a doer. Lot's of people are counting on your success, not the least of which are your family, employees and clients. Just remember you need tough times to make it great.