Over the last year the US, once flying high, has fallen and face planted into a somewhat ugly recession. For people with steady jobs the fear is of course the dreaded pink slip. But as long as they can keep their jobs their paychecks in most cases will remain the same. For small business owners a recession is often felt in the pocketbook. With less people buying their goods and services their revenues and profit margins can start to sink. And it can be painful for a number of reasons. First many business owners have an emotional attachment to their business. When the business starts to flat line its hard to readjust to the new realities of your surroundings. If you are a restaurateur it might be hard to scrap plans for opening a new location across town even if the economic realties of the market make it clear that continuing ahead with previous plans is illogical. The second difficulty is that it’s hard to readjust ones life to deal with a lower take home pay. So while a small business might see a 20% drop in revenue that could translate to a 40-50% drop in profits. And while you might have lived on a smaller revenue 10 years ago it’s hard to go back to that. Living without regular out of states vacations is one thing going back to that point is even more difficult. And these somewhat harsh realties are what drive people to look for something, anything that can restore their business to its previous health and prosperity.

First I want to point out that in many cases advertising in a recession can be a wise move to increase market share and take advantage of a bad market. But at the same time we want to avoid the following type of thinking.

“Our revenues are way down”
“That’s horrible”
“Let’s spend a ton of money on advertising and hope we can put this behind us”

The problem is that the difficulty for this business is not that they didn’t spend enough on advertising last quarter. The problem is that we are in a world wide economic depression caused by billions of crappy loans real estate loans given out over the last few years. And yes everything is interconnected but putting out more ads for a local restaurant is probably not going to change this.

Ok so what is my advice for moving forward?

1) Cut Expenses that are not needed. Comb through your budgets for extras you added during better times but are not needed. Are you paying for cable in the break room that nobody ever watches? This might be an easy cut to make. If employees ask about these cuts simply state that during down markets you like to cut these types of expenses instead of cutting headcounts.
2) Insource. Basically if you have employees without much to do and you are paying people outside they company to do work you might consider bringing that work back in house. 2) Keep current advertising that is working. There is no reason to cut advertising that is generating business. Cut ads that are not working
3) Look for new inexpensive ways to increase business. Calling up past customers is always an inexpensive way to increase revenues. 4) Adjust

Number 4 is probably the most difficult but important. If ones business is affected by the recession (and most are) it might be a good idea to simply accept the possibility of a reduced monthly income for awhile. I am not saying people should give up on their business or not attempt to increase profits. But during a recession it might be a good idea to keep working to achieve higher goals but at the same time when you are doing your monthly personal budget accept the possibility that a weakened economy often results in less customers and lower revenue. This means if you planned on buying a new car or taking an extra vacation it might be a good idea to change those plans.

In the end by operating in a logical manner and accepting the current economic realty a business can survive a recession and hopefully be in a position to flourish once the economy recovers.

Ki lives in central Texas. His website provides a guide to Austin Real Estate it also contains a search of the Austin MLS and updated information on Mortgage Rates.