This document provides guidance for business leaders and entrepreneurs on surviving the recession. It begins by recognizing that the current economic situation is more like a recession/depression and recovery will take a long time. It then provides advice in 3 key areas: [1] Sales & Marketing - focusing on preserving and growing customer base through differentiating from competitors and innovative marketing; [2] Internal Cash Flow - emphasizing expense reduction, negotiation, and operating frugally; [3] Internal Processes - reviewing processes to find efficiencies and using process improvement methodologies. For businesses in severe trouble, it recommends promptly seeking professional help and taking sensible risks to improve fortunes. The document concludes by emphasizing managing people resources effectively and involving employees.

1. Walsh Enterprises Business & Financial Advisors
Huntington Beach, California USA
http://www.awalsh.us
walshal1@aol.com
Surviving the Recession
A Guide for Business Leaders and Entrepreneurs
Your first step is to recognize that this in not a recession in the classic
sense that we have been accustomed to in the past. This is more of a
Recession/Depression, and we will be a long time recovering. Credit
is still frozen, real estate is still declining, people are still losing jobs in
droves, manufacturing is down, and there are plenty of other signs
that we are in for more hard times ahead. Nationally and internationally
we are experiencing price deflation for many commodities, products,
and services. Whipsaw moves in the commodity and securities
markets are a sign of investor insecurity and low comfort-level. A sea
of dollars has been created that has largely gone to the banks with no
good effect to the economy. This threatens to generate hyperinflation
at some point in the not-too-distant future. We are going to pay
higher taxes to pay down the massive debt the government has taken
on in our names. The dollar is losing its luster as the world reserve
currency, and other nations are nipping at our heels; taking advantage
of our problems. The government hints of green shoots are just so
much wishful thinking. We cannot even trust the economic data the
government feeds us. For instance, the employment numbers are
widely acknowledged by professionals as being radically understated;
using creative statistics.
Of course, there are companies and industries that do well in any
economy. If you are in this position, good for you and good luck
keeping it going. Most businesses and industries are not as lucky, and
must take steps to adjust accordingly. Here are some thoughts along
those lines.
The Big Bugaboo
Let us talk about the most significant topic first – Credit and Capital.

2. As you know, the financial meltdown has largely frozen credit. This
has in turn filtered through the economy; scaring capital investors to
the sidelines.
▪ Big banks are not doing much in the way of lending, and have
been reducing existing credit lines in droves. However, regional
and local banks are still more active. You may want to consider
developing new banking relationships to avail yourself of this
opportunity.
▪ If you are an existing business trying to raise new capital, talk to
your existing investors. They are your most loyal and faithful
group.
▪ If you are an entrepreneur looking for capital, you are not going to
get very far right now except via asset-based private lending;
assuming you have assets to lend against. Angel investors have
been largely sitting things out waiting to see what happens when
the dust settles. The banks will not even talk to you. There is still
some activity out there, and you might get lucky; but you had
better have a first-class business plan/proposal put together or
they will not even look at you. If you have not prepared one
before, seek professional help. If you are lucky enough to get an
investor who is willing to listen, you will only get one shot at them
and you do not want to blow it with an amateurish presentation.
Those of you with no money, no assets to borrow against, and no
plan; good luck.
Existing companies with years of profitable financials will probably be
able to ride out the storm. Those of you just getting started are going
to have a tough time attracting credit or capital.
Sales & Marketing
Preserving and/or growing your customer base.
Most of you are experiencing declining revenues and lost customers.
In an economy such as this, about the only way to displace lost
customers and/or grow your customer base is to steal market share
from competitors. Now is the time to dust off your marketing strategy
and methods.
▪ Work on your company and product branding. You want to
differentiate your company and products as much as possible
from your competitors.

