Recession-Proof Your Business

1. Don't be caught off guard if the slowdown hits your company. Prepare a worst-case, 12-month cash flow scenario and identify what changes you would make the when. Improve your management reporting to identify the leading indicators for your business.

2. Set and measure inventory targets and keep in daily communication with your sales and operations staffs. Contrary to what you would think, this is now the time to weed out unprofitable customers. Every company has them... they cost more than they add to your bottom line. Either evaluate how to make them more profitable or politely refer them to your competition.

3. To prevent attrition, keep in close touch with your customers. Show them that you care about them. Think about how their business is being affected because lasting relationships are built in hard times. Recognize that when the business climate changes, customer needs will change as well. That means that new markets may open up for you.

4. Develop strategies to land more customers. That means spending MORE on marketing... not slashing it to pieces. The successful small business is going to have to win a bigger share of the shrinking pie. The way to do that, especially for retailers, is to create a positive experience. Another strategy is to reach out to new residents in your community. They're going to choose someplace to buy their pizza, gym membership, and shoes. You want an active campaign that greets them and bonds with them.

5. Spend on hiring. Again, contrary to first glance, most economic downturns are short-lived and it's easier to invest in training time for new hires during slower growth periods. Employees that are fired during recession will have to be re-hired... which costs companies a lot more in the long run. Another strategy is to look around for people who have been laid off from competitors and pick up some valuable talent. This is a great time to find top performers (possibly for less!) who will help bring your company to the next level.