Coping with Recession

I met with a business owner/client last week. He described his business outlook by saying, “I can’t see the bottom. 2009 will be about survival for my business.”

There is no avoiding the fact that the world is now in a period of contraction and deflation. In order to maintain at least flat revenues for 2009, your company most likely will have to take a bigger share of an ever-shrinking pie. And in order to maintain margins that will enable your company to break even or eke out a profit, you will have to come up with some tactics to control costs.

Here are some things I have seen firms do to maintain revenues:

• Law firms that may have had other business foci are handling more divorces and guiding companies that are in danger of bankruptcy filings.

• Consultants that had focused on growth are now focused on helping distressed companies.

• Real estate firms that had focused on the purchase and sale of buildings are filling their days with sub-leasing.

• Marketing firms that had relied on referrals and increasing amounts of work from existing relationships are now focusing on more efficient sales processes, pursuing old leads, and aggressively renewing old relationships.

• Larger companies that had concentrated their efforts on big clients are going down market to support revenues.

On the cost side, I have seen:

• Companies looking to get more bang for their advertising dollar are going after more sponsorships instead of just media and print buys. They believe this achieves a better focus on the people they want to reach.

• In an effort to attain a better ROI on advertising dollars, some firms are using more sophisticated on-line advertising methods rather than banner ads to reach their audience.
• In order to meet funding shortfalls, municipalities are looking for creative ways to make cuts. For example, the city of New Bedford, MA is cutting salaries by 10% and forcing unpaid holidays instead of simply ordering layoffs.

• KPMG in Britain is offering a 4-day work week with a commensurate cut in salary (to 80%) of pay, but retention of benefits. Acceptance rate: 80% of the workforce voted to accept.
• On the other hand, some cities and companies are using the shortfalls as an excuse to clean house of underperformers.