A slowdown or double-dip recession could put entrepreneurs to the test. Here are strategies for how to survive.
Even the optimists are saying that we have at least two more years of economic stagnation. Other experts are warning of a possible double-dip recession.
Recent employment and bank lending rate data seem to support a prolonged recession for small businesses.
So what does this "new normal" in our economy mean for entrepreneurs?
For startup entrepreneurs it means you need to be lean. There will still be new businesses forming, even if the economy takes a turn for the worse. Some of these new businesses will be opportunistic entrepreneurs who see ways to meet the needs created out of the dramatic changes taking place in our economy and society.
Others will be among the growing army of accidental entrepreneurs who are finding that starting something on their own has become the only viable way to make a living during these challenging times.
Whichever path leads you to start a new business, a successful launch will require bootstrapping.
There is very little money being invested in or lent to new small businesses right now, so be prepared to find creative ways to get your business off the ground without a lot of funding.
If you are already a business owner and have survived the past two years of economic turmoil, let me be the first to offer congratulations. Clearly you have found a way to continue to offer value to the market. You must have also been an effective manager.
Some businesses that have survived are hanging on by a thread. If that is the case for your business, continue to pay attention to the basics. Keep cutting overhead, pay down debts and take good care of the customers you have so you don't lose any more of them to stronger competitors.
Every small-business owner should continue to run his or her business cautiously and prudently. There will be more tough times ahead.
Look for growth opportunity
Over the coming months, more of your competitors will probably fail, and that presents an opportunity to attract new customers to your shop.
This can be an excellent time to expand and take advantage of a larger market share. If you do expand, continue to bootstrap and try to keep your use of debt to a minimum.
This is no time for excessive leverage because of the uncertainty of the economic outlook.
Whether you are a new entrepreneur or a seasoned business owner, more than ever before remember, cash is king. Given the uncertainty of the economy, entrepreneurs should try to keep enough cash on hand to cover at least 30 days of monthly expenses -- and up to 90 days of cash on hand is not a bad idea, either.
It's also important to keep one eye on the future. Eventually things will improve. And those who survive the Great Recession have a good chance of emerging in a stronger position. The survivors of today will become the market leaders during the recovery.
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