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 For the longest time my approach or attitude toward recessions or economic slowdowns was to strengthen your own business and understand that during the worst of times there is always someone doing business. All I ever wanted was to be that business. I still believe that but with the rapid increase in gasoline prices and the stock market officially falling into a bear market (20% drop from the high), it’s time to perhaps readjust our thinking.

First, for all of the newer business owners, Recessions happen regularly. Actually, we have one about every 8 to 9 years. There has never been a decade without one. Having said that, we must also remember that all recessions do come to an end. The normal length of a recession is 1 to 2 years. However considering that housing and fuel are involved, the cornerstone of most economies, plan on this one to stretch to the 1 to 3 year time frame.

All Recessions have a few things in common: Businesses go out of business. I can’t make that sound any better but the trick is to not be one of them. (That’s the purpose for this piece.) Your sales will decline. BUT that doesn’t mean you will make less money. Many businesses make even more money because they cut the fat from their budgets. Credit will tighten up and your vendors will need to collect their receivables more diligently because they are afraid of the business failures and don’t want to be stuck with worthless debt.

That opens the first opportunity: Vendors need and worry about their cash flow, so now is the time you can negotiate much better terms for prompt or early payments. Even if you owe vendor money, don’t be afraid to ask for a discount if you pay an invoice early.

Next opportunity: When business is good people flock to open businesses. Many of these businesses don’t know how to operate during slow downs and these are the businesses that close first. The jerk that loves to advertise that they are the cheapest in the town will not be able to sustain any type of slow down and they will be gone. That means you have a little less competition to worry about.

Kenny Rogers, in his song the Gambler, said that “we have to know when to hold them and when to fold them.” That means cut your losses as early as possible. A great idea during good times might just be a dud during a recession. Another way to put it might be “when the horse is dead, get off it”. Your first loss is the best loss.

It’s time to refocus every employee toward sales and marketing. Making sales and add-on sales are the heart beat of a business during times like these. Everyone is a salesperson, from the high school kids, to the bookkeeper, to the person who vacuums the floor. Everybody is selling. Some times it’s as simple as pointing to a piece of merchandise in front of the customer and saying “did you see this?” It might just add an extra sale a day.

Think about how your customers’ attitudes have changed. They believe that every retail store is hurting because of the economy. Because of that, the “promotable” item is even more important.  Always have some type of special or promotion. This is also a great time to start sending out coupons. They work and more and more businesses are making them part of their marketing plans. Where would Bed, Bath and Beyond be without their coupons? But that’s only one of many. Make the coupon easy to understand and always have an expiration date.

This is also the time to reevaluate every expense you have. Expenses that work in strong times are extravagant during slow times. That also means be careful with your buying as well. Buy from companies that can fill reorders quickly. It is better to have a vendor inventory the extra merchandise than you having it in inventory. Inventory costs money. After all we do 80% of our business with 20% of our inventory. Let’s work to make our inventories more efficient.

Lastly, during normal business conditions we have 3 categories of customers: High End, The Middle Class, and the Economy Buyer.  The High End and the Economy Buyer stay intact but the middle of the road buyer leaves the middle for either The High End or Economy. Obviously, the Economy category increases more but High End Buyers also increase. That customer might not buy as much but feels more comfortable in the higher class. The problem that many businesses get into is trying to attract the Economy Buyer. That is a slippery slope to tackle because the competition is more intense. Many successful specialty retailers have traded up over the years into better merchandise for this very reason.

Be the best at something and customers will follow. Remember the words of my college Economics Professor who told me that when everyone finally accepts that we are in a recession is when the economy has already started to heal.  It might just be almost over but I’m not an economist. All I know is that there is always someone doing business and I want it to be you.

One more thing - again my readers have shared some wonderful ideas! Please visit the survey results to last week’s question about commissions. There are some great tips there to use in your stores. Thanks again to everyone who responded for sharing some strategies. I know you made me say “aha” and I’m sure they will do the same for you.