Joseph Hunkins

They don’t call 2008 “The Year of the Rat” for nothing. Although some small businesses will emerge from 2008 relatively unscathed by the financial turmoil, it is likely that most will be affected negatively as we move ahead into a recessionary economy and the perils of uncertainty in the global economy.   This period is likely to last at least 1-2 more years and could go longer.

Although new and great challenges are always coupled with new opportunities, my feeling is that the best small business strategy moving ahead is to cut your expenses as much as possible, assume the recession could last for several years and seek stability more than growth unless you can grow the business very inexpensively.   Rather than borrowing to grow, consider options where you can effectively monetize your own time and experience towards the longer term goals rather than take on more business development expenses (and thus usually more debt) as one tends to do in a normal business environment.

Following are a few examples: read more

As an internet and real estate entrepreneur, my business prospects are always in flux. So it’s still unclear how the current crisis will affect my businesses in the coming months, let alone years.  My priorities have shifted toward less risk and less reward, hoping to simply maintain some stability until good opportunities present themselves, as they always do whether the overall business climate is good or bad.

On the optimistic side, I agree with those who see this as a time of potential opportunity for flexible, clever businesses that will rise to the challenges by cost cutting and consolidation and then move into niches that have been occupied by less efficient entities that will not withstand the pressures of the coming recession.

However,  the only certainty in the current business environment is an unprecedented level of economic uncertainty.  Most businesses reading this post are from the USA, which continues to be viewed as one of the stablest and “safest” of the economic harbors. That is an advantage to some extent, but I think in many sectors we’ve begun to see a major shakeout.  read more

Most small businesses have yet to see the many problems that will come as weakness in the broader economy starts to ripple through all sectors, but barring an economic miracle we’re in for a very rocky ride.

Businesses that depend heavily on credit lines should look for ways to reduce that dependence as much as possible.  For example, consider discounts for payment at time of service and consider relatives and business partners as sources for short term loans, etc.   The condition of the entire global banking system is not clear at this time, but it’s very likely that credit will be tight for several months and perhaps longer.

In general, look for ways to run your business more efficiently.   With only a handful of exceptions your revenues are going to go down and profit is going to drop if you can’t cut expenses significantly.   Use this time as an extra incentive to run very lean and efficient - always an advantage in good times and bad.    Put off purchases that are not necessary and consider downsizing office space.   Keep employees realistically informed of their prospects and make it clear that productivity is of the highest priority in the coming years.

Bank failure?  Just follow the Hitchhiker’s Guide to the Galaxy.  (Don’t panic!) read more