Dan Saves

Making an Economic Turndown Work FOR You
by jl scott

Let's talk about what businesses need to do when the economy
tanks. Remember - for 15 years, I worked with companies in
financial trouble: keeping them out of bankruptcy and turning
them around.

Folks often think that involves basically firing everyone and
hiring new people. Not true. The idea is to find, and correct
what's being done wrong.

Many of my clients were family-owned, mid-size companies. That
would have made it pretty hard to fire everyone, even if I
wanted to. I DID find a thief, or two, in the woodpile of a
couple of larger companies, but that's another story.

My busiest time at all this was during the economic turn-down of
the '80s and early '90s. So, I'm no stranger to knowing what to
do when the economy goes south.

Before you can correct anything, you have to find out the
problem. Obviously, not every company had the same problem -
other than the basic one caused by low cash-flow.

In looking for the problems, I was able to see what GOT them
into trouble. I discovered several things many folks do that
increases the problem, rather than alleviating it. These
particular things are nearly universal - everyone seems to do
them.

So, I'm going to show you how to avoid these mistakes, STAY in
business and come through the turn-down with a minimum of
problems.

Let the Games Begin.

Let me say, right up front, you will need to demonstrate some
will-power. If you can't do that, you probably shouldn't be in
business. But, there's an easy way to do that.

Think of saving your company as a game. When you win, you'll
still be in business after the danger has passed - and after
others have gone under.

Making it a game doesn't make it childish. It gives you focus
which, in turn, keeps fear to a minimum. The thing you do NOT
want to get bogged down in is fear, which can bring about the
very thing you fear.

Instead, by focusing on the game, you keep moving forward in a
positive direction. If things look rough, you go back to the
game and find something else you can do.

I've gone through a couple of very bad times with iCop - once
due to an economic turn-down, once due to other situations.
But, each time, I just sucked it up and did what I had to do to
take care of the company.

On one occasion, I had to make some serious financial cut backs.
But, I lived through it and so did iCop! And, so will you.

As a turn-around specialist, I was right in the middle of things
at the client company. I was into the books, so I could see
where they needed to continue to spend money and where they
needed to cut back. I'll have to leave it to YOU to make those
decisions for yourself, based on what I tell you.

Expenses Will Need to be Cut ...

... both personal and business. Start with the personal.
Remember - the business is the most important thing right now.
We need to do whatever is necessary to STAY in business.

You don't need to do a lot of heavy deprivation. Start by
cutting back the over-spending we've all been doing.

Dump Starbucks - that, in itself, will save a bundle over the
course of a month, and you CAN still get a cup of coffee for
under a buck! What the hell was ever cool about spending $4.75
for a cup of crappy coffee in the first place?

In fact, you may not have a choice on that one. I've heard that
Starbucks is going down, but I don't have any sympathy for them.
That place was the epitome of the nonsense of greed.

Speaking of that, you may have noticed, there's some price
gouging  going on right now. For instance, I went to the same
place I've gone to buy corn for the ducks for four years.
Within a month, the corn doubled in price!

Now, there is NOT a shortage of corn and they've been using it
for ethanol for several years, so they had no excuse. So, why
the big jump in a month? Price  gouging. They think they can
get away with it since everything else is going up, and people
will just pay it.

The trick is - do NOT buy anything when looks as if price
gouging  is going on. I left, and bought the corn somewhere else
at the old price. Refusal on the part of the customer to buy is
the only way to make them stop it.

When times are bad, it simply makes no sense to pay for
over-priced products. There's very little we can't do without
for a while!

Of course, there is the obvious: do the necessary things to get
better gas mileage, cook and eat at home, go back to doing
personal things that mean something for the Holidays, etc. And,
it won't kill you to do some of your shopping at K-Mart for a
while, instead of Dillards.

You don't need me to tell you how to do the obvious. Be
creative! The trick is simply to look at it as a temporary
adjustment. Which, if you do it right - it is!

The Dreaded Budget

I know many folks hate budgets, but you can't run a successful
business without one. The purpose of a budget is usually
defeated because people think it involves depriving themselves.
Well, yes - and no.