3. ▪ Rather than do like everyone else, dropping prices, perhaps you
want to restructure your branding and image to attract more high-
end customers.
▪ Take a hard look at your advertising methodology and budget.
One recent article I read indicated that most companies are still
putting the majority of their advertising dollars into traditional
media messages, whereas their customers are spending upwards
of ½ their time on the internet; and growing. Get with the web
trends, get creative, and you might find that you can have a
greater impact with fewer dollars.
▪ Use every resource at hand to build goodwill and loyalty. Your
investors and employees can be goodwill ambassadors. So can
your vendors; who have a stake in your success. Conversely, they
can also do you great harm. Reach out to them. Be creative.
Involve them in the media and the message.
▪ Be aware of what people are saying about your firm on the web.
Google yourself. You might be pleasantly surprised – or horrified.
▪ Use the concept of World-Class Management for good. At its
core, this means studying your competition and adjusting your
methods accordingly. Look at what they are doing, right and
wrong, and adjust your methods to maximize your impact vs.
theirs.
▪ Innovate. Any new innovation you can bring to market or to your
operations will increase your chances of surviving and thriving; but
be careful. New innovations usually require up-front investment of
time and money. Choose carefully so that you do not destroy your
cash flow now for a benefit that will not kick in for months or years.
▪ Other companies are obviously having problems too. Is there an
opportunity out there to pick up an acquisition at a bargain-
basement price that could add critical benefits to your business?
For instance, doing an asset-based acquisition could net you a
sizable new customer base and/or valuable infrastructure at
discounted prices.
▪ Do you have marginal business operations that do not support
themselves? Have you been hanging on to them in the hope that
you could someday make them winners? If you cannot make the
turnaround now, let them go. Why carry a monkey on your back?
I watched a holding company do that; and eventually end up in
bankruptcy. They almost destroyed their perfectly good
aerospace subsidiary by draining its cash flow to feed two other
subsidiary losers. Do not go down that road.
Internal Cash Flow

4. Now we get down to the nuts and bolts.
▪ The first expense line most companies cut in hard times is payroll.
You should be running a lean organization at all times, and some
cuts may be appropriate; but be careful. You do not want to lose
key people who will be needed when the economy starts
recovering. Cherry-pick carefully among those who are marginally
productive and non-critical to your future. No one wants to do
layoffs, especially in a lousy economy, but sometimes it is
necessary. Just make sure you do it wisely.
▪ A major expense line for most companies is IT. Those computers,
servers, peripherals, and software packages can run big bucks;
not to mention the IT staff required. It is time to take a look at new
trends. For instance, there are companies that offer remote cloud
computing. Let someone else have the burden of buying and
running the hardware, handling storage and security, and even
providing/maintaining the software. It can be accessed through
simple internet connections, you do not have to make big capital
outlays, you do not have to support a big IT group, you are saved a
lot of hassles, and you will save money. Look into it. It is worth the
effort.
▪ Lease -vs.- Buy. Every business has to make some investments in
equipment, etc. Most of it can be leased; keeping your up-front
cash outlays to a minimum. Leasing is generally a little more
expensive, and there are tax issues to ponder; but if cash flow is
an issue, leasing can be a way to bring in needed resources
without raiding the bank account.
▪ Negotiate, Negotiate, Negotiate. Lots of vendors provide
products and services to you. Then there is the landlord. They are
probably experiencing the same problems you are. They do not
want to lose revenues from you, but they don’t want to lose you
total business either. Talk to them. Everything is negotiable.
Make them your partner, in good times and bad.
▪ Sometimes companies tend to go a little crazy with facilities and
amenities; especially if they are operating on freshly-obtained
capital or credit. Operate frugally. If you are in big-bucks facilities,
look for alternatives. I worked once on a turnaround at a biotech
company. They got into trouble partly because the CEO spent
lavishly on an overblown laboratory and corporate facility; using
funds raised from an IPO. By the time I got there, the CEO and his
scientists were gone, and the place was on the verge of
bankruptcy. I outsourced both the research and the production; at
significantly reduced cost. The fancy corporate digs became a

5. thing of the past. Doing those steps and others, we survived –
and then we prospered. We had amenities that were civilized, but
no more.
▪ Don’t waste money. Operating and growing with internal cash
flow is critical in these difficult times. It takes money to make
money, but use it wisely. Watch all of your expense and capital
outlay lines like a hawk. Remember: the heart ands soul of any
business is cash flow.
Internal Processes
Making your company lean and mean.
▪ The best companies are reviewing their internal methods and
processes routinely. Periodic changes are necessary and
appropriate. However, we all tend to get into ruts from time to
time. Take a fresh look at what you are doing, and how you are
doing it; at all levels and in every function. Look for time-savings,
cost-savings, ways to improve product, better branding, more
effective selling methods, improvements to finance and
administration - everything. Sometimes a professional can help
here too. They can look with fresh perspective, and can
recommend solutions that you are not even aware of.
▪ Use the proven process-improvement methodologies that are out
there; Lean, Six-Sigma, ERP, MRP, TQM, etc. Not only can they
make a big difference to your business fairly quickly, but the nature
of the business world is that your customers are probably going to
demand that you use them anyway; if they already are not.
▪ Choose your projects and methodologies carefully. Some will
have longer payback periods than others. Some might be wholly
or partially inappropriate to your operations. Do the things that will
give benefits most rapidly, and save the long-lead-time and more-
expensive items for later.
Turnaround.
This is for those of you experiencing severe problems that threaten your business survival.
▪ Act now. Do not wallow in self-pity and/or hesitate until you are
near the end. The earlier you act, the better your chances of a
successful turnaround.

