Take a simple test:  What do YOU think?   The answer, I’ll bet was “I’m not sure.”  And if that’s right, then you are representative of the majority of America (and maybe a lot of other countries).

What do you do when you are uncertain?  You are cautious, right?  You watch your spending and keep it to the basics — the needs and wants that are modest, etc.  Well, there is your answer.  This recovery will evolve slowly, because there have been few recessions like this one — ever.  Because so many people, and companies (that are managed by people) are being cautious, spending will be cautious, reducing the likelihood of a fast, robust recovery.

Consumer spending is slowly coming up — but just a little.  That’s partly due to tax refunds and lower taxes due to investment losses; partly due to the “stimulus mentality;” and partly due to the moderate recovery of the stock market.  Corporate sales and earnings are still soft, and trailing last year.  They’ll beat last year come 4^th quarter because the 4Q last year was a disaster.

Corporate spending is also (want to guess?) slowly coming up –  just modest spending and just for the high-return or “absolutely necessary” items.

So what should you do now?  Keep being cautious.  It’s the only prudent thing to do.  But be on the lookout for opportunities.

I like a metaphor here to illustrate.  It is how surfers behave.  They work hard and paddle like crazy to get out just beyond where the surf is breaking.  Then they just “idle” out there, paddling around in place, making sure they are in position to catch the next big wave, but being cautious and choosy.  When they sense a big one coming, they paddle hard again to catch it at just the right point.

Then they ride it for all they are worth, hoping they can stay up on their board and not wipe out.  If it was a good wave, and they are skillful, they get a nice ride almost onto the beach, where they can …you guessed it… paddle hard to get out for the next wave and do it all over again.

This recovery will come in waves, too.  The companies that take good care of their customers, watch their costs and spend their resources wisely-on innovative new products and meaningful product improvements — will enjoy the ride on each successive wave.  The more the surfers do it (and do it right) the more skillful they become.  The ones who wipe out still have to paddle back out and try again.  The ones who succeed start looking for bigger waves to catch.

You see, business is not some magical process.  Someone develops a product or service that meets a need or a want, for which customers will pay money.  Then they produce and deliver the product (or service) and if they do it well, they get to do it again.  If they don’t, someone else catches their next wave, and they are wiped out-at least temporarily-and then they have to work even harder to get in position for the next opportunity.

Smart people try to learn from their mistakes.  They also conserve their energy (and money) to spend on the best opportunities.  My question for you is:  do you understand which opportunities are your most desirable ones?  Consider this question carefully because answering it correctly is the key to choosing the right waves and riding them the right way.  In metaphorical terms, can you recognize the good waves when they are coming?  And then are you skilled enough to ride them?

Work hard.  Study carefully what your customers value.  Stay close to customers.  Keep your eyes and ears open about what competition is doing.  Survey the environment constantly.  Then consider what you can do well-and actually deliver on consistently.

Those are the “waves you should choose, and the rides that will be good ones.”  Work within your resources (energy) and learn from each successive wave.  At the end of the day you’ll be tired, but happier.  After all, business is like a sport-where the score is kept in money and the prize is that you get to play again.

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About the Author: John L. Mariotti is President and CEO of The Enterprise Group — Time-shared Executive Advisors. He was President of Huffy Bicycles, Group President of Rubbermaid Office Products Group, and now serves as a Director on several corporate boards. He is the author of a number of business books on Partnerships, Marketing and Strategy. His latest book, THE COMPLEXITY CRISIS was chosen as one of 2008’s Best Business books. His electronic newsletter THE ENTERPRISE is published weekly. His Web site is www.mariotti.net.

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For additional information, see OPEN’s “Analyzing Customer Profitability.”

After one particularly painful business trip in 2007, when I found myself spending a shocking amount on food, drink, lodging, and transportation fees, I resolved to never fall into that trap again.  I sat down, took a serious look at my business travel expenses, and found several ways to

Flash forward one year.  In 2008, I took a nearly identical trip and found myself spending almost $400 less than before without reducing the effectiveness or enjoyment of the trip one bit.  That $400 wound up covering some design expenses that helped create a much more attractive public face for one of my businesses and has created lasting traffic.  In your world, $400 might do any number of things – buy advertising space, invest in infrastructure, or reach out to clients.

Here are eight simple rules for practicing effective frugality while traveling on business.

