Small Business Survival Strategies for a Recession

There are clear signs that the U.S. economy is going into a recession. The Dow Jones Industrial Average is down substantially from its 2007 highs and commercial and investment banks or writing off billions in sub-prime loan losses. In addition, the U.S. Federal Reserve Board has already cut its Federal Funds Rate this year (the rate at which banks borrow from each other) by 125 basis points (1.25%), which indicates that the Federal Reserve is trying to stimulate growth in the economy. Also, many publicly traded corporations are missing their Wall Street earnings forecast. Given these signs, businesses must quickly adjust to a recessionary environment in order to survive.

So what is a recession? The Federal Government considers the U.S. in a recession when it experiences two consecutive quarters of negative Gross Domestic Product (GDP) growth. However, on a more practical basis, a recession generally refers to a slowdown in business activity and consumer spending.

So how does a business survive a recession? Here is a list of small business recession survival strategies:

- Review and upgrade the controls surrounding your small business to avoid any financial improprieties.

- Increase your advertising budget, but only use advertising vehicles that have worked for you in the past. This will ensure that you will receive an adequate return on your advertising investment.

- Offer aggressive sales and discounts to your customers in order to encourage customer loyalty.

- Review your business expenses on a daily basis and reduce your costs where appropriate.

- Focus on providing superior customer service. Keeping your existing customers is a critical objective during a recession.

- Brainstorm creative ways to increase revenue and reduce costs everyday. Make brainstorming a part of your daily routine.

- Increase the number of hours you work on your business, especially working on your sales and marketing efforts.

If you find yourself in a situation where you need help with your business, there are some very good online resources for small businesses. Here are a few.

- Small Business Administration (www.sba.gov) - Provides tools and resources for small businesses.

- South Beach Software (www.southbeachsoftware.com) - Develops small business growth and recession survival software.

- Score (www.score.org) - Provides free small business advice provided by over 10,500 retired business executives.

Recessions can be a scary time for small businesses. However, businesses that recognize the environment they are operating in, and quickly take aggressive actions, can survive even the worst of recession.