Small Business Survival Tactics in a Recession

[Hell Puppy]

I dont profess to be an expert, but I have ridden out a couple of these. I'll share some thoughts, would love to hear from others who have been through bad times as well.

Cash is king.

Watch your cash flow like a hawk. Not counting every penny where it comes from and where it goes? You better start counting. You may be living and doing business on assumptions that things are like they were a year ago. Dont wait til the bank account is dry to figure that out. Know how much is coming in and from where and how much is going out and for what. I cant emphasize this enough.

Do you have accounts receivable? Be less tolerant of late and slow pay. Dont let big accounts receivable numbers get you in trouble. In this business, that means beware when the sponsor or biller check is later and later.

When the shoe is on the other foot, protect your credit and your relationships, but if you have a NET 30, pay it at 30 days, not 15, 20, or even 29.

Beware of your credit card and credit lines. This is a credit crunch unlike we've seen before. I haven't experienced it yet, but lots of reports of limits being lowered and especially on business cards the companies are asking for fresh financials before extending large amounts of credit. Might be interesting in vegas to see what happens when Amex's with "no limit" are declined when trying to charge $5K+ per night suites.

Build your cash reserves. Only spend what you have to, postpone what you can.

If you have more than a handful of employees, good time to review salaries and positions and cut some dead wood. Look at your marketing spends and dump anything not working. Enhancing your sites, projects or products? Will it bring more cash? If not, postpone it. Can you automate something and let someone go? Do it. Sales budgets should be heavily commissions based, cut base, raise commissions. Upgrades that can wait, should would wait. Look for opportunities to optimize operations.

Analyze every dollar being spent like it's your last. Ask yourself, what happens if I dont spend this? If it doesn't bring ROI, dont do it. This is where the nerdy guys with 5 spreadsheets open on their desk all day long are worth their weight in gold. They cost money, but they will wring out more than enough to pay for themselves.

Strengthen your relationship with the people who bring you money. This is one area where you spend. Now is the time to treat them as a partner, especially the big ones. Call 'em, touch base, ask 'em how they're doing. Do they have problems you can help them with? Better yet, can you both find a way to make more money? This is my exception to the rule on sales people. Your sales people who do this well should be empowered and rewarded more than usual for bringing more business. And dont be afraid to spend on the customer. Taking someone to lunch in a down economy goes further than it does when money is falling from the sky for everyone.

Anyone have stuff to add? Differing opinions...?

[MRock]

break out the metal detector to find those jars I buried back in 2001

[Nymph]

I'll scratch your back if you scratch mine...the bartering system.

There are goods, or services that most any of us can supply, or need. If you know who does or has what that you need, you might be able to work out a deal for trade that would have normally cost you big $$

I know this has been going on for years, but maybe it will be used a lot more now.

[tony404]

I agree with all except booting people and putting people on straight commission. If someone has been loyal and did the right thing. Screwing around with their income at the worse possible time is not cool.
A guy I worked with had gone bankrupt and after I got to know him.He told me what happened. His family owned a trucking business, things got bad. He, his dad and brothers sat down and decided that they would not close til they found every employee a job. They had been loyal to them and they had to do the right thing. Well to do that it cost them, they had to take on a mountain of debt. I asked would he do it again, he said it was the right thing to do so he would do it everytime.

[gonzo]

Originally Posted by tony404

I agree with all except booting people and putting people on straight commission. If someone has been loyal and did the right thing. Screwing around with their income at the worse possible time is not cool.
A guy I worked with had gone bankrupt and after I got to know him.He told me what happened. His family owned a trucking business, things got bad. He, his dad and brothers sat down and decided that they would not close til they found every employee a job. They had been loyal to them and they had to do the right thing. Well to do that it cost them, they had to take on a mountain of debt. I asked would he do it again, he said it was the right thing to do so he would do it everytime.

It was the right thing to do.

He is a fine man and there are very few like him.
You should be honored to know him as there are many that would have bailed chalking it up to a lesson he needed to learn.

[LAJ]

Good stuff HP.

As someone who handles A/R, my patience has grown thinner as of late.

[tony404]

Originally Posted by gonzo

It was the right thing to do.

He is a fine man and there are very few like him.
You should be honored to know him as there are many that would have bailed chalking it up to a lesson he needed to learn.

I was, he was a true southern gentleman

[bluemoney]

I aint worried bout no economy!

Just hooked a deal man! Gonna make a "g" . . . . in one day motherfuckers!
Show me a motherfucker who can do that . . . . right here bitch!

And I aint sharing it with non of yall!

[helix]

3131 flashback

[gonzo]

Originally Posted by helix

3131 flashback

He moved to Charlotte....

http://charlotte.craigslist.org/w4m/878200768.html

[Hell Puppy]

Originally Posted by tony404

I agree with all except booting people and putting people on straight commission. If someone has been loyal and did the right thing. Screwing around with their income at the worse possible time is not cool.
A guy I worked with had gone bankrupt and after I got to know him.He told me what happened. His family owned a trucking business, things got bad. He, his dad and brothers sat down and decided that they would not close til they found every employee a job. They had been loyal to them and they had to do the right thing. Well to do that it cost them, they had to take on a mountain of debt. I asked would he do it again, he said it was the right thing to do so he would do it everytime.

All very admirable.

Remember we're in a dried up credit market though. Debt aint an option. How understanding are your vendors? Your landlord or mortgage company or other creditors?

It's all about survival. When it's this bad, you do what you have to do to ensure the business survives. Do you lay off 20% to make sure the other 80% still have a job? I would.