It is best to have a minimum reserve of one year of your company’s basic costs on hand at all times. This reserve can be invested when it isn’t needed, of course, but it should be invested so that you can get to the funds in a matter of days without penalty or loss. This will represent one of the more conservative pockets of your (or your company’s) portfolio. If you are just starting a new business, it is wise to have more than one year’s cash reserves.

Now, I understand this is not simple to do. It requires 1) a real understanding of your costs, 2) accurate investment plans for expansion and the return (and timing of that return) on that investment, and 3) a discipline about what is necessary to drive profitability in your business.

1. If you do not have a gift for understanding the financial aspects of your business, then do not begin, or continue, until you have someone you deeply trust to handle these, someone who will confront you with the reality of the consequences of your financial behaviors as soon as he or she sees them. This trusted advisor must make you learn what you don’t know – how to assess what happens when balance sheets do not balance, when costs exceed revenue, when profitability is lost.

2. Take care when planning to expand. Expansion is based on assumptions – continued revenue growth (sustainability), a stable or growing world economy, a lack of competition and/or market disruption in your market space, and so on. Make sure, once you have made the exciting best-case scenario, to sit with your financial advisor and look at an average-case and a worst-case scenario. Look at the consequences of these, particularly the average-case. And ask yourself – if the average case is all I gain, and perhaps it cannot be sustained, what does today’s risk look like then? Is it still worth taking? How long will the return on the cost of this investment take to actually hit your books and have an affect on your profitability? Can you trust stable market conditions to sustain your company until that time? If not, what does today’s risk look like? Draft a series of these questions, and consider each with your CFO.

3. Above all, focus your growth or maintenance on profitability, not only on top-line revenue. Without profitability, top line revenue will not sustain your company through the vagaries of the marketplace or the next downturn or an unexpected disruptive competitor or a sudden change in the price of a required component. As CEO, it is your discipline that drives your company’s future, the security of your employees, and your competitive position in the market.

Your commitment to profitability will create a “lean” company, even if that company is growing in market share, and in its bottom line. The minor details of profitability might surprise you. Much of the new leanness is knowing what you have, that you do not need. Automation and software now handle an unusual amount of what was once manual labor, if you will only implement it. Administrative systems can be simplified more every year. Off shore support can save a great deal, if it is well-managed. Eliminating internal “silos” and flattening the organizational chart may work for you. Asking your team for ideas to streamline processes can work, especially if these ideas are tested and incorporated.

And if you are contracting in this recession and not expanding, you are more aware of the bottom line than ever. Perhaps for a year or so you can only manage break-even, or use a portion of your reserve, while preparing for the next uptick in the economy or the new change in the marketplace? Take some time to think and play “what if” games. What if it was only you left? Or a core team like when you started out? What if you simplified your product line? What if you re-priced and re-positioned your services to current market needs? What can you do without, to drive to profitability. Smaller and alive is better than bigger and gone.

The same discipline is required during both growth and contraction. And the financial discipline to keep your company safe goes on, year in and year out.

This means that you must ask these questions, as if you were starting your business anew:

What does the market need now? If your current offerings don’t fit the market’s need now, then you must either direct your offerings to alternative (often smaller or niched) markets that still want them, or shift your offerings to meet the general market’s new preferences.

What price will the market pay for your offerings now? Usually during a market or economic disruption, the market will pay less than before, or will not pay at all. You must determine the price tolerance of the “new normal” – no matter how long that condition lasts – and package your products and services in new ways to meet the price points the market is dictating.

What positioning will attract the market’s attention? With this information – what offerings at what price points – you can begin to re-think your positioning to your target market (the alternative market or the general market) to write the language and tag lines that will bring you customers and clients.

What value proposition will resonate with the market? With all of this – pricing, positioning and new offering packages – you can then create a value proposition to carry into the market that will create new opportunities.

For example, if you have a software development and consulting practice and your target market is  no longer buying, adapt the software and your services to solve the pain in your key market, which will likely be focused on cost cutting, staff reduction, and whatever can increase profitability. Try to build into the new version of the software some technology that will replace or reduce your personal services to the client, to increase your own company’s margins.

Or, if you are a service business or a consultant, look at your clients’ pain points: Are they working longer hours with reduced staff? Increase your service hours and add pick up and delivery services for a premium charge. Do they need specific roles filled in the company rather than general consulting (but cannot afford a full time employee with benefits)? Offer to step in to fill a part-time tactical role for a fixed project fee or monthly charge. Look at all the expertise your company can offer, and broaden your offerings and how you deliver them.

