Rieva Lesonsky has been one of the nation's foremost experts on entrepreneurship for over 20 years. The former editor of Entrepreneur magazine, Rieva is CEO of SMB Connects, based in Irvine, California, which helps connect corporations, organizations and government agencies with entrepreneurs. To ask her a question, sign up for her free email newsletter or have her speak to your group, go to www.askrieva.com.
Q: Whether we are officially in a recession or not, I'm worried about my business. Every day, I read about a company filing for bankruptcy or shutting its doors permanently. As owner of a small, three-year-old business, I'm concerned about making it through tough economic times.
A: For small business owners, the idea of surviving in a recession is daunting. Your immediate (and understandable) tendency is to pull back, sit still and wait for things to get better. However, that may not be the smartest thing to do.
Although it seems counter-intuitive, I believe many smaller businesses can actually prosper during recessions. But that won't happen if you're hiding in the corner waiting for the storm to pass.
1. Cutting expenses.
First, do what smart CEOs and business owners do during challenging times-reevaluate your business expenses. Look for waste. Find ways to spend less money. Get your employees involved in this process. A tough economy is a good time to rally the troops. Employees worried about their own futures tend to come together to help ensure a company's survival, and their jobs.
Remember even the little things count. Look at your newspaper and magazine subscriptions. Can you read the publications online? Are you using energy efficient lighting? Can you teleconference instead of driving or flying to meetings? When you travel, do you book budget-friendly hotels? Are you getting the most from your credit cards? Do they offer cash- back reward points or other benefits?
2. Reexamine your leases.
Though it seems drastic, it may be a good time to relocate. While a move costs money, many buildings have vacancies and building owners are eager to fill empty spaces. If you can get a good deal, it can more than pay for the price of a move.
Or try to renegotiate your current lease. Can you afford to buy a building? There are bargains out there, so look for properties in or close to foreclosure. A good real estate agent can help you identify these properties.
In tough times, nearly everything is negotiable. According to an article in the New York Times, even big box retailers like Best Buy are willing to negotiate on the prices of big- ticket items like computers and peripherals.
3. 'Hire' your customers, increase marketing.
Instead of hiding, this is a great time to make yourself and your business more visible. Participate in trade shows. Get involved in your community. You want to show the world you're not hurting-even if you are.
One of the best ways to drum up new business-in tough economic times or not-is to put your satisfied customers to work for you. Ask them to bring in new clients or recommend your work to others. Reward them for it by offering small discounts the next time they do business with you. Or simply ask them for testimonials you can use in your marketing efforts. (To build better customer relationships, a good software solution using CRM is a good way to go.)
In fact, marketing is truly key to your survival. Many business owners think that this is the time to lay low and cut advertising and marketing. Not so. Keep to your original budget, or even increase your spending in this area. Start making some noise. Since most other businesses are quietly riding out a recession, your message stands a better chance of breaking through and being heard.
Cory Treffiletti, president of a small advertising agency in San Francisco, chided businesses for cutting their ad budgets, observing that "Every experienced advertising or marketing person I know says the best way to build and maintain a brand is to spend money during an economic downturn."
Again, remember everything is negotiable. Since other businesses are cutting back, you're in a better position to negotiate for lower rates and better ad placements. It might even be a great time to test a new marketing message-one proclaiming the value of what you offer.
We're all concerned about rocky times when they hit. But you can't just live in the moment. Stay flexible, consider your options, make decisions quickly and don't panic. Of course, that alone won't bring you sustained success. Your company's growth is dependent on balancing the needs of today while you, in the immortal words of rock and roll lyricist Christine McVie, "Don't stop thinking about tomorrow."
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