Tightening the Belt
   ...recession and your home-based business


If you opened the home office door to your business
after 1991, you have not had to cope with a recession.

It is quite likely you have become more familiar in past
years with a free-spending clientele than one that is
suddenly underemployed or unemployed.

But, what of all this recent talk of recession?  And,
if we actually do enter a recession, how will it affect
your home-based business?  Will you soon be abandoned by
the same economy that has buoyed you up in the past
decade?

Experts assert that what we are experiencing now is
simply a leveling off, not a recession.  However, there
are signs that make more than one or two experts a bit
nervous.  An unforeseen shock, such as another big jump
in oil prices or a collapse in the stock market, could
turn this economic leveling-off into an actual decline.

In this perpetuating drama we call a business cycle, the
likelihood for a slow-down in the economy after this
great boon we have been experiencing is high, whether
this year, next year, or ten years from now.

So let's talk about it.

With or without a major slow-down, recession-proofing
your business is certainly a topic worthy of addressing.
Those who educate themselves in advance and follow a
disciplined plan will be better prepared to weather the
storm.

What is a recession?

In a recession the economy not only stops growing, but
it actually shrinks.  To be called a recession this
phenomenon must continue for at least two consecutive
quarters.

The result?

Businesses close down and many people lose their jobs.
People respond by changing their spending habits,
looking for bargains and eschewing luxuries.  In short,
people get back to the basics.

Due to their very nature, some industries continue to
thrive during a recession.  One example is the health
industry.  People will continue to get sick and need
medical attention during a recession.  People will not
cut back on their food consumption, although they may
cut back on eating out and other luxuries.

Life still goes one, and certainly, there are still
opportunities open to you.  Some businesses actually
strengthen during a recession.  Yours could be one.

The advantage you have as a home-based business owner
over other big businesses is that you are able to trim
the fat — without firing all the employees.

With this in mind, may I offer a few quick suggestions
on what you can do to keep the customers coming back
and the cash flow consistent?

1. Communicate Regularly With and Keep Your Customers
Your relationship could mean the difference between
success and failure.  Continuous business from ongoing,
currents customers is what keeps you afloat in a
recession.

2. Reactivate Dormant Accounts and Old Leads
Sit down and call past customers from whom you have not
heard in some time.  Tell them you are just checking in
and say, "Hello, what's new?"  Show an interest.  Old
leads can also mean new business.

3. Ask Existing Customers for New Business.
Offer a special or free consultation with anyone they
refer to you.

4. Give Superior Service to Your Customers
Hold onto your existing clientele.  During a recession,
they are your bread and butter.  Be helpful, courteous
and accessible.  Your customers will stay with you.

5. Re-evaluate Your Fee and Pricing Structure
Make sure your pricing is affordable for both you and
your clients.  Clients will be price-sensitive during
a recession.  That doesn't mean you necessarily need to
bring your prices down, just be sure they are fair and
affordable.  If your pricing structure is in line with
what you and the market can bare, don't cut prices —
instead reward your loyal customers.

6. Re-package and Add Value to Your Products or Services
Look for ways you can bundle products or include add-ons.
Accommodate for reduced budgets.  Help your customers to
find ways to save money.

7. Postpone Fee Increases
Don't announce that you are holding prices due the
recession — just do it.  You don't want to put up any
red flags to your customers, just continue business as
usual.

8. Re-evaluate Your Target Customer
During a recession, you may need to be more flexible in
your customer criteria.  Instead of working with only
fortune 500 companies, you may need to consider taking
on smaller, local firms.  Don't let your standards down,
just readjust to accommodate a wider range of prospects.

9. Determine to Market More Effectively
Learn all you can about marketing, advertising and
reaching customers and prospects.  Then, take your
knowledge and increase the amount of time you normally
spend in marketing and finding business.  Stick with
marketing campaigns that work.

10. Emphasize Your Unique Selling Proposition
Your unique selling proposition (USP) convinces your
customers to use your products or services over those
of your competitor.  Come up with a powerful USP, be as
specific as possible and articulate it to those with
whom you do business.  Integrate it into every area of
your business.

11. Make Doing Business With You Easy and Fun
Is it easy to find things in your catalog or in your
online store?  Did you follow up on orders and inquiries?
Step out of your home office and become your customer to
answer these questions.  Make sure it is enjoyable for
anyone to do business with you.

12. Arrange Mutually Beneficial Business Relationships
Joint ventures and endorsements will greatly increase
your chances of converting a prospect to a buying
customer.  They can also help you mutually cut costs.

13. Give Payment Terms
Allowing customers to pay over a period of weeks or
months can increase your sales.

14. Get Rid of Excess
You may have excess inventory or equipment you simply
do not need.  Evaluate where most of your money is going,
then trim your expenses.

15. Be positive
Everyone in business has slow times.  Trust in your
abilities.  View yourself as talented and successful.


If you experience a lull in your business, it is only
temporary.  Following the above strategies, you will be
able to turn business around and become profitable.

A home-based business has many advantages during a
recession.  Use them to find success.

------
Note: You have permission to reprint this article
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Heidi Perry, the author of this article and a
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	       Tax Reminder
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January 15:
If you are required to pay estimated tax on self-employment income,
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January 31:
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