5 Ways to GROW your Business during a Recession

1. Start spending: It may sound counter-intuitive, but hard times call for you to increase some of your expenditures. For example, if sales is the lifeblood of your business, you should consider adding to your sales team by staffing up or investing in a product that could make your sales process more efficient. Or, you could boost morale and positive energy within your sales team by raising commissions for top performers, or giving them gifts that they will appreciate, such as tickets to a sporting event or a concert.

Obviously, this does not mean you should increase spending across the board. Rather, make spending decisions with your customers in mind. For example, if you run a coffee shop, consider going from two baristas to three because your competitors are likely trimming their staff, and you could gain customers who don't want to wait in a long line.

2. Make friends: A friendly phone call or two to your vendors and creditors is very important at this time. Building rapport and camaraderie with your suppliers can be crucial if your own customers are slow to pay. If you have built a solid working relationship with vendors, in some cases you could ask them to lengthen your payment cycles from 30 days to 90 days, or renegotiate rates.

Keep the phone lines open to your bank as well, and be sure to have a plan in place if you need loans in the near future. If you don't already have a strong history with your bank, it may be to your advantage to take out some small loans and pay them back on schedule to strengthen your credit.

3. Focus your vision: This is the perfect time to take a close look at your products and services to see which are worth keeping and which you need to sacrifice. Get rid of losses, of course, and consider ones which are profitable, but may not justify the effort of making and selling them. Having a tight focus may help you thrive. It is often better to give a narrow group of customers something you know they want or need, than to pursue a wider group whom you don't really understand.

One way to assess the value of your product line is through an activity-based cost analysis, which tallies the cost of making each of your products and the cost of serving each set of customers. In the end, you will know which product line to eliminate and which customers you'd be better off not serving.

4. Diversify customers: When the economy is fickle, it's important to diversify, and avoid giving more than 20 percent of your business to one customer. If they go under, you don't want to be dragged down with them. One way to diversify is to consider products that are closely related to what you do best that could get you into slightly different markets. Such half-step diversifications can be less risky than sitting back and hoping to hang on to the existing products and services you offer.

5. Smart marketing: The first step in formulating a proper marketing strategy during these times is to acknowledge that consumer behavior will change and learn how those changes will impact your business. Understand that most people will have economic anxiety; even people who are doing OK themselves will be cautious. People will act more penny-wise and tighten the belt, for example by holding on to a car a few extra months or eating out less often.  So as you market your products or services, you should expect cost to be a bigger part of every consumer decision.

However, remember that self-image matters and people who are struggling don't want to show it. On the flip side, people who are unaffected don't want to rub it in other people's faces. So this is the time to take a look at your ideal client profile and re-assess their decision making process to make sure your business prospers.

The good news about hard times is that some of your rivals will give up, giving you a chance to gain market share, enter a new niche, or simply find some bargain investments. But most importantly, as a business owner you should avoid adopting the victim mentality and capitalize on this opportunity to grow your business, while others shrink or die.