Surviving an Economic Downturn

Surviving an Economic Downturn

I wondered several months ago whether I would be among the first to feel the impact of an economic slowdown. I retail gift baskets, an item I perceived as a luxury. I also sell business opportunities, which I feared might be too expensive in a shrinking economy.

As it happens, my retail business has increased, as has the sale of business opportunities. People are looking for a supplemental income or a replacement salary after a layoff.

Of course, you never really know. Forced to face the possibility that things might get worse, I found ways to cut costs and add to my business security, regardless of what happens with our domestic turmoil.

Here are some cost-cutting tips to help you deal with economic uncertainty:

Minimize staff and maximize talent. One of my consulting clients recently encountered hard times. She offered two nonessential employees an extended leave of absence (with a promise to call them back when the economy improves) and replaced them with an answering service. I detest layoffs, but a company and its employees might not have a future without efforts to trim the budget. Job sharing is another option to across-the-board layoffs.

Cut back on advertising. After calculating my monthly advertising fees, I found that I could save more than $2,500 a month by reducing the size of print ads. I also negotiated better rates, reducing my expenses more than 60 percent. Wanting the smaller ads to remain effective, however, I added red ink for emphasis.

Learn new skills. Reclaim some of the tasks you currently pay someone to do. For example, I used to pay someone more than $400 a month to burn CDs and training DVDs for me. I also paid a printer to collate and staple information packets. Paying an employee to collate and staple cut my production costs in half.

Reduce inventory. Many companies overstock inventory in anticipation of a rush on product. Negotiate terms with your suppliers that allow you to purchase as needed with smaller minimums. That means you'll pay less upfront.

Review your policies and implement other cost-saving measures. I recently reviewed my worker's compensation, vehicle and office building insurance policies. Some coverage was redundant. While working with my insurance carrier, I also discovered that policies could be grouped for a multiple policy discount.

Use your credit to your advantage. Credit card companies want solvency and on-time payment. If you have both, call the credit card company and negotiate a better rate, or take your business elsewhere. Credit card companies are settling for pennies on the dollar because of the large number of defaults and bankruptcies. Work your credit history to your advantage, and keep shopping until you find the best rate.

Attempts to cut costs can add up to thousands of dollars saved every year. Choose carefully, and you'll be among the fittest survivors.