Tips for managing your business in a recession

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October 18, 2009

Anonymous The Meridian Star Sun Oct 18, 2009, 12:37 AM CDT

Although smart business strategies are important in any economic situation, the current weak economy makes sound business decisions critical. Your small business can take several steps to maintain your stability in the current economic environment.

Don’t panic. Don’t assume the sky is falling. Remain confident to employees and customers. With continued hard work, planning, and perhaps some tough decisions, you will survive.

Communicate. Share information about your positioning in the weak economy. Let customers, vendors, and employees know that you are on top of the situation and making changes to sustain your business.

Evaluate your budget. Identify how close your business is to meeting revenue and expenditure budgets. Calculate how much of a revenue drop your business can absorb and for how long. Review all expenses, and remember that any expense can be reduced over the long term.

Monitor cash flow. Monitor cash flow by updating your cash needs month-by-month. Also look ahead for up to three years. Consider renewing your credit line now, rather than waiting until the renewal date.

Don’t forget customer service. With much of your focus on the recession, be sure not to forget your customers. Now is a great time to review all aspects of your customer interactions, analyzing how best to convert those contacts into opportunities to enrich the relationships. Look at all of your business functions, including marketing, sales, finance, delivery, support, and service, to take full advantage of all customer contact points.

Add price points. While recessionary pressures may make you feel that you should cut your prices, try to resist. In most cases, doing so simply lowers your profits now and devalues your products and services in the future. Rather than lowering your prices, look for new ways to offer your products and concentrate on differentiation. For example, revise your packaging, reformat your products, or reconfigure your offerings to add more value.

David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.

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