Plan around public transportation.  Before you leave, figure out how to get to your hotel using public transportation in the city, print out the route, and keep it with you.  Do the reverse for the return trip as well.

“Buddy up” at larger meetings and conventions.  If you already know people who are thinking of attending the same meeting you are, consider “buddying up” with them.  You can share hotel rooms and perhaps other transportation costs, plus you have someone to converse with during the travel.

Make lodging reservations directly with the branch you’re staying at.  Use web sites to identify places to stay, but before reserving a room, call the hotel directly before using the online reservation system and don’t hesitate to ask for a reduced rate while on the phone.  You’re likely to get a much better rate, particularly if it’s out of season, during the week, or you’re staying for a longer period.

Don’t spend a dime in the airport.  Throw a few granola bars and an empty bottle into your carry-on bag.  Once you’re through security, fill up that bottle with water.  Granola bars provide a great energy boost and water is the most effective way to keep yourself hydrated and alert.  Plus, the cost is minimal – unlike the tons of overpriced items in the airport.

Keep one day’s essentials in your carry-on.  This way, if your luggage gets lost on the way, you don’t have to derail plans (and often incur expenses with little benefit) in retrieving the items.  I usually tightly roll one set of business casual clothes and iron them when I arrive.

Drink plenty of water at meals.  When you go out to dinner and you’re served water before you order, drink the entire glass as quickly as you can while being discreet.  This will make you feel more full and cause you to order a smaller, less expensive, and often healthier meal.

Don’t drink too much.  Often, I’ll go out with associates and potential clients for drinks in the evening, and I’ve seen a lot of them drink far too much, say things they regret later, do things they regret later, and reveal things they regret later, all of which can be painful for a business.  Not only that, they’re often tagged with an impressive bill.  My solution is simple – I have a drink or two, but I usually alternate the drinks with water or soda that appears to be a mixed drink, but is much less expensive and keeps me from getting into a difficult situation.

Use conversation as your entertainment.  There’s no need to go out for entertainment while on business travel.  If you have down time, seek out conversation.  Meet with other people who are at the same meeting, for starters.  A worthwhile two hour conversation with an interesting and insightful person while nursing a single beverage is far more valuable and far less expensive than going out somewhere expensive or renting a pay per view movie in your hotel room.

Good luck on the road!

Growth should generally be a key focus for business but the current strained economic conditions mean that for many businesses simply keeping above water is a major challenge. Also, some recent examples of irresponsible behavior by corporate leaders have led to great concern among customers and a desire for signs that businesses are practicing *responsible growth* and long term, *sustainable* corporate architectures.

Responsible practices and long term growth have been great basic business principles for some time, but have become especially valued by your clients, customers, or prospective business associates given the current economic climate. Luckily for the small and medium sized business, responsible rather than reckless spending and adopting a long term rather than short term focus are likely to prove even more valuable now than before.

What kinds of expansion are justifiable?

Flexibility is extremely important when times are tough. It is justifiable to expand your business to be more flexible as you face uncertain challenges. Also, expanding for flexibility may allow you to capture or create new markets for your goods or services, or even develop new goods and services. Even as business in general has stopped the dramatic expansion of the last 10 years, the pace of technological innovations remains very fast. This creates both challenge and opportunity for you and your business.

Generally expenses related to significant quality enhancements and product improvements should prove justifiable even during challenging revenue times because they help protect both short and long term business prospects and help to build the long term reputation that is important to your success.

Another expansion focus can be real estate. In many areas of the USA as well as cities around the world real estate values for some types of properties have fallen dramatically and there may be opportunities to reduce lease costs or buy properties to enhance your businesses viability. A caveat here is that prices of commercial real estate in many areas have not fallen nearly as dramatically as home values, so all other factors equal this is probably not a great time to be buying commercial real estate unless the price is very right for you. It is a great time to renegotiate your leases and other real estate service arrangements. Rent costs in many cases do not reflect current reduced values and you should be asking your landlord to price according to those reduced values and the fact that vacancy rates are higher and rising, making you and other reliable renters even more important to your landlord.

Recalculate Risk and Reward:

In my view the best course of action has changed with respect to taking on risks. During the early 1990s many companies took on high levels of risk with large expenditures in an effort to maintain and increase market share - effectively to avoid being “left in the dust” by competitors who were also expanding business rapidly. Our own travel publishing business took this approach as we increased our staff many fold, from about 10 full time writers to nearly 100 at two additional office locations. Although this expansion followed a year of huge revenue growth, we also felt the pain of many when falling revenues could no longer support our large staff and infrastructure. Despite the current negative economic climate we are expanding again, but this time much more conservatively and with an eye to optimizing our time and resources rather than just using them.