Get flexible about pricing – experiment with ala carte, bundled, one time cost, subscription fees or retainers until the market says yes. Keep an eye on your margins, as it is your bottom line that will support you through the downturn, even if your top line dips.

Change your positioning and value proposition language to buzz words that touch the market’s fears and promise a solution that you can deliver. Focus on tactical deliverables and results: “profitability in the new economy” “cost reduction,” “unlimited services” and so on.

Apply these strategies to adapt your business to the new economic realities. Keep experimenting and testing various packages, price points, positioning and value propositions, until you find success.

In all, in a long recession, you can expect to work harder and longer and get less revenue for your trouble. That is what I am hearing everywhere. The point is to survive the recession in order to build again when the economy or marketplace turns back up.

I have written a much longer version of this blog with more detailed examples. If you would like a copy, please leave a comment here with your email address, or ping me at joey@biz150.inmotionhosting.com/~joeyta5 and I will be glad to send it to you.

Whether you as CEO are the main point person, or you have a business development or sales person on your staff, you must direct that the development, maintenance and support of the pipelines of new opportunities are constantly re-enforced.

Too busy? Wait until that major client drops away, or a disruptive competitor eats your lunch, or your margins are cut by forces outside your control. Then wonder how you were too busy to maintain your pipelines to new revenue.

One of my clients, a highly successful CxO, was turning to consulting to diversify his interests and his market reach. He said to me, “So, I should set up on the calendar to be out in the community with my contacts several times a week, right? I mean, I should deliberately set myself the task of networking as a regular event?” Perhaps I have lived this life too long, but that surprised me for a minute. It seemed so basic an idea that I was caught short by his asking. But there was no way he would know this, as he had never consulted before.

“Yes, I said, it should be regular, often and calendared. It is not just a discipline; it must become a way of life that you are always connecting, looking for the next relationship that brings the next opportunity for referral or for direct work.” He became masterful at this.

Now, I don’t mean you should be always pitching, or talking business at inappropriate places like personal social gatherings. I mean when you are in a business context, you should always be working the room for wherever you can be of service, without pushing, only being available to help. This means meeting new people, and new colleagues who may not hire you but may refer you. And of these folks you meet, you must select some who are best suited, and see them more than once or twice – you must put time and effort into building a relationship with them. This means a follow up email, and the effort of scheduling and meeting, and sending them information of interest to them, or resources or leads. Giving first is often your most successful strategy for creating lasting relationships.

The point of networking and marketing is to be in the “top of mind” of your most valuable sources of new work, so that when someone says “I have this problem” or “I need this product” it is your name that is immediately spoken.

Evaluate where to spend your time. What kinds of professionals send you the most work, or leads? Focus on more of those. If you attend a formal networking/referral group, assess its value after the first year. Who knows your value proposition? How many referrals have you gained? How many of those referrals were correctly targeted, and how many closed? If the answer is none or few, abandon the group or change to another one that may be more useful. If you are in a niche market, or offer specialized services rather than addressing a “horizontal” market, these groups may not be of much use to you.

And, you must take your carefully honed one-phrase or one-line value proposition (a success promise with a metric, most times) and teach this repeatedly to your referral network. And you must train them also on how you want leads referred to you (by phone, by email introduction, by sending them to your website, etc.). If your referral sources cannot state your value proposition succinctly, and know the simple and best way to send a new prospect to you, their good intentions will be worthless to you.

This discipline means keeping up connections with your long-time colleagues, sharing information or leads with them, involving them in your conversations online and offline, and seeing them face to face at least a few times each year. It is fine to see your colleagues (especially those who already understand your value proposition) at gatherings, but it is important to carve out time to see them one-on-one as well. Try to meet for an hour or so before a networking gathering, so you have some private time.

This discipline is most challenging when you are busy fulfilling client work or delivering products that are in demand. And it is equally difficult if times are tough, when you are re-positioning to avoid a decline. All the same, you don’t stop marketing when times are good and you don’t stop marketing when times are bad. You must train yourself to respect the priority of always networking and marketing when you are working.

Recessions and depressions are depressing. Industry downturns can be worse, because you see other colleagues in other industries thriving, while there is nothing for you to do. Worse, you continue trying to get work (a job or a consulting gig) and face continual rejection. The world seems gray, and you begin to lose your energy and stamina.

