by Marvin Double

Created on: January 17, 2009   Last Updated: March 30, 2009

The daily news confirms what business people already know; the economy is bad and getting worse. Job losses, bankruptcies, foreclosures and tightening credit have made the business environment increasingly difficult.

In these economically challenging times keeping any business alive and kicking requires being creative and thinking perhaps a little outside the box, so to speak.

Because each business is different, there is no single magic formula, no universal system that can be applied to every situation.

There are some general principals which do apply to every business, regardless of type. When condensed to the basics these principals come down to two things; maximizing operating efficiency and preserving capital.

Over recent months retailers have been especially challenged by a reduction in spending and a lack of consumer confidence. Analysts predict the market will contract further making competition for customers even more intense.

Holding on to your customer base is critical to keeping the doors open. Opening an hour early, offering free coffee, or closing an hour later and offering free deliveries might be ways to gain a competitive edge.

Contests, giveaways, discount days and incentives help promote customer loyalty, along with exceptional customer service. One way to bring customers back is by giving coupons to be redeemed for a discount on the next purchase.

Carefully balance your merchandise mix and stock only quick moving items. When possible buy discounted stock from liquidations. Liquidate your own slow moving, less profitable lines.

Independent merchants might consider the idea of forming a buying cooperative to secure volume discounts from wholesale distributors on specific commonly stocked items. This works in situations where merchants are obviously not servicing the same local market.

Sharing the cost of advertising through co-op programs with manufactures or other merchants can also help preserve working capital. Consider also renting out display areas in the store, working with rack jobbers or selling a higher percentage of consignment goods.

For manufacturers the purchase of equipment ties up huge amounts of capital. It is possible however to free that capital by getting a sale-leaseback arrangement through a specialized financing company.

The principal behind this is fairly simple. If, as an example you have $1,000,000 tied up in equipment, in a good situation you may be able to liberate 80% or $800,000 of working capital by selling it to,

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