Managing a Small Business in a Difficult Economic Environment — by Dan Lynn

By Dan Lynn

Well, the good news is that we finally started a business. The bad news is that we picked the absolute worst time to start a business. March of 2000 wasn't exactly the perfect time to get started. In fact, that was exactly when everyone fully realized that the bubble had burst. Try raising money for a Web Services company in March of 2000. It figures, a day late and a dollar short.

However, in retrospect, it was the best thing that ever happened to us. Hell, we had no idea what we were doing so we probably would have wasted a lot of money. Instead we had to build the business the old-fashion way. Here are some of our key learnings to building a business in a difficult economy:

Overall: - You must be even more aggressive and work longer hours. - It's so easy to spend money. You've got to watch every single dollar you spend. - You MUST practice right-to-left thinking. In other words, start with a plan and then figure out how to get there. Most people don't have a plan. As a result, they don't know where they are going and don't know when they get there. - You've got to frantically work to create leverage. - With adversity comes opportunity - so work hard, stay energized, and focus on getting strong so that when the economy turns you are ready to take off.

Funding: - Funding options become very limited - so you may need to go it alone.

Cash Flow: - Cash really is king- Collections become increasingly difficult and increasingly important - You may need to use incentives like prepayment discounts to accelerate cash flow

People: - Great people are the difference between success and failure - Don't hire until you definitely have to - Make the tough choices quickly - No hamburger helpers - people who make the hamburger taste better but aren't really needed.

Service: - Service, service, service. New customers are hard to get so don't lose the ones you have.

Services: - You must balance Focus and Flexibility - Listen to the market and follow the need - Deepen relationships and broaden services