For many small business owners and managers, a contraction in the economy seems a "black swan" event... a crisis so unusual and unexpected as to prove almost un-manageable. But, in fact, contractions (whether you want to call them recessions or depressions) occur regularly. And experienced managers and mature businesses know to apply a handful of common sense tactics for getting through the rough times.

Focus on Survival is Tactic #1

A first point. In a bad recession or a depression, your overriding objective may not be to grow your profitibility. Sure. Some firms even in a contraction do grow revenues or profits. But for many firms, surviving and staying healthy through the contraction represents the big objective.

That sounds obvious. But if your firm simply gets through this economic tunnel with its business model, balance sheet and brand intact, you'll have done a better job managing through the downturn than all of the investment and mortgage bankers, most home builders, and at least two of the American auto manufacturers.

And this is pretty significant. When the economy regains some health in, say, 2011, you'll be ready to restart growth and return to appropriate levels of profitability.

Tactic #2 is Stay Alert for Crisis-related Threats

A contraction comes with its own threats and problems. Competitors will flail and some will fail--very possibly screwing up your market in the process. Key customers and vendors may get into trouble. Probably, key employees and owners will, too. You want therefore to stay watchful for these risks and problems.

One helpful approach for starting to think about new threats to your firm is SWOT analysis. The acronym SWOT stands for "Strengths-Weaknesses-Opportunities-Threats." By brainstorming about new, crisis-related strengths, weaknesses, opportunities and threats all at one time, you'll typically find objectivity and thorough thinking easier.

SWOT analysis doesn't have to be fancy. Don't worry about the form of your SWOT planning--a sheet of paper, a notebook or a whiteboard all work just fine.

If you can't get yourself into the right frame of mind for performing this sort of analysis, consider reading a book like, "The Great Depression: America 1929-1941" by Robert Mcelvaine.

Tactic #3: Watch Out for the Big Bargains

Almost surely, you'll be presented with unusually attractive bargains during a contraction: wonderfully talented people needing employment, landlords willing to get creative about leases, vendors happy to offer great deals, and so forth.

Search out these sorts of bargains. Not too terribly far in the future, some businesses with hindsight will kick themselves for the great deals they passed on.

Gird for the Long Haul is Tactic #4

For many middle-aged and older business owners and managers, the systemic financial crisis that triggered this contraction means retirement savings have been halved. That sucks, obviously. And a period of denial, anger and grief is understandable.

Once one is prepared to accept the new financial realty, one should calculate what the decimated retirement savings means. Probably, for many business owners and managers, the decimation means one needs to work ten or twelve years longer than planned only a few short months ago. Be sure therefore to factor into your business planning the extra years you'll personally need to work.

Article Source

Small Business Planning Tactics For a Recession