Bad news and more bad news - that's all we're hearing these days as Canada's economy hits the skids.
Consumer confidence is at a 26-year low. Bankruptcies are up, the housing market is down, unemployment is on the rise and hundreds of thousands of jobs are on the line.
"I think it's unprecedented in the last 30 to 40 years and for most people, this is brand new territory," says Rob Warren, business expert and executive director of the Asper Centre for Entrepreneurship at the University of Manitoba in Winnipeg.
As bleak as it may seem now, it looks like things aren't going to get better anytime soon. According to the Conference Board of Canada, consumers expect to be even worse off in six months and the Canadian Chamber of Commerce is warning businesses to buckle up for a bumpy ride as the country officially tilts into a recession.
So what's the business world to do?
And especially small businesses that often have less of a cash cushion, more difficulty getting credit and less money for marketing?
"This is a very dangerous time for small businesses and it can be dangerous for a couple reasons," Warren warns.
"One is that big companies that might buy your products or services could cut back and you may find, as a small supplier, that you're one of the places they drop in an effort to cut costs or consolidate. On the other side, you're seeing that businesses just can't get the funding they need to get or make inventory."
The U.S. credit crisis is quickly becoming a huge obstacle for many small businesses in Canada - and one that could make or break them in a recession.
"The toughest challenge right now for small businesses in today's economy without a doubt, and regardless of the business, is raising funds," says Alex Shan of Toronto-based IT consulting firm Jolera. "Banks just don't want to give out money right now."
It's a story Pages on Kensington bookstore in Calgary knows all too well. A Cowtown institution, Pages is well positioned to survive a recession - but that doesn't matter to lenders.
"We were turned down for a line of credit a year and a half ago and we would have no chance of getting one now," says owner Simone Lee. "Our credit card fees are just ridiculous and that's not right."
With a lower Canadian dollar, books are actually now cheaper in Canada than they are south of the border. While that's good for business, Lee is still wary.
"It's definitely a concern," she says. "Everything proportionately affects everybody, but disproportionately it's an inverse ratio to small business - it will affect us first and it will affect us the most."
Indeed, many small businesses are already taking a beating.
"The feedback we're getting is that 65 percent of small businesses - and probably creeping higher - are very cautious right now and almost half are seeing a negative impact on their business," says Howard Grosfield, vice-president and general manager of small-business services Canada and international for American Express.
Conducting surveys and outreach programs as part of its new Canadian small-business division, a recent AMEX/Ipsos Reid survey of more than 1,100 small-business owners (with between two and 100 employees) found that nearly seven in 10 owners were also worried about their future financial security.
"They are worried, but they're finding comfort in the fact that they still have the right business model and business plan and they're vowing to stay the course," Grosfield says. "They're not panicking."
While panicking in a crisis never makes good business sense, there are some key survival strategies that all organizations should be implementing in these trying economic times. First and foremost - take stock of where you stand.
"I think the most important thing to do right now is look inward at your business model and really make sure you only focus on the parts of your business that are tried and true and delivering value," advises Grosfield.
"It's finding the 20 to 30 percent of your business that drives 80 percent of the value and focusing on that and being very careful in where you expand to less-tested areas, whether it's new products, services or geography."
Along with focusing on the key customers and relationships that deliver value to your business, cutting costs right now is also crucial.
"You really have to look at cashflow - what can you do to reduce the cash going out?" asks management consultant Gail Evans of the Calgary-based Wynford Group.
"Not only cutting costs but also seeing how you can use your staff in other ways. How can you retrain people to be more valuable? How can you reorganize things to better serve your business? How can you streamline operations and improve efficiencies?" By being as lean as possible, experts say you'll have a better chance of not only weathering this economic storm, but also coming out of it in a stronger position when the crisis is past.
"The biggest lesson I can give is that you want to be a low-cost supplier right now," Warren says.
"To be successful, you have to have your costs down to the bone and you want to make sure you can drive what you're paying for goods or become so valuable as a supplier that you can get the price you need for your product."
Reducing overhead won't be easy for businesses such as Pages, which has a lot of fixed costs. Even so, the bookseller is looking at some creative ways to boost the bottom line.
"Operating the store has become more expensive because of the boom we've had in Calgary the last few years and it's not like we can carry fewer books," Lee says.
"We could cut back operating hours, but then that means you're less available for shoppers. So we're probably going to talk to our landlord to see what we can do about rent. The climate has really changed and we may be able to negotiate a better rate."
Indeed, renegotiating everything from rent and inventory costs to interest rates and even travel discounts is a survival strategy experts highly recommend.
"Everyone is re-evaluating relationships right now to make sure that they have what they need to weather this storm," Grosfield points out.
"Make sure you're leveraging every last bit of the pull you have with your partners and service providers to get all you can in these challenging times.
"Be proactive and reach out to your customers and suppliers, recognizing that this is affecting everyone. Say, 'How can we work together to help each other through this challenging environment?' " Businesses should also look at new ways to do more business - whether it's deploying skills in a different way or changing products or services to better meet current demands.
"Anything you can do to identify a niche or make yourself more competitive, this is a good time to do it," suggests Warren.
"It's also a good time to work on new products because if you can get something to market quicker or into the distribution channel faster, you'll do better."
Looking for new ways to do more business, Pages is planning to hold more lucrative offsite events where it sells books for authors. Lee is also considering buying more books on a non-returnable basis, which means they come at a better price but can't be sent back if they don't sell.
"Another idea we've been kicking around is to institute a fast-reader program where, if you bought a hardcover book and brought it back in pristine shape in X number of days, we would give you a percentage of the cover price back," says Lee.
"Consumers with over-stuffed bookshelves would love it and we may be able to turn over our stock several times."
It's this kind of out-of-the-box thinking and strategic rethinking that experts say can help save a business - even businesses in the sectors that are the hardest hit right now.
"You need to be very clear on what your strengths and weaknesses are in this business environment and then find new ways to capitalize on your strengths," says Evans.
"We have one client in manufacturing who has discovered that this is a really good time to do R&D work so they'll be set when things settle down. For oil and gas, they can't produce right now and make money, but they can certainly plan. It's a really good time for building infrastructure."
While small businesses may not have as much money for research and new development right now, they do have one big advantage over larger corporations - the ability to change quickly.
In this volatile economy, experts agree responding to the market and adapting fast will make all the difference.
"You want to look for the gaps that will show up and be ready when they do," Warren says.
"Some companies will disappear and if a competitor disappears, you want to be in a position to take over their orders."
(Tess van Straaten can be reached at tess@businessedge.ca)
