|Business Tips for
Surviving these Lean Economic Times
Common sense belt tightening and re-prioritizing
combined with early detection can help a business
survive an economic downturn.
BY PHIL MENKE, REAP
SOUTHWEST/CENTRAL BUSINESS SPECIALIST
Yes, this business cycle is in a downturn; no question
about it. Despite the unending optimism of the roaring
’90s nobody managed to repeal the business cycle.
In every business downturn some businesses survive
and even thrive. What are their secrets? There is no
single magic “silver bullet.” Rather, their management
strategies are an incremental collection of common sense
belt tightening and re-prioritizing. They start with the
first warning signals. Thus they are prepared when the
down cycle turns most challenging.
○ Common sense strategies: First, look at that
“dusty” business plan you slaved over when you started
your business. You used it to sell yourself and your
creditors on your business. Use it now for clues to help
you adjust to the down cycle.
○ Look carefully at your financial data. How do
your actual cash flows match up to your projections? If
they don’t, analyze why not. Analyze current sales or
cash inflow patterns. Project these forward. See if they
still make sense. Also calculate a 12-month profit and
○ Analyze your credit balance. Often
entrepreneurs are top heavy on short-term credit. If
more intermediate and long-term credit will ease cash
flow imbalances, talk to your creditors. See if you can
shift some short-term debt to intermediate or long-term.
Often this move alone has a major impact on your ability
to “weather the storm.”
○ Interview someone with conservative financial
common sense. Call together a business advisory
committee made up of people with sound money management
judgment and business savvy.
○ Communicate with your creditors early, before major
trouble is encountered. Keep communicating.
Familiarize yourself with your business plan components,
whether financials, marketing and promotion, or short
and long-term goals.
○ A downturn in business climate is not the time to
retreat from aggressive marketing and promotion. Too
often marketing and promotion is considered expendable
in tough times. Just the opposite is true.
Become more innovative, cost conscious, and targeted
with marketing and promotion. Get more “customer
friendly” in ways that analyze your customers
Small rural businesses have a comparable advantage over
larger firms in this. Many have a customer base small
enough to interview individual customers about their
wants and needs. Take the time to sharpen your marketing
○ Analyze accounts receivable. If you have many
accounts in the 60-90 day category, you need to tighten
payment policy, politely but firmly and consistently.
Don’t let your customers use you as their banker.
○ Get deposits on orders, especially when you act
as a service provider on larger jobs. This helps when
cash flow is tight. You’ll have the cash flow to pay
subcontractors up front. For any small business, a
discount might provide enough incentive keep a customer
or land a new one.
○ Downsize or eliminate product lines or services
that are low profit, take up too much of your time,
and erode the economic base of your company. Do this
early. Slow product lines or services eat up management
time and capital and may not justify the sweat equity or
borrowed capital necessary to keep them.
○ If you are the boss, examine your leadership
ability. One option is to hire a competent
professional trouble shooter to provide an outside
review. This step can objectively appraise your
management skills to focus on primary leadership
○ Discipline yourself to bargain harder with
suppliers. If this is a tough job for you, get
assistance. Suppliers will bargain in tough times. After
all, they’re fighting for orders with other suppliers
getting the same pressure.
○ Commit yourself to the highest standard of service.
This is especially important during lean times. It alone
can make the difference, especially in small rural
Each business has its own set of people, resources, and
issues. Don’t look for a quick fix! There isn’t one. A
series of small incremental changes add up to a powerful
package for positive change.
Think positively. You can implement some of these
“lean” strategies to enable you to survive and even
thrive in tough times!