When the pie is growing, everyone gets a piece. But what happens when things get tough? How do you make money when everyone is cutting expenses?
When a market is in recession, everyone hurts, jobs are lost, and it becomes extremely hard to start or develop a new business.

Collective stress in such a tough environment often leads owners of small businesses to make reckless and ineffective decisions.

So what can you do?

1. Start at Home – Take a close look at which expenses in your personal budget might be luxuries and could be reduced. For example, instead of going on vacation to a hotel in Eilat with the whole family, go on a camping trip in the north and save on accommodation expenses. Instead of bringing in someone to clean the house every week, do it every other week, and enlist the family for a joyful house cleaning event during the week in between. As we reduce non-essential expenses in our personal lives, the pressure of losing a livelihood (for employees or for the self-employed) will diminish. A business owner could take a temporary pay cut and thus reduce some of the fixed expenses of the business.
2. Manage Your Cash Flow – Streamlining. Review business processes that can be done with fewer resources. For example, check comparative employee performance and find options for improvement. Try reducing time of delivery to the customer without compromising the quality of the service or product.
3. Defer Non-essential Expenditures – You must review which expenses can be postponed. For example, replacing office equipment with newer items, even though the existing equipment works and does the job, is an expense that can be deferred to a more prosperous period. Determine which items are absolutely necessary for the business to function and buy only those.
4. Reduce Operating Costs – The biggest mistake of business owners is to stop contracts with various vendors, with the first ones usually being marketing and advertising expenses, in order to save on business expenses. Instead of acting arbitrarily, one should go over each type of expenses and examine whether it contributes to the business, and if so how it can be reduced. For example, ask providers for discounts and promotions, or consider spending some of the budget on outsourcing if it saves costs.
For Effective Stream outsourcing services click here.

5. Grow Your Sales – Yes, it is possible to increase sales during a recession! This is a time when customers are also looking for cost savings. You can offer special discounts for new customers to join, launch a special offer to retain existing customers, expand the product package for the same price, or extend the payment schedule. Admittedly, each item will eat into your profits, but you will increase the scope of work and create a regular flow that will help you weather this difficult period.
6. Maintain Strict Budget Control – Review all revenue and expenses against the budget, and continuously monitor the business’s activities in order to detect bottlenecks or discrepancies in the forecasted cash flow before they happen. If you are aware of a potential problem in advance it becomes easier to deal with.
7. Do Not Despair – There are always highs and lows, and low periods eventually end. You need to be conscious of this and navigate through safely, by prudently lowering costs and increasing sales. The biggest mistake is to completely slash marketing expenses, because ultimately, marketing is the engine that brings in customers.

Despite all the challenges, and perhaps even thanks to them, a recession period can be very good for your business. It forces you to look inside, streamline processes, and allocate resources more effectively.
After all, a business that has survived a recession emerges into an economic boom more solid, with a host of loyal customers, and better equipped to cope with the pressure of demand for its products or services.