Many new resources are already available or will become available to small businesses during these challenging economic times. As during the best of times using your resources wisely and with an eye to optimizing your return on investment are always important guidelines.

On one hand, you might be thinking that starting up your business in this economy would be a risk. On the other, you might be hearing buzz that the U.S. is beginning to come out of the recession, which would mean that starting up now would put you on the leading edge of post-recession confidence.

How do you decide what to do?

Regardless of when you start up your business - in a strong or weak economy - it’s important to be aware of the following 10 economic indicators and their forecast for the next six months.

10 Economic Indicators to Consider When Starting up Your Business

• Personal Income
  Personal income is down from where it was a year ago. However, it seems to be at the bottom and will increase slowly to the end of the year.
• Unemployment
  Unemployment is on the rise and will continue to be a concern, increasing from 9.4% today to nearly 11% by the end of the year.
• Outstanding Consumer Credit
  Credit card debt has been on the rise each month for several years. It reached its peak in January 2009, and then began a gradual decline. It has now reached a plateau and is not expected to alter significantly over the next six months.
• Housing Values
  The value of homes across the nation has, in general, seen a 15% decrease during the last year and a 32% decrease from the high in 2006.
• Inflation Rate
  Some good news is that the inflation rate has been stable and should not impact the economy adversely over the next six months.
• Interest Rates
  Over the next six months, interest rates are predicted to be stable at 3.25% for mortgages and loans tied to the Prime Rate, while consumer loan rates are expected to increase.
• Consumer Price Index
  Good news. The consumer price index is also predicted to be stable.
• Crude Oil Price
  The price of crude oil had significantly declined from its high a year ago (above $100/barrel). However, it has temporarily increased during the first quarter of 2009. Good news. It is predicted to decline again to an estimated $32/barrel by the end of the year.
• Gross Domestic Product
  The GDP shrank in the first quarter of 2009. However, the forecast is for a modest increase in the later quarters of this year.
• Dow Jones Industrials
  The Dow Jones is predicted to go down again this summer before rebounding during the winter.

Okay, so what does all this mean? Should you start up now or wait six months? Here are some ways to look at these forecasts.

1.  If you need to borrow money to start your business: Interest should remain at the current low rates but will continue to have stringent borrowing requirements.

• If you need to borrow against an asset (like your home), the value is probably at its lowest now and may increase by the end of the year (but not by much).
• Venture capital may be more available now because other instruments are not as profitable.

2.  If you need a large number of buyers for your product or service, it may be better to wait because:

• Currently, personal income is low, unemployment is high, credit card borrowing to buy consumer goods is restricted, and consumer confidence is low.
• However, income, confidence and credit card borrowing are all forecast to increase later in the year, so don’t wait too long.

3.  If your business needs employees:

• More potential workers will be available because of rising unemployment (perhaps at a lower rate) later in the year.

4.  If your business requires travel:

• Fuel prices are predicted to go back down later in the year.

Overall, most predictors think the worst is over and that the economy will be improving, albeit very slowly. While there are some signs that we are coming out of the recession, there are not yet enough signs to constitute a trend. Therefore, if you are woman entrepreneur thinking about starting up a business, the most important factors impacting your success are the answers to these five questions:

Five Most Important Factors Impacting Your Business Success

• Is there an adequate market for your goods or services?
• Is the market healthy enough to support your business?
• Are adequate resources available for your start-up (money, employees, and/or goods)?
• Do you have reserves or other resources to see you through the tough start-up months (or perhaps years)?
• Are you committed to your vision statement and business plan?

By giving each of these questions your full consideration, you will find out the answer to the most important question of all: Should you start up your business now, or would it be better to wait six months? In the current economic climate, the right timing can be your best indicator of business success.

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About the Author: Dr. Susan L. Reid is a small business expert and business catalyst for spiritually conscious women starting up businesses. She is the author of “Discovering Your Inner Samurai: The Entrepreneurial Woman’s Journey to Business Success.” To download a free copy of the Turn Your Business Dreams Into Reality Toolkit, which includes a PDF chapter of her book, go to Your Samurai Business.

