The Media declares 'Disaster of biblical proportions'!

photo by clearly ambiguous 


Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, “biblical”?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes…
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together… mass hysteria!

It’s pretty much impossible to turn on the TV or read a newspaper without getting hammered with all of the dire news about the economy.  This article from is a good example:


Growing uncertainties in the labor and housing markets are pointing to slower economic growth in the months ahead.

It goes on to list some key points that are likely affecting you:

  • Gas prices are up.
  • Jobless claims are up.
  • Dogs and cats living together (it doesn’t actually say this, but it is strongly implied!).

Technically we may or may not be in a recession right now, but the reality is that regardless of what you call it, things have slowed down,  prices have gone up and people are concerned.

Having said that, life goes on and despite the fact that most media outlets will continue to sensationalize the fears and concerns, this too shall pass.

Don’t Worry, Be Happy (not quite…)

Even though things will eventually (if they haven’t already) bottom out and get better, we are living in interesting times and it’s more important than ever to pay attention to your bottom line.

If you were only going to focus on one thing – it should be your cash flow.

The recent fate of Bear Stearns stock holders illustrates this well as you can see from this Jeremy Siegel quote via

The truth is, had they had the liquidity to hold on, the Bear Stearns positions might have turned out to be very profitable. [It’s] just like Long-Term Capital Management ten years ago — had they been able to hold on, those positions became profitable. But they weren’t in both of these institutions, and as a result, without liquidity, this is a major risk.

Without cash or at least access to a loan or a line of credit, the typical small business owner is proverbially ‘running with scissors’ and in a dangerous situation.

You should have a cash flow projection readily at hand and spend time every week or two using it to project what if scenarios.  Things like “What if I lose my largest account?” or even “What if I land that really big account – the one that will require me to spend a lot of up front money?”

Hope for the best, but plan for the worst

If you’re feeling the pressure and you’ve already got a good handle on your cash, then the next thing to focus on is your bottom line.  What can you do to increase revenue, decrease costs or just generally increase profits?

There are literally dozens of ways to do this but here are 3 quick suggestions:

1.  Revisit your existing and past customers:  It’s a lot more expensive to get a new customer than it is to keep an existing one.  Increase your efforts to keeping your customers happy, including giving them special deals and offers.

2.  Make your workforce more productive:  If it looks like it may make sense to cut some headcount, use this as an opportunity to really upgrade your average performance.  Alternatively, maybe it’s a good time to invest in some training.  Increasing overall output without increasing the cost of salaries can be a nice boost to that bottom line.

3.  Create new offerings:  This could either be a package deal of your most popular product or service coupled with another discounted item to get your average revenue up, or it could be creating a new higher margin (or maybe lower cost) product or service that would be more popular with price conscious customers (remember they’re feeling the pinch too).

This article in the SF Gate has several more great ideas – I especially liked this point:

— Don’t stop marketing. Scrutinize your marketing budget to make sure you’re not wasting money, but don’t stop marketing or advertising completely.

If you can afford it, you may even want to increase your sales and marketing team.

“What everyone cuts first is marketing, which is crazy,” said Van Horn. “Look at your marketing to see where you actually get a return. But the last thing you want to do is eliminate the thing that will bring in new business.”

Interesting times can also include great opportunities – strike while your competitors are pulling back.

What are some of your ideas for riding out the storm?  Share them here.

Shawn Kinkade

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