In a Recession, "Panic" is a 4 Letter Word.

By Brona Pinnolis, c.2009, All Rights Reserved


No doubt, these are hard economic times. For many small businesses this may be the first recession in the history of the organization. If one looks to the stock market and the severe volatility over the past many months, many business owners may be wondering—or already experiencing—what these trends mean to the survival of their business.

In tough economic times, however, panic is a four letter word. Much of the volatility in the stock market has resulted from investor panic. What we do know, however, is that when sellers sell low, they are realizing their losses then and there in the hopes of not sustaining further losses. They are giving up the opportunity to ride the eventual, inevitable upswing. Business owners can take a cue from this behavior as to how to attempt to ride the recession. In four words: “Try not to panic.”

In my previous column in this magazine I wrote about the various sources of funding for small businesses. We all are too well aware of the shrinking credit market, however, and this tightened market impacts substantially on a small, newer business. If the big boys in Detroit and the major banks can’t get credit, how can a small business hope to do so? In short, for the time being it may be very difficult, but sound local businesses may have some hope in turning to sound local banks. However, now may be the time to set aside pride or stubbornness or whatever else may prevent asking for help and turning to family for bridge loans. As a business owner, you should extend to family the same standards you would to a bank: bring a solid business plan to the table, show your plan for weathering the next year or two of possibly lean times, and pay interest to them. In a volatile market this may even seem like an attractive alternative to some family investors. Be good to your word, but also put it in writing.

Look for new markets for your products. As the value of the dollar decreases, American goods become more attractive in foreign markets. Is there an opportunity to expand globally for the goods or services you provide? With such a great portion of the economy web-based, there is practically no market off limits. Do your research on what you sell or offer. Talk to folks in state and local government to find out what they are doing regarding international business opportunities that might fit with your business products or services.

Of course, make sure you are on the web. Any company not having a website and one that is easy to navigate is likely going to have severe problems in tougher economic times. People will shop on their computers, even for local businesses, and “do the walking” not through the old phone book but through the internet.

A slow down is also a good time to focus on existing customers. Don’t forget to remember them! Ask for their input on what they like about your company and what they would like to see different or in addition as far as your offerings. There are easy ways to set up web-based questionnaires, such as surveymonkey.com.

Finally, get out of the office and network! I personally belong to several good networking organizations including BNI (Business Network International) and Network of Memphis, a women’s organization. We all know word of mouth works in business; good networking may help you cut costs in advertising, saving precious resources. You can find BNI on the web at memphisbni.com and Network at networkmemphis.org for more information on these particular groups. The Memphis Small Chamber is an excellent resource and can be found on the web at smallbusinesschamber.com. For women who are interested in jumpstarting or re-energizing their business plan or taking their projects to the next level try Ladies Who Launch, a national organization with a Memphis presence. Find them at either ladieswholaunch.com for the national site with a link to Memphis or go directly to tammygunnels.com to connect with the local launching guru.

Readers, share your experiences about other local networking opportunities and let’s get a discussion going on what’s out there and what works. I will recap some of your comments in the next installment. Stay strong and don’t panic!