How to Benefit From an Economic Downturn

The dollar is weak, unemployment is on the rise and businesses are closing their doors. All of these events are signs that the economy is on a downward trend, more commonly referred to as an economic downturn. Even with all this bad news, there is a way for your business to benefit during this period.

Difficulty: Moderately Challenging

Instructions

1. Refocus your business slightly towards service and away from sales. Change to repairing merchandise as opposed to selling it. Recognize buying is not a priority during economic downturn. This translates across many different types of businesses from clothing to furniture.

2. Concentrate on services relevant to customer needs. Switch from building wealth for your clients, to financial services more useful during a time when everyone is losing their jobs like managing or getting out of debt.

3. Provide less expensive items in retail. Increase your stock of less expensive items and decrease your stock of luxury and specialty items. Luxury items are the first to go when the economy takes a nosedive and people begin to lose their jobs.

4. Incorporate Just in Time Management. This saves on the cost of having inventory overages, which includes shipping costs and storing inventory.

Tips & Warnings

• Keep your relationships with existing customers close. They are feeling the hurt as well; keeping a close relationship with these customers will ensure that you will not lose their business to a competitor.
• Be aggressive with advertising. Studies have been conducted that show business that cut back on advertising during economic downturns make less revenue than businesses that don't.
• Don't cut your sales staff. These people are the driving force behind revenue.
• Don't automatically cut employee benefits and pay. If you do, it will be more likely that they will leave and go to work for your nearest competitor.

Resources

• Visit the sba.gov for more ways to manage and benefit your business during an economic downturn.
• Read helpful information about effective business practices during economic downturns on bnet.com.