Death to the Cubicle

You know that office real estate is a huge expense. Do some quick math on your cost per square foot. Now, get out that measuring tape and figure out your staff’s cubicle footprint. Add to that your IT infrastructure costs, your telecom costs, your power consumption, your other office amenities, your plumbing-per-employee numbers. Is that number ever going to be lower than buying a bunch of new laptops, some smart phones, and subsidizing your staff’s Internet and phone bills? You tell me. I’m betting no. Web commuting is here, has been here, and is your new savings device. One cow gone.

Location, Location, Relocation

While you’re at it, get out the atlases. There are better places to find your resources than in the senior team’s selected headquarters location. Places like Billings, Montana, and Pittsburgh, Pennsylvania, and Fort Wayne, Indiana have huge broadband infrastructure projects, better employee salary costs, and extra programs to promote business growth and related projects. This is the wired world. You must reconsider the “have to see them to prove they’re working” mentality. Moo.

Mainstream Marketing Spend

Okay, let’s not kill this cow, but let’s raise a few calfs to go with it. Internet marketing and social media lop a zero or two off any typical ad budget. As mainstream print, radio, and TV circulation plummet, restructure, and struggle to find their new voice, Internet marketing including content marketing, community platforms, and affiliate marketing (based on the cost-per-action model) are proving to be low-cost, targetable, flexible alternatives. You’re reading this on a blog, so I’m preaching to the choir, but go back and look at your company’s marketing spend, all of it. Make room in the barn for a few new little cows.

Management Challenges

All three suggestions require shifts in business process. If you have web commuters, policies have to move to “performance-based measurement.” Instead of considering someone effective because they’ve been in their cube for 9 hours, they now have to prove themselves by turning in work and making effective decisions. Collaboration while remote can be difficult without tools like virtual meeting software and VoIP tools, etc. You might want to take some of your savings and put them into implementing an internal collaboration platform, and put some into management consulting to shift your processes around.

Your senior teams and sales processes need to understand a whole new set of measurements for the Internet marketing space, beginning with the fact that all the numbers from online seem so much smaller. One reason they seem smaller is that they’re more accurate. Everything is measurable online, at least to some extent. Be braced to see differences in metrics like “reach” or “awareness” or “impressions,” and instead put your focus on “sales,” “leads,” “conversions,” and “engagement.”

As the economy’s turmoil pushes many into a risk-averse herd mentality, you have an opportunity to push forward in a new capacity by rethinking those sacred cows. There’s nothing sacred, and business books will be quite interesting in the next several years following this time in history. How will people be writing about your company?

This article is a preview of what’s to come in the new OPEN Forum.  You can see this article on the new Open Forum here. To see more new content and features – including the Connectodex^SM tool for business connections – go to beta.openforum.com.  Just use your Americanexpress.com User ID and Password to log in.  If not a Cardmember, you can still have access to all of the great content once the new site launches.

Sounds simple enough, right?

But I wanted to know if trade terms work in the real world, especially from the point of view of the company extending the trade terms.  So I asked John Mariotti, President and CEO of the Enterprise Group, and formerly the CEO of Huffy Bicycles.  He’s had a lot of commerce experience, both as buyer and seller.  Here’s what he had to say:

Question:  Why do sellers offer early payment discounts?

Mariotti: There are five reasons the seller would be willing to offer a discount to encourage early payment:

• Companies want their money.  It sounds simplistic — but isn’t.  Getting paid early is important in business.
• They want their money ahead of other people.  The buyer may not have enough money to go around.
• The longer it takes, the greater the risk that something happens and you don’t ever get your money.  The earlier you get paid, the less risk.
• It helps you from the perspective of working capital.  The more money you have in hand, the less need to find working capital from other sources.
• It lowers your costs of borrowing and can even substitute for loans.  The more money you get in hand, the less you have to borrow. This is important in times when it’s hard to borrow money or interest rates are high.

Question:  Is there ever a downside to offering discounts for early payment?

Mariotti: Yes.  Consider:

(1) Discounts cost you money.  Again, it sounds obvious — but discounts add up. A 1% discount for monthly invoices amounts to 12% interest a year.  A 2% discount, as some companies offer, would amount to 24% interest.

(2) Look out for the “double whammy.”  If you are having trouble getting a buyer to agree to a price increase, you might attempt to negotiate by offsetting the increase with an early payment discount. But the customer may squeeze you over price AND expect the discount — and still pay you later.