You work diligently at the grunge work of searching the recruiting boards online, posting and sending your resume, refining it again and again for various positions so it is more on-point, until this administrative busy work becomes drudgery.

You network like mad, connecting to all your colleagues, expanding your Linkedin network, updating your profile, answering Questions to become more visible. You blog, you send messages to all your online social media contacts, you meet your colleagues for coffee.

And still nothing. Like an actor waiting for a call-back after an audition, you wait by the phone and email. You wish they would call to say you didn’t get the job, but of course they don’t, mostly. Groups start to form called “Pink Slip Parties” and “The Laid-off Lounge” where you don’t dare show your face. You notice an increase in graveyard humor among your colleagues. Networking evenings that cost $60 find a lot of faces missing. Later the $35 evenings see this too.

Eventually, every day looks the same, and none of it looks good. If you are a worrier, you feel worse. If you have dependents who don’t or cannot work, the pressure is even greater. Culturally, men suffer under the engrained expectation that they must be the providers, while women’s instincts to protect their families add an extra burden.

In face of all that, how can I tell you to remain positive and confident in your value? Because you must. And because, except for the economic swing, nothing has changed. You are still the same person delivering the excellence you delivered when times were booming. Yes, it is harder to find clients or job positions now, but you are not alone in that. The scarcity of work is so far removed from your control, that you mustn’t take upon yourself any blame for the struggle. You cannot control the Federal Reserve’s policies, the banks’ behavior, or the greed of the big guys.

Here are some tactics to try out:

1. Be mad, or sad, that this is not in your control. I mean, be actively mad or sad or both. Take a few minutes everyday to curse the gods, or the politicians, or whomever you like, and take those minutes to feel really bad. Give yourself three or four minutes of wallow.
2. Then pick yourself up, take a shower to wash it away, and get ready for your day. Get dressed and looking good. It will make you feel better.
3. Take care of your physical self. Eat well, exercise, get out of the house, even if you don’t want to. Try not to drink or drug yourself any differently than you do in good times. In fact, pamper yourself if you know how.
4. Determine what time of the day is your strongest (mornings? late afternoons? nighttime?) and do your best work then.
5. Leave time every day to see people outside your house – it will make you put your best face forward, will make you re-engage with the world, will offer your some perspective beyond your own views.
6. Do not whine. Yes, you can have a confidante who sees you at your worst (not necessarily your family). But otherwise, be worldly and confident. “Yes, the conditions are difficult”, you can say. “Yes, the downturn is lasting a long time. Yes, it is beyond our control.” But then, in the face of this, re-iterate your own value and how you are applying it to new topics and challenges, and how the work will come when it comes, with diligent effort. Say it to yourself, and most importantly, say it to your colleagues when you see them.
7. The posture, brightness and behavior of acting positive will actually support your attitude. Strange how this is true. If you mope around in your pajamas whining, righteous though you may be, it will only make things worse. Going out into the world and faking it will actually invigorate the confidence you have lying fallow.
8. Turn your attitude inside out: instead of looking everywhere for help for yourself, look at how you can help others. Now, this is not sentiment or crystal-hugging here. There is a positive response, in yourself and in others, when you approach the world with “How can I be of help to you?” First, it is empowering – to you by offering, to the recipient by your assistance. Next, it is generous. Finally, it is pro-active, and pro-active kills depression. And, if you help, you get that deeply desired feedback loop that your excellence is in play, is witnessed, and is acknowledged. That in fact is a lot of what you have been missing from work days.
9. And then, when the economy turns back up, and your work is challenging and fulfilling and financially correct again, try to remember that still, except for the economic swing, nothing has changed. You are perhaps more valuable for your experience, providing the excellence you have to offer. And you may just be more prepared for the next swing that you cannot predict.

So, you are mostly out of work, either unemployed, or underemployed, or not consulting to many (or any) clients. One of the disruptive patterns of un- or under-employment is that your time is broken up by the work you can do, the job hunting, the networking and the marketing that is required (see http://bit.ly/dp97Gv) . But there is still plenty of time left over, and it gets wasted, often in worrying. Or, conversely, the time worrying wastes valuable time for other more useful pursuits.

I was once scheduled to have lunch with the mother of my close friend and business partner, and needed to move the scheduled time. I asked my partner what else her mother might have scheduled that day. “My mother? Scheduled? My mother is retired – she can only do one thing each day!” This comment has stayed with me all these years, in that perplexity about why when we have almost no time to ourselves we can get so much done. But when we do find a period of free time, almost nothing on our List gets accomplished.

