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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | NOVEMBER 21, 2002 WHAT WORKS By Karen E. Klein Making the Most of a Downturn Despair isn't an option. So says the University of Cincinnati's Charles Matthews, who advocates preparing for the better days to come
Smart Answers columnist Karen E. Klein spoke recently with Charles H. Matthews, director of the Center for Entrepreneuship, Education & Research at the University of Cincinnati's College of Business Administration. Here are his suggestions for what entrepreneurs can do to avoid ruin during an economic downturn: Plan ahead. Sounds simple, but many entrepreneurs are too busy putting out fires and fretting over next month's cash flow to sketch out a map for the future. "A plan doesn't have to be long and sophisticated...it does need to be grounded in actionable steps," Matthews says. "Where planning does occur, the weakness generally is a lack of implementation plans, especially with regard to tasks, time tables, budgets, and responsibilities." The moral: Make your plan practical and assign responsibilities to specific people in your organization to carry it out. Plan again. Have a backup plan at the ready. If projections won't be reached -- as is likely during an economic downturn -- what are your alternatives? "If you have a business plan that is based on worst-, expected-, and best-case scenarios, at least you will have a fighting chance to turn things around," says Matthews. Don't price recklessly. With large national retailers slashing prices right and left, it's easy for small-business owners to conclude that they have no choice but to follow suit. Just because national discount stores sell on price, that doesn't mean you should, or can, do so without going out of business. Offer your customers better quality, better service, better convenience, and you can charge a little more while keeping margins healthy. Follow up on every lead. Don't let poor economic news freeze you into inaction. A slower business climate can give you extra time to follow up on viable business leads or investigate strategic partnerships that you never had the time to pursue in the past. Continuing to generate new business will help you weather the lean months. Delegate tasks. As your firm grows, you'll need to let go of some of your responsibilities and jobs and assign them to employees. As your business gets larger and more complex, you simply can't do it all. Tough decisions regarding delegation and direction will need to be made in order for your company to stay afloat and continue to grow. Secure adequate capital. While a recession makes getting capital harder, getting the right amount (not too much, but not too little) is even more challenging. "Matching short-term loans with short-term needs, and long-term loans with long-term financial needs is essential," Matthews says. "Even more perplexing, once the funding is achieved, many firms fail to fully integrate a payback plan into the firm's operations." While success can be elusive, Matthews points out that it tends to be the outcome of strategy, planning -- and luck. Says Matthews: "Adhering to the first two will bring you more of the latter -- even when economic winds aren't blowing in the right direction." Editor's note: When it comes to marketing, Corporate America bandies about big words -- branding, product launches, value-added -- and backs them up with bigger bucks. Meanwhile, small-business owners implement huge marketing efforts on small budgets. BusinessWeek Online's SmallBiz would like to recognize these small businesses, give their strategies a boost, and share their successes. So, if your marketing drive achieved good results, send us an e-mail at smartanswers@businessweek.com and tell us what you're doing. We will choose the most interesting submissions, interview the business owners, and have a marketing expert comment.  Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | NOVEMBER |
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