Business Tools


Disciplined business practices and a little belt-tightening can help keep your doors open and customers at your counter during a sluggish economy.

Whether the United States is in a recession, depression, downturn or long-term financial funk largely determines upon which talk radio pundit you listen to.

By economic definition, the U.S. economy is not in recession, posting growth, however minimal, in the last three successive quarters, according to Department of Commerce data. Most economists define a recession as two consecutive quarters of falling gross domestic product.

But you don’t need macroeconomics expertise to see that rising energy and food prices, along with slumping real estate, has got consumers spooked, which is bad news for those who make their living in the discretionary waters of the specialty-equipment industry.

“Phone calls and walk-ins are down,” says Dave Dragna, general manager of Action Auto Sports, an independent retailer of lift kits, suspension and performance products in Corona, California. “We’re just doing different types of work in order to stay open. People are just holding on to their money.”

Jeff Stillwell, general manager of All American Truck and SUV Accessory Centers in Oregon, says this is the worst business downturn he’s ever experienced.

“It’s impacting us greatly,” he says. “We're feeling the pinch just like everyone else. With the way truck sales are, it affects our industry greater than a lot of other people's industries. All we can do is tighten our belts, watch our expenses, watch our payroll and try and ride it out.”

With a few tips we’ve gathered from industry and general retail experts, you too can prepare your business to ride out the rough patch. Some economists predict that it will last at least into next summer.

First, the obvious: Trim expenses anywhere. Stillwell says All American is tightening up on hours, overtime and inventory.

“We're not loading up on stock items as much as we did,” he says. “We’re sort of waiting until it gets sold before we replace it. We’ve closed our corporate office on Fridays. We’re just making smart business moves that we should have been doing all along. But you let a lot of things go when business is rolling.”

Stillwell says that although the company’s cash reserves get tighter “by the day,” it is still in good shape.

“We pretty much pay for everything,” he says. “We are not an in-debt company. We just have to watch what we’re doing. I think it’s going to be a fairly long haul before it starts picking up, but we’re here to stay. We’ve made the right moves in the past to keep things going.”

Layoffs are often inevitable during downturns. Dragna says he had to let a couple of people go. Stillwell’s business was also not immune.

Brian Gillespie, owner of Hasport Performance, the Arizona company whose custom wiring harnesses and billet engine mounts helped light the Honda engine swap craze, agonized over laying off employees. In the end, he managed to switch around some workers and their job duties and found a better, more efficient fit.

And one more small way Gillespie tightened his own belt: he stopped driving the company’s Honda Ridgeline for errands, now using it only for events or heavy hauls. Instead, for around-town driving, he uses a Civic—with various combinations of engine swaps.

More consumers and enthusiasts are researching online before making a trip to their local shop—and some have stopped going to a shop altogether, opting to buy online. Use your website to provide customers with the information they need to make informed purchases.

Along with trimming overhead,’s Gene Marks writes that all businesses could be doing something to shrink line items such as freight, utilities, telecommunications, sanitation and office supplies. But often managers are too locked into certain ways of working with suppliers.

Marks notes that this is understandable, particularly in supplier relationships where protracted or unreasonable negotiation can cause quality, procedural or personnel problems. But every business needs to look again at its purchasing methods to find the best deal.

Marks cites the example of Mark Wuertz, vice president of hotel and restaurant operator Bennett Enterprises, who realized that as the economy started to slow, the company could no longer maintain its margins by raising prices. It had to find ways to lower costs.

Wuertz hired a consultant to examine how the company bought its products and services, and to suggest ways to eliminate inefficiencies, such as three divisions that were all purchasing independently. Wuertz also shook up the purchasing process, making vendors, even those with a long history with the company, re-submit bids.

Wuertz expects the trimming to save about $75,000, about 1.25% of the company’s annual $6 million selling, general and administrative expenses. Although this is an example of a large operation’s methods, the same principles apply to small- and midsize businesses.

Experts differ on the wisdom of increasing or decreasing advertising during downturns. Some argue that it’s the time you most need to advertise. Others say it’s an inefficient use of capital.

Both Stillwell and Dragna say that they’ve cut back on local advertising in newspaper, radio and enthusiast magazines. And in tough times, putting ads in newspapers isn’t a good strategy for small businesses because it doesn’t really work, David Sable tells

Sable, vice chairman of Wunderman, a network of advertising, marketing and consulting companies, says it’s better to forge stronger connections with an existing client base. Make the extra effort to understand their needs. Ask a lot of questions and send them updates on new products you know they’ll like.

Remind them that your small business can offer a level of service that big box retailers or Web-only stores can’t.

“Personal touch is everything,” Sable says.

Meanwhile, put your website to good use. It’s both a vehicle to advertise your products and services, but also a possible revenue stream.’s Marc E. Babej and Tim Pollak write that this is the first recession (their words) in which the Internet will play a central role for American consumers. Although the Internet was around during the shallow 2001 recession, only about 50% of the population was online. Of those, only about 20% were using high-speed broadband connections.

Now almost 70% of the population is online, and 80% of those are broadband users, say Babej and Pollak. And in tough times, people are apt to research their purchases more thoroughly. With gas prices high, consumers are also more likely to purchase more online. There has been an explosion of online retailers, from to the mom-and-pop equivalents doing business as eBay storefronts.

“It adds up to a bonanza of choices for cash-strapped consumers, and a new set of challenges for those who sell to them,” Babej and Pollak write.

Virtually anyone selling anything should be online with as much sophistication as they can muster, the writers say. And they should follow a few cardinal rules: maintain quality, don’t over-promise, and keep a close eye on pricing.

Gillespie says he plans to do more with Hasport’s website this year, “make it more of an information site to drive sales and product recognition,” he says. “Website sales are nice, but it’s more about preaching the gospel of Hasport and keeping the name up there.”

Despite the economic climate, continue to deliver new products and services to keep customers returning.

Finally, as counterintuitive as it may sound, strive to deliver new products and services. Don’t stagnate, advises Larry Van Gelder, marketing manager at Barry Grant.

“You've got to keep people excited,” Van Gelder says. “That’s what makes our market happen. People are looking for innovation, and the new products are what keep our whole industry rolling. Keep putting new things in front of people, and keep them excited.”

Gillespie agrees, noting that Hasport plans to introduce a new product every month. After noticing a dip in sales after a six-month period in which the company didn’t introduce anything new, “we made the decision that we had to keep coming up with new products,” Gillespie says.

“Perhaps on the hard parts side of the market, you can get by with having a new water pump that fits the next, later-year vehicle, but not the performance side,” Van Gelder asserts. “Our whole industry is based on innovation. If you’re not innovating, you’re nowhere in this industry.”