You'll need to keep the money flowing in and out, so your
finances don't become stagnant. Movement is energy and energy
creates. The trick is to put the money in the most advantageous
places.

So, list all your regular payments and the dates they're due to
be paid each month. Some payments fluctuate each month, and
part of the game is to see how much you can get them down each
month. Example: the electric bill.

In addition to regular expense, keep track, and make a list of,
what you spend out of pocket - including with debit cards.

This list is also to get you to really study where your money
goes. Once you have all that in front of you, you'll get a new
perspective. You have more that you thought! And, you can cut
WAY more excess than you thought!

Cut the Right Expenses

This is where nearly every client I had fell down on the job.
They inevitably cut the wrong expenses.

For instance, I would often find no advertising budget and, upon
questioning, the client would tell me, We can't afford to
advertise right now. My response: NO, you can't afford NOT to
advertise right now!

Write this down somewhere ... Cut NO expense that helps sales!

This is true for online businesses, too. Every expense you have
for your web site that helps you make a sale, or look
successful, must stay.

Increase Income

You have several ways to do this: raise your prices, add
additional products, attract more customers. The easy way is to
raise your prices. BUT - when the problem is the economy, that
may drive potential customers away. They're having cash flow
problems, too.

So, that leaves finding a way to increase your customer base
and/or expand your line of products/services. Online, that may
take advertising, or it may take increased search engine
optimization. It might even take extra effort, such as writing
articles and getting them out there with your attribution
statement at the end.

Paying the Bills

ALWAYS make payments to your savings and debt first! Even if
you think you can't afford to save, put a small amount aside
anyway - just for the feel of it. It's amazing what it will do
for your self-confidence as you see even a small amount grow.

Eat at home, then, take the amount you would have spent at
restaurants, or on fast food, and put that amount away each
week. You'll be AMAZED at what you save! Then, when you hit a
certain pre-decided amount, treat yourself to ONE dinner out.

DO - always reward yourself. It will keep you motivated. Just
don't over-do it! Set your goals high! And, remember, not all
rewards have to cost money!

Paying your debt goes without saying. But, it's also important
not to rack up NEW debt. Start looking at credit cards as
something to be used for emergencies ONLY. And, I mean REAL
emergencies!

Get into this mind-set: if you have to use a credit card for it,
you don't need it! The idea is to use your cash flow - NOT
drive up additional debt.

Stop and think before spending ANY money! Do you REALLY need
this? Do you really need it right NOW? If not - walk away.

In a tanking economy, everyone has same problem. This is the
time to make deals - barter - trade services. You won't know if
it can be done if you don't ask. Since everyone has the same
problem, there's certainly no shame in asking.

Things to Avoid

Many online businesses may have an added problem. The online
business may be a sideline. The owner may also have to deal
with an off-line job. This could actually give this person a
leg up on the entire situation.

Yet, many will feel like they can't afford to maintain the
online business. Whoa! Backward thinking! The online business
is an additional asset many don't have. USE it!

NOW is the time to GROW that business. Now is NOT the time to
see it as something you play with. Make it PAY!

The thing that may tempt you - and which you do NOT want to do -
is get caught up in any get-rich-quick schemes. Scams and
scammers run rampant during economic downturns.

They prey on people's desperation.

Never allow yourself to feel desperate. Make yourself a
detailed plan. It's part of the game. Work that plan. Move
forward with confidence. In fact, you can actually enjoy the
game - and, if you do, you'll WIN!

It's really just a matter of changing your thinking. Think
about what you're doing.

In the original article, I wrote, Stop and think before
spending ANY money! Do you REALLY need this? Do you really
need it right NOW? If not - walk away.

For instance, if it's impossible to walk away - can you buy
a less expensive brand? Of course, you can!

Working online gives most of us a much smaller overhead
than having a business down on Main Street. So, we're
already ahead of the game. In fact, our savings will be
more on a personal level.

If you have to buy inventory, it will probably go up in
cost. Here, you'll need to make decisions. Look for deals
and you'll find them. That's just good business, anyway.

Get your interest rates lowered or waived. Other
businesses are having the same difficulties you are, and
they do NOT want to lose any business. They're very likely
to bend over backward to keep yours.

