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For entrepreneurs whose businesses are less than eight years old, this is the first time they’ve operated in a recession since the previous one took place in 2001. But for business owners who’ve experienced other downturns, there’s a sense of security in that they’ve been through this before and will in all likelihood go through it again. Here are some suggestions from business owners who are no strangers to recessions about how to survive and even thrive when running a business in a down economy.
Don’t buy into the doom and gloom. “One of the really important things is to maintain your optimism,” says Carla Lane, CEO of Lane Staffing, a personnel company based in Houston. Lane, 36, was at the helm through the recession of 2001 and her company also felt the sting of lost business when Enron, one of their clients at the time, experienced its downfall. But “when you’re in business and you’re doing something that you love you have to remember that you’re doing this for a reason and whatever is going on right now is not going to last forever,” she says.
Reconsider every expenditure. Business owners are often passionate about what they do, which is fine, says Keith J. Davis Sr., president of Houston-based marketing and publishing company D-Mars Marketing. Having watched an economic downturn cost his company business after September 11th, as well as having experienced regional slowdowns after various hurricanes including Katrina, the 38-year-old Davis Sr. has seen business owners make the mistake of being swayed by their feelings more than the bottom line. “When you say you’re passionate about everybody and you don’t want to lay anyone off, at the end of the day you may lose your company because you’re running it with your heart,” he says. In bad times, “we have to do a reality check. If we’re not making money doing this, we need to stop doing this.”
Make use of downtime. Business may not be as steady as before, but that doesn’t mean you can’t turn this into a productive time. William Drakeford opened his first Drake’s Place Salon in 2000 and has grown his business to five locations in Southern Maryland despite the recession of 2001 and the current downturn. Though a down real estate market means businesses can get a good deal on office space, the 38-year-old Drakeford doesn’t recommend expanding right now, but rather using the recession as an opportunity to re-tool the business and make sure everything is working seamlessly. That means making adjustments to the business plan, looking for ways to increase efficiency and planning how you will expand when things turn around. “Look at every aspect of business from promotion to marketing to operation,” he advises. “So once this recession passes you’re really ready for it because your operations will be really tight.”
Become more relevant to current customers. It’s always easier to convince current customers to buy from you than to add new ones, particularly in a recession, so look for ways to target new product lines or services to your existing client base, Lane says.Â For example, Lane Staffing recognized that many of their clients didn’t need personnel services because they were cutting back “so we looked at what our skills were as a staffing company and one of those is taking care of payroll,” Lane says. “That’s one of the things we started offering to our customers. We were able to maintain by looking at our business and seeing how we could become relevant in this difficult time.”