Measures for small businesses to survive during an economic downturn.

A question was posted  by Chad Moray Chief Economist & Director of Economic Research at U.S. Small Business Administration,

What measures should Small Business take to weather this economic downturn?

 My reply was this:

 Spend smart. Spend your money with businesses that can refer business back to you. Create strategic alliances. Barter and partner for symbiotic relationships. If your vendor/supplier isn't a customer, find one that will be. A "yes" is a powerful bargaining chip. 

Rather than spending money on broadcast inch deep promotions, get very targeted on your customer base and make it personal. Face to face meetings, not mailers. Sweat equity has the still has the best rate on the market.

Look for new channels, and experiment with low-cost channels. Low margin sales are better than just plain low sales- keep your product/service flowing/ Then focus on that word of mouth referral business- take this opportunity to grow your market share.

No, I don't mean dilute your product lines or services... treat it as a "We're all in this together" promotion - maybe for a 90 or 120 day period, or get creative and keep the promotion until the Dow Jones hits XYZ number...

Whatever you do... do NOT skimp on your people!

"Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.”
- Andrew Carnegie

Do not overload your current workforce by not replacing people that leave - shame on that comment! Now is the time to enlist all your employees as your sales force, keep them happy - reward them for bringing in business and finding cost savings - If you can't reward them monetarily, reward them with time off. Enlist them for ideas.

Keep moral up! Have some fun low cost activities -Have a "Gas Prices are so high that ...." joke contest, Friday off for the winner.

Treat your employees well and make them part of the solution! Unhappy, overworked employees will only result in lost productivity and a mass exodus when there is an upturn.

Now- You do not need to hire full time mediocre employees to milk the payroll - there is a lot of executive level (currently unemployed) talent out there. You can leverage that to get high dollar talent to come in on an interim basis, you can negotiate for partial days with a revenue share. Take advantage of their knowledge, they want to work. Get a rock star and let them help grow your business so you WILL be able to afford them full time.

Wouldn't you rather hire 30% of a 100K seasoned talent that can hit the ground running and get immediate results? Or would you prefer 100% of 30K junior level talent that will have to learn all those valuable lessons on your payroll? Ok, that was a bit of a shameless plug. http://lilliantaylor-blackmon.com/welcome.pdf

Overall, the doomsayers are probably those who've never had to kill what they eat. It takes a little more creativity and effort, but spend smart, keep the faith, do the right thing and it will all come back to you.