Even credit card companies will lower your interest if you
have a good payment record. But, it will only happen if
you ASK! They don't want to lose customers, either.

Avoid a poverty - or lack - consciousness. Don't say, I
can't afford ... - Say, I chose not to buy (whatever)
right now. It gives your unconscious mind a whole
different picture!

Most of us have been through this before - at different
degrees of severity. But, we panicked this time due to
over spending for so long. Did we REALLY think that could
last? It was a sure road to disaster.

Car repair is an emergency that can be put on a credit
card. That over-priced prom dress, is not.

Kids are amazing creatures. They LIKE to feel useful and
as if they're helping. Sit them down and calmly explain
the situation and ask for their help. Explain that this is
reality - that life ain't always fair.

If they happen NOT to be cooperative, this is a chance to
teach them some life lessons the hard way. Tell them this
is not open for debate, and relieve them of a few things
that cost money.

When it's time to buy gifts, buy kids grown-up stuff. They
LOVE it, and it's a lot less expensive than the dang
over-priced toys they want. Less dangerous, too - provided
you're careful.

Buy ALL your toiletries, over the counter drugs and
cleaning supplies at a GOOD discount store. Don't trust
WalMart. They play games with their prices.

Use the library and stop buying books. A second-hand store
helps, but the library is free!

Make ONE weekly trip to the grocery, instead of 10. If you
run out of something, tough it out - without it. It might
help you drop a pound or two.

Use a shopping list, and don't buy anything that isn't on
it. Leave the junk food off the list. This is the perfect
time for healthy living! And, tell yourself healthy living
is the reason for dropping the junk food - NOT lack of
funds.

Use the sales at the grocery! Buy store brands. They're
all made by brand name companies, anyway. Well, except for
Charmin. Don't skimp on toilet paper. Every time you use
cheap toilet paper - which is just the next thing to a corn
cob - you'll feel poor.

If you MUST have fast food, watch for the dollar sandwiches
that'll be out soon. But, that does NOT mean you get to
spend another nine dollars on junk. Have a SMALL order of
fries.

Stop pigging out by ordering 15 toppings on your pizza.
Accept the normal three. Trust me - you won't starve to
death.

Stop buying all the newest cleaning gadgets. You do not
need a separate instrument for every cleaning job in the
house. Go back to a rag, a mop and a broom.

Get a microfiber cloth and clean with water. Those things
don't need cleaning agents - which are WAY more expensive
than they need to be! You can also shine anything -
including your stainless steel - with WD40, and just about
any cheap oil will work for wood.

All the over-spending got WAY out of hand! Seriously, look
at your records and see where your money's been going.

Cut back on your Home Shopping Network, or QVC, purchases.
Check what you've spent there in a year. You wouldn't go
shopping at the mall and buy all that crap. Let 'er go!

Get a water filter for your facet and stop buying bottled
water. Yeah, water's good for you, but you don't need to
take it every place you go because it looks cool to walk
around with a bottle of water. It's just WATER, for
cripe's sake - not liquid gold!

Go back to living like a normal person. Stop buying
clothes for your pets. They're animals! A little neck
kerchief is one thing - a ball gown is something else!

Animals have gone without clothing since they were created.
They'll be able to sustain the loss.

Get over the idea you have to have Calvin Klein (or, any
other designer label) jeans. There's nothing wrong with
LEE jeans - and they last longer.

In fact, take this attitude: Why should I give ANY company
free advertising? If a company wants me to advertise their
company by wearing their name on my butt, THEY can pay ME.

Well, I can see I'm starting to get on a roll, here - so,
I'd better quit. Like I said before ... it's all a matter
of common sense and paying attention!

Stop watching the rich and famous. Just remember - most of
them are in trouble, too. Be grateful! You could owe
millions instead of thousands.

------------------------------- * dr. jl scott is the
Founder of the International Council of Online
Professionals (iCop™) - and also the publisher of the
Internet Marketing Trade Journal™ - the ezine that keeps
you up to date on Internet marketing coming of age. For
your FREE subscription:
http://www.i-cop.org/trade-journal.htm