Planning for a Recession

I was doing some work at home last night and had CNBC on in the background to keep me company while my husband was away at a business function. In time, The Big Idea and Mad Money came on and they were talking about how certain companies would better weather the recession because they saw it coming versus those that were completely caught off guard. Now they were talking about bigger companies but I started thinking about how it applied to my company as well. For a while I've thought that we were headed into a recession (mainly thanks to a finance professor who, back in 2006, pointed out that the yield curve was inverted and as such we would likely enter a recession in 12-18 months. Turns out he was exactly on the mark!) so I've tried to plan accordingly.

That meant doing things like trying to cut back marketing expenses (ironic given that I was a marketing major at bschool) since it's sometimes tougher to determine the ROI of those activities or, at the very least, being much more strategic with the few marketing dollars we have been putting out there. I think we've done a good job but I'm also looking forward to figure out what we are and aren't going to do next year. Topic #1 - I've nixed an east coast tradeshow in the spring. Too expensive, too far to travel, and the east coast is - right now - being harder hit by this economic downturn then the west coast so I just don't think my products would play well there right now. Course it's a gamble since other folks I talked to had a great show there last year.

The economy is also impacting the types of new products I'm thinking of introducing next year and the price points that will be feasible for those products. And it's also weighing on my mind as I think about the next steps for this company. If we're at max capacity right now with the way things are currently organized I want and need to figure out a better way to grow. But if the economy is such that sales may take a huge hit I'm obviously a little nervous about dumping capital into business expansion be it on increased production space or additional personnel. It's a fine line, made even finer in this economy, and I'm trying to determine the right balance so that at the end of the day not only are we one of the businesses who have survived, but that we can emerge as a leader in, what will be initially, a smaller competitative landscape so that we can be positioned to thrive as the economy gets back on its feet.