Question:  Are there any other advantages to offering early payment discounts?

Mariotti: Sometimes those who plan to sell their companies will offer early payment discounts to help reduce their DSO (days sales outstanding) number.  This could make the company appear more attractive to acquirors.

Question:  Now for the big question:  do early payment discounts actually work?

Mariotti: In my experience, many customers take the discount and still pay later.

If that happens, you may not be able to do much about it.  You can call them and try to jog the payment.  Penalties usually don’t work. You can try to charge the customer back to recover the discount, but then it becomes a confrontational negotiation and usually the penalty gets negotiated away in the end.

I’ve had the best response by going back to the buyer and saying “That wasn’t the deal we made. We’d like you to honor the deal you made.”  Sometimes that has an impact.

If you must go back to enforce the terms, the way to do it is to call and talk to a human being.  The second best approach is an email to someone you’ve previously spoken with, requesting them to intercede on your behalf.

Question:  What would you advise a small business?  Should they ask for early payment trade terms?

Mariotti: First I’d assess the situation. What is the prevailing practice in your industry?  Are competitors offering discounts?  Do customers expect a discount or not?

If you discover that a discount is expected, then a modest discount of 1% makes sense in most industries.

Some customers normally pay late –- so by offering an early payment discount you also are raising the issue of the time value of money up front.   And that’s a valid issue.

If the prevailing terms in your industry are to pay in 30 to 45 days, be sure to build that into your plans. Sometimes you build it into a price negotiation. You say, “Instead of charging an 8% increase, I’ll knock that down to a 6% increase and also offer you a 1% discount if you pay early.”

And always document the terms, even if just in an email exchange. If there’s a change in personnel at the other company, that documentation will be needed.

Question:  Is a discount of 10 days realistic?

Mariotti: 10-day discounts are usually not going to happen, unless the buyer has electronic funds transfer capabilities. The practical aspects of cutting checks and mailing them makes a payment in 10 days unrealistic.  Consider 15 days instead.

Question:  What about the situation where a small business is selling to a large corporation? Would you offer a discount?

Mariotti: No.  If I were selling to WalMart, my pitch would  be, “WalMart, you can borrow money cheaper than my company — why don’t we just agree on 15-day terms and I’ll reflect that in my pricing?  Otherwise, I have to borrow at a higher rate than you – and also reflect that in my pricing.”

Most large corporations are good for payment.  Don’t waste your cash discounts on the highly solvent companies, but rather on the companies you’re nervous about.

Question:  You’ve given a lot of advice.  What points would you like to close with?

Mariotti: I’d like to emphasize 3 points above all:

• It is always good to get your money sooner
• In case of noncompliance, fall back on the ethics:  “That’s the deal we made.”
• Beware of the double whammy, which is where the customer takes the discount and you still don’t get paid any sooner.

Thank you, John Mariotti.

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For information on the benefits of trade terms, see OPEN Forum’s “Managing Cash Flow with Trade Terms.”

Most advice to entrepreneurs focuses on what they should do: build a great product, assemble a great team, provide great service. All are “duhisms.” Unfortunately, many entrepreneurs don’t realize that there are things they should specifically avoid doing too. These are also duhisms, but somehow no one ever talks about them. Here is my list of the twelve most important things that entrepreneurs should not do.

1. Don’t worry, be crappy. Perfectionism, first of all, is an illusion. Nothing is perfect. Even worse, perfection stands in the way of revenue and truly learning what customers think because nothing is in their hands yet. When your product is “good enough” (but not “perfect”), ship it, and see what happens.

2. Don’t give out lofty titles. Just because a roommate was there during the drunken weekend when you came up with the idea for your company, doesn’t mean he should be CTO. Someday, you’ll need to hand out titles like director, vice-president, and chief whatever officer, so keep them in reserve. Until then refer to each other as “co-founders” and describe the area of responsibility: for example, “programming.” If your roommates aren’t cool with this, they’re doing you a favor by showing their colors now.

3. Don’t hire your family. The probability that your spouse or relative is the best person you can get for a job is 0%. The probability that people will hate working at company with spouses and relatives is 100%. The probability that one of you will have to go someday is also 100%. Never hire out of expediency. Always hire the best person you can get. This usually means not hiring your family unless you’re Jack or Suzy Welch.

   By the way, if you both hire your family and give them a lofty title, you are truly a bozo.

