Steps To Take Now To Survive A Recession

I'm no economist. I do, however, look at lots of data and try to figure out what it is saying. That can be enlightening, revealing, and help you make a decision. But when it comes to a recession, no one ever seems to be able to predict when it will start or end.

ROBERT FALETRA Can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.

The prudent thing for a solution provider to do, of course, is run scared all the time. Heck, managing the downside is what successful entrepreneurs do. So are we in, heading into or likely to avoid a recession this year? Your guess is as good as anyone's. The reality is the only recession you care about is a local one that is a function of what your customers do. If your customers pull back on their IT spend, it doesn't much matter what the rest of the world does—it's a recession for you.

So what can you do now to prepare?

First off, it's time to act as if we are in a recession and understand there are ways to take advantage of that. Your customer set, for instance, is less likely to add head count now. That presents a sales opportunity to get in and emphasize your IT outsourcing capability. Some targeted marketing efforts along these lines could very well pay off in customer requests for outsourcing services, even if they are only temporary. Having access yourself to low-cost offshore outsourcing services you can resell can give you an advantage as well. Open-source software capabilities may also help you capture sales, as open-source tends to mean lower up-front costs for the customer.

Virtualization, which allows you to consolidate servers, is another opportunity to drive down costs for the customer. It not only cuts down on hardware costs but there is a less tangible energy cost-savings that can help justify the spend. More importantly, virtualization can reduce hardware spending for your customers by allowing them to get more out of their current infrastructures.

Above all, the most important thing to do in an environment like this is watch your cash flow. Cash flow problems have doomed more solution providers over the years than any issue I can think of, and managing this may require full-time attention by an employee. Regardless of whether we fall into a recession or not, these moves at the very least can mean a stronger business.

How are you preparing your business?
Make something happen. E-mail CMP Channel President Robert Faletra at rfaletra@cmp.com.