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Business Survival in a Tough Economy

Many analysts agree that the economy has suffered an extended period of slow growth. This creates challenges for small businesses.

Plan for More of the Same

Different economists make the argument with a variety of data, but the consensus seems to be that the economy has changed in the past several years. There seems to have been a deceleration in growth and employment. These conditions can continue for years.

As economists are quick to explain, on the other hand, that these trends could also change. Slow growth could become even slower or could accelerate. Any change in the pace of growth could have an impact on small businesses, but it seems safe to assume that business owners should plan for a continuation of slow growth.

If their assumptions are wrong and growth does accelerate, the business owner should enjoy profits that exceed expectations. However, realistic business plans should be developed based on the conditions that have persisted across most of the nation, and the world, for years.

Keep Expenses Low But Maintain Necessary Spending

One of the keys to business survival under any conditions is to keep expenses as low as possible. This could mean that the business owner is forced to work longer hours to reduce payroll expenses, or inventory levels are maintained at the absolute minimum to free up as much working capital as possible. Every expense should be scrutinized and regularly reviewed to ensure that your suppliers and vendors are still offering competitive prices.

It is important to maintain necessary spending. Employee perks, for example, may seem like an easy expense to cut but the long-term impact could be negative. The objective should be a lean business operation that avoids unnecessary spending, but spends what is required to maintain employee and customer loyalty. If the economy does eventually recover, loyal employees and customers will become even more valuable to a small business.


Michael Carr is a small business expert who has been involved in the successful development of three small businesses.