4. Don’t sweat valuation. This is easy for a venture capitalist to say, but your company is either going to die or make you more money than you imagined. Whether you have 10% or 15% and whether your pre-money valuation is $2 million or $3 million isn’t going to really matter. Do the math: 15% of $0 is $0, so stop negotiating, take the money, and build something that’s worth more than $0. Whatever valuation a venture capitalist offers you, increase it by 20% and counter her offer. This is just enough to show that you’re not a pushover, but not too much that it will prolong or blow up the negotiations.

5. Don’t believe venture capitalists. Having said that you shouldn’t sweat valuation, you shouldn’t believe venture capitalists. It’s not that we’re all liars—we just don’t finish our sentences. Rule of thumb: add “as long as things are going well” to everything a venture capitalist tells you. For example, “I am investing in your team” or “I will be there for you.”

6. Don’t create lofty forecasts that you call “conservative.” You know you’re pulling numbers out of the air. We know you are too. You know we know. We know you know. So why would you forecast the fastest ramp in the history of capitalism? (It’s more likely that I will play in the NHL than you will achieve $2 billion in sales in year four.) Just project $25 million in year four, and we’ll all be in agreement about your lie.

7. Don’t believe that the exception is the rule. This is called the Twitter Effect. It goes like this, “We’re focusing on usage and eyeballs like Twitter. We’re not that concerned about revenue right now. Look how valuable everyone thinks Twitter is. We’ll be just like that.” Twitter is the exception. Facebook is the exception. YouTube is the exception. There, I listed all the exceptions. Everyone else needs revenue asap, or you will #fail.

8. Don’t focus on partnerships. “Partnership, noun, a relationship between two parties that does not increase the profitability of either.” If your partnership doesn’t cause you to edit your Excel spreadsheet, it’s meaningless. Focus on customerships, not partnerships if you want to succeed. When you’re a big, dumb, slow-moving company, then fabricate all the partnerships you want.

9. Don’t build out your infrastructure. Sure, your conservative estimate is for a growth curve that makes Twitter’s look like a blip, so you need customer service, technical support, and racks of servers. I’ve never seen a company achieve even its “conservative” projections—I take that back: I’ve seen plenty of companies reach their overhead projections. The odds are that you’ll run out of money before you’ll run out of infrastructure.

10. Don’t assume you’ll ever raise another round. Most projected timelines should contain a event that’s called “This is where the miracle occurs.” A much better assumption is that no miracle occurs, it takes years of grinding it out to succeed, and you’ll never raise another dime, so you must reach profitability with what you already have. Miracles happen in movies, not startups.

11. Don’t compare your intentions to other employees’ results. Most people compare their intentions to the results of others. In this way, you’re never at fault or a failure. For example, you intended to ship on time, but the sales gal didn’t achieve her expected results. The effect of this is poor morale and chasms between people. You need to face the facts: you probably delivered less than you intended. Maybe others did too, but at least you’ll be more humble.

12. Don’t ask people to do something you wouldn’t do. This is the Golden Rule of business. If you wouldn’t fill out ten fields of information and provide a credit card number for a free password, don’t expect your customers to. If you wouldn’t work on weekends stuffing envelopes, don’t expect your employees to. If you wouldn’t invest in your company, don’t expect venture capitalists to.

Now sign here:

I hold these Don’ts as self-evident and necessary and proper to the creation of our company.
______________________ this first day of July, 2009.

If you’d like to read much more about startups and entrepreneurship, go here. Eggs photo updated by Peter Oneppo.

According to the Institute for Business and Home Safety (IBHS), about one fourth of all businesses that close because of a disaster never reopen. That is a startling statistic.

Consider what happened a while back to a local family business in my city. A carpet store that had been in business for thirty long years burned to the ground. Gone were thousands of dollars worth of equipment and carpet, plus two smaller businesses that were housed in the same building. Luckily the owners had plenty of business insurance to cover their physical losses. But they lost their most important business asset - customer records - because of failed back up systems. They thought they did the right thing by backing up their computer systems every night. But they forgot to test whether the back up would work. And it didn’t. Rebuilding their customer base will be tough and the long-term revenue impact is hard to measure. But you can bet it will be tough for them.

With disasters like hurricanes, tornados, fires, floods and terrorism, to name a few, it’s critical for small companies like yours to have a disaster plan. And to make sure the plan is practiced and tested to ensure there aren’t any gaps that could prevent your business from getting back to business. The SBA offers a quick disaster planning guide (pdf) to help you focus on the key issues to address.

