Down times, we all have them, we all hate them, but they cannot be avoided. Generally a time when turnover just seems to dry up. Costs remain the same but income vanishes dramatically. If left unchecked, it spells disaster.

Now before we get too involved in surviving the down time, let us point out that it is vitally important to be able to tell when a down time is coming. It's better to have a strategy in place before the problems arrive than to try and implement a recovery when you are already standing knee deep in the you know what.

Market indicators

Do not look to things such as real estate movement as being an indicator of economic buoyancy. If property is taking a dive, you are already too late. Look to the frivolous items. the fancy cars, the holiday destinations, the restaurants, the boats. Keep a check on these because they are the best indicators of pending economy situations. Reason being that most people will down grade the car, flog off the boat, take a trip into the country rather than traveling overseas, all as a way of saving cash. The property is always the last thing to go. The big tip here is, always look to indicators that move long before your product or services might suffer. You know what they are, if you don't, make certain to take the time to check around. Talk about it with friends family and staff. But don't bother with indicators that move after your product might shift. It's a waste of time and only gives false readings.

Cutting expenses

Now, if the indicators are all looking good, you don't have a problem and maybe it might be time to consider milking the cow so to speak. But if the indicators are looking bad and you decide the shit is going to hit the wall, do not panic. Don't charge off and start sacking staff. This is the very last thing you should do. Make yourself take the time to very carefully list all your expenses in great detail. You will be surprised just how much you can prune back by making cuts with some of these expenses. If times really are tough, you will find a lot of your suppliers will be prepared to negotiate deals and this is the best way to reduce a whole bunch of overheads.

• Start with the obvious ones like reducing the business lunch factor. If you are honest with yourself, you will know a lot of these cuisine acrobatics are not really needed.
• Update your phone plan. These plans are getting better all the time. If you negotiated a deal more than six months ago, it is already out of date and can probably be reduced. If you don't have a phone plan, get one quick.
• Check your web costs and make certain you list everything including hosting, email, name registration and most importantly, maintenance of the site because without constant maintenance, the site is probably a dead duck.
• Negotiate a better deal with your landlord. If times look like getting tough, he will be no different to anybody else and will pull a price to keep a tenant. Don't be afraid of this one. Ask. You have nothing to loose.
• Check your vehicle costs. Make an honest appraisal of travel. Could some of it be better served by utilizing couriers. Get staff to use the train in place of driving if spending a lot of time in the city. Re-allocate client call rates so that staff are not charging all over town to visit people. Share cars so that when one person is on the road, the other is in the office. There are lots of ways to cut vehicle costs.
• Freight is another big one with most companies. Keep checking for the best deals. Once again, it's fair to assume that if you start to experience a down turn in trade, so will your freight company. Don't let them spin you a line by saying everybody else is going well. Nail them for a deal.
• Stationary may sound silly but it is normally left unchecked and you will be surprised at how these bills mount up. Never give Zena a free hand with the stationary requisition. You know she will just order all the reps new pens so she can get the free gift offer.
• Tell your staff that things are tight but be careful to explain that you are not wanting to take away jobs. If you have good staff, they will start to find ways of cost reduction themselves.

Discounting

Another word of warning for when times get bad. Avoid pressing the slash and burn button. We strongly advise you resist the urge to discount just to increase turnover. Do not misconstrue turnover for profit because they are not the same thing. We cannot stress this enough. Be very honest with yourself before discounting. Get out the calculator and do the sums. Work out how much more you will have to sell just to get the same profit. As a general rule in our industry if you were to sell 100 units to make the profit you required, then you would have to sell 143 units to give away 10% discount. You would have to sell 250 units to give away a 20% discount. And that's just to make the same profit. Of course this figure gets even worse when you consider the extra cost of trying to handle the extra turnover. Unless they have the infrastructure to support discounting for a short time, most companies sink very quickly. Even well established companies cannot survive a lengthy period of discounting. So use it wisely. Companies who appear to successfully discount all the time are simply buying better or are more able to switch sell or have associated products with plenty of profit in them to justify the appearance of discounting. They are in the business of looking like discounters but they are not in the business of giving money away. It's just marketing. Real discounting should be for very special situations only, like clearing old stock or as part of a special promotion. So, be warned, If you start to discount as a matter of course, be ready to enjoy early retirement.