6. ▪ Seek competent professional help. Your skills are limited, as are
everyone’s. You are probably emotionally involved. The strategic
application of professional assistance, on a timely basis, can make
a huge difference.
▪ If you have been profitable in the recent past, your business model
is probably valid and you have just been faced with some new
challenges. Do not throw the baby out with the bath water. Take
a hard look at what has changed, and adjust your methods
accordingly. If it ain’t broke, don’t fix it. This is where a
professional advisor can help. When you are up to your neck in
the business, sometimes it is hard to see the forest for the trees.
A fresh perspective can be of great assistance.
▪ If you have been operating unprofitably since day-one, either you
are early in to your enterprise and it just needs a little time to
percolate, or your business model is flawed. Take a hard look,
and see if there is something you can alter to hit a winning formula.
Take Sensible Risks.
All business involves risk. Choose wisely, but be prepared to take risks.
▪ It is possible that your business fortunes might improve
dramatically if you just took a risk that you have been putting off.
Take a hard look at your options, weigh the risks, and act on those
that make sense. Few actions are totally irreversible if they do not
work out, and you do not want to miss out on a viable opportunity
because of excess caution.
▪ Remember the heady days when you first started out. You felt
that you could conquer the world, and you were prepared to take
on any challenge. Experience has a way of tempering our
attitudes, but you do not want to lose your entrepreneurial vision.
Manage for Success.
Are you making best use of your people resources - including yourself?
▪ Successful people and businesses reinvent themselves often;
adjusting to changing circumstances. Stay nimble, try not to get
caught in mental ruts, and reassess often.

7. ▪ If you are leading a company of any size, your primary job is to be
visionary and leader – so envision and lead. Let others get caught
up in the fine details. Manage them through the results.
▪ My methodology of leadership is simple. I retain competent
managers, give them broad instruction, and then turn them loose -
managing by results. If the results do not come, and I cannot see
factors beyond the manager’s control that caused it – they are
gone. Those who accomplish are rewarded well. Of course,
those managers must exert more direct control over their reports
down the chain. It is their job to get caught up in the details.
Choose your own methodology, but this one has worked well for
me and I highly encourage you to use it. One thing is for sure - a
micro-managing CEO does not understand their proper role. They
are wasting their time and the company’s, and their senior
managers resent it. They did not move into upper management to
be micro-managed. They want to have ownership of their
responsibility-areas, and they will perform better if they do. There
is always the rare exception to the rule, but those people do not
last long under me. I want managers who can lead and
accomplish with minimum guidance. Don’t you?
▪ Are your employees encouraged to share ideas, and do you have
an open door policy? If not, shame on you. I have seen
companies save millions based upon ideas presented by common
laborers. Sure, you will have to be patient and listen to some hair-
brained ideas; but you will get some good ones too. They see
things you cannot – or will not. Unless you encourage them, they
tend to keep their mouths shut. Reward them too. Let them
share in the fruits of their beneficial ideas. Don’t be stingy. Give
them motivation.
▪ Your employees are the core of your business. Involve them.
Give them a sense of belonging, community, ownership, and pride.
Small efforts like newsletters, suggestion boxes, company picnics,
etc. come at low cost and can make a big difference. Learn their
names, and talk to them. Just a small greeting from the big
cheese can bring a smile to a worker’s face. If they feel a sense
of belonging, they will be goodwill ambassadors for your business
and they will perform better.
▪ Share the fortunes of the company; in good times and bad. When
times are good, reward those who have contributed. When times
are bad, talk to them and enlist their aid in doing what has to be
done to survive. If sacrifices have to be made, do not wait until the
last minute to tell them. Make them part of the process; and the
solution.

8. There are other thoughts I can share, but I think I have hit on the
critical ones. These thoughts should feed your imagination to explore
other solutions. The gist of my thoughts has been largely aimed at
mid-size and large companies, but much of what I have said is
applicable to entrepreneurs too. If you are opening a business, start it
off right with the proper philosophy, methodologies, and culture. If
your business is sloppy, and you are seeing the negative results, it is
never too late to change.
What is my basis for sharing these thoughts?
▪ Thirty-year business background as executive, consultant, and
director, with startups –to- global firms, regionally –to- globally,
through recessions, downturns, surprises, government stupidity
and interference, and a host of other challenges.
▪ Two successful turnarounds.
▪ Two successful business startups
▪ Twelve successful Merger and Acquisition transactions; in good
times and bad.
▪ Countless sales boosts, cost-reductions, process improvements,
organizational improvements, and other value-adding activities.
▪ Years of experience consulting, advising, and coaching.
Want to explore a thought? My contact info is on page one.
Good Luck.
Al Walsh, CEO
Walsh Enterprises