For a home-based business, a disaster can be crippling. You could lose your home and your business in one swoop. Any small business owner can minimize the damage by simply having proactive strategies in place to deal with an emergency when it happens. When you consider all the disasters that could impact your business, it’s scary. What if:

• You arrive at your business to find it vandalized and all of your customer records missing?
• Your most critical employee becomes ill and requires an extended absence?
• Your computer hard drive (or network) crashes?
• You become the primary care giver for a sick family member?
• You become ill and can’t manage your customer commitments?
• Your business becomes inaccessible because of an emergency on your street?

What would you do? Would your business survive? What would you grab if you had to leave your business quickly? After the emergency, how would you communicate with your employees? Customers? How long would it take to get back to business as usual?

Without a disaster plan, you’ll have a harder time getting back to work. That’s tough to do if you have no plan for action and little money to move forward. The time to formalize a game plan for an emergency is before it happens. Do it now.

Are you prepared for a disaster? Have you encountered a disaster in your business? How did you deal with it? Please take a moment to share your tip or story for others by leaving a comment.

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About the Author: Denise O’Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O’Berry is the author of “Small Business Cash Flow: Strategies for Making Your Business a Financial Success.” Her blog can be found at Just for Small Business.

We asked Wharton lecturer and small business expert Robert Chalfin, about cost-saving strategies for small- to mid-size businesses. Chalfin is quick to point out that while there are no single solutions, there are numerous steps entrepreneurs can take to cut costs during the current recession.

“Think through the ongoing monthly expenses.” says Chalfin. “You could have a service contract you don’t need or can be reduced. You might have insured your computer equipment years ago when a PC cost $4,000 or sold some of the property that you continue to cover.“

Chalfin recommends reviewing your property and casualty insurance policies annually. Is your business properly classified?  Your business may have changed its focus since you purchased the original policy“ Invite, and insist, that your agent visits and tours the premises once a year,” he says. “Review your policies. Consider your deductibles and overall values. Do they represent today’s prices? Do you need business interruption insurance?”

Some other expense-saving strategies, according to Chalfin, include the following:

• Consider the utility of all employees as well as overtime payments. As a result of the slowdown in business certain positions and overtime payments may no longer be necessary or even needed.
• Review your health plan. “Do a little homework. Obtain competing bids every year, and don’t tell the insurance companies what you currently pay. Look at your deductibles. You may want to increase them. It may be worth it.”
• Ask for rent abatement. “If you lease your premises, ask your landlord about a rental abatement. Ask for some free months if you extend your lease.” Also consider if you can sublet any of your space or eliminate unneeded facilities when you renew your leases. “If you are responsible for common area charges these items may have declined. Inquire about these items as your lease may allow you to audit the landlord’s expenses.”

Chalfin is author of Selling Your IT Business: Valuation, Finding the Right Buyer, and Negotiating the Deal (Wiley & Sons, Inc.)

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For more information on cash flow management, see OPEN Forum’s “Managing Cash Flow through Trade Terms.”

In reality, the idea should be to focus on what gets you fired up in the morning. Running a small business is tough, and we all have days where it’s tough to face the day at all. But none of us would be running a small business if there weren’t some fire burning inside of us. The focus should be on what makes that fire burn brightest.

So don’t just sit around and whiteboard out what your core competencies are. Take a step back, look deep into your soul, and figure out what it is inside of you that burns the brightest. What is it about the business you’re running that gets you fired up the most? That gets you eager to start the day, and loathe to finish it because there’s just that much more that you can and want to do?

For me, personally, I love getting into fascinating discussions over important issues and trends. I’m one of those people who will discuss things into the wee hours of the morning and love getting out of bed to get into intellectually stimulating discussions that make me think. Of course, lots of people like that, but we’ve continually focused the business of Floor64/Techdirt on ways to leverage building more such interesting conversations. What more fun could we have?

Back in April, I went to the Mesh Conference in Toronto, and one of the great speakers was Jessica Jackley, from Kiva. She talked about her overall mission in terms of helping those who need microfunding — a truly amazing and compelling story. At one point, she made a comment that immediately resonated throughout the crowd:

“I’m not wealthy, but I feel I could retire on happiness.”

Find that element, and don’t worry about defining “core competencies.” You’ve already found them.