And so it is with time on our hands when seeking work. We are enervated not energized. We are pleased with ourselves when we have pursued our job boards, sent our resumes, and networked with our colleagues. But the down-time still weighs on us.

Think carefully for a few minutes: You cannot fix the economy that you didn’t break. You cannot fix the folks who helped to break it. You cannot fix the natural cycle of your industry that brings you to a low point every few years. You might notice that there is a pattern in some of these cycles — also not anything you can fix, only something you can anticipate in the future (see http://bit.ly/9HsyiP). So, get to acceptance of all this, and move on to fix what you can.

I remember my first downturn (industry-wide) when I was a young consultant. I didn’t have any perspective on economics back then, so I could not place my consulting practice in that the larger picture. During the work days I tried to understand how to market in a wasteland. I would be so alienated each morning, that I took to doing my errands first thing in my walking neighborhood (then Beacon Hill in Boston), just to have the human contact of my local merchants – the postmistress, the greengrocer, the butcher, the newsagent, to jump-start my social brain so I could return to work on the marketing and outreach. This was not a conscious tactic, but a necessity, and it worked.

So, what else can we do to maximize our downtime, and avoid the wasted time of worrying?

1. Create alternative marketing tools for yourself. This could be starting a blog about your expertise (or a secondary blog directed at an adjacent industry) to expand your market reach. Or participate in online social networks with your expertise and commentary to create extended visibility.
2. Volunteer at a not-for-profit that is aligned with your industry, job or expertise, and volunteer to offer your skills. Consider what you might “trade” for that volunteering that might gain you exposure in your search for work – access to prospects, speaking engagements, sponsored webinars, and so on. (for more on this, see “Understanding and Optimizing Pro Bono Work” at http://bit.ly/b88DVp).
3. Aggressively refine, extend or re-build your working infrastructure to smooth your workflow when it returns. This may mean updating or cleaning your database, or your contacts lists, or your social networks. It may mean learning a new software tool that would speed your work. It may mean cleaning out your files. Focus on those tasks that will truly enhance your work life, not the drudge work that doesn’t matter. All those tasks you never get to, that slow down your real work – get to them.
4. Reconnect in an upbeat way with people you lost touch with while you were so busy. You will discover many of these while you are refining your infrastructure. Don’t put your worries on them; just make a friendly outreach that asks for nothing. Not only will these meetings take this unfinished business off your List, you may find some interesting synergies or new thoughts from the connection.
5. Work aggressively on projects that create ongoing passive income. Make certain that the subject matter of these projects is of deep interest to you, even if it is not connected to your primary work. Keep the overhead low. Do not treat this project as a hobby, but as an alternative business that will continue to drive passive income to you after you are fully working again. If you need a partner in this, to make it succeed, then find the best partner and begin. Partners will share the burden, broaden the skill sets required for the business, and will continue to move each other forward.

Now, if you approach these tasks as “make-work” you will fail at them. If you structure your day and schedule yourself with way you did when you were busy working, these tasks will energize you and lead you into new territory.

And the new energy will suffuse itself into the search for work, the marketing and the networking. Energy gets more energy, like working out at the gym creates more strength for the day ahead.

And very soon, you won’t have time to worry; you’ll only have time to fix what can be fixed, and move ahead.

Balance looks different for everyone. Some folks want intensive work on a fixed schedule, followed by no interference from their work-life at all. Others want their mornings at the gym or at yoga, and no start-time or time-clock to punch, and then will work late into the evening. Still others like a life where they can adjust their days to their work demand, and don’t mind a mix of client- or job-interruption each day, even on the weekends.

One colleague, having left a directorship of a not for profit, was offered consulting work within the same organization. I asked her how it was to work for the organization in which she had built several of their business units and been the boss. “I like it,” she said. “When the workday is over at 5:00 p.m., it’s over and I don’t think about it until the next morning. I get to do other things with my mind and my time. I’ve never had that before.”

A consultant said to me, about recessions, “Finding work is much more work than doing work.” And he was good at finding work. “Having the client and delivering your services is much more rewarding as well – you get that feedback that you are offering value. Full time marketing and pitching and negotiating, even when you are good at it – it never lets up. You can’t settle down and get something done.”

So, what does balance look like and how do you get it?

1. Figure out what pattern of work and non-work time is best for you to feel whole.
2. Get control of your schedule and your time, if you can. It is more important to feel you have some control over your time than to get more of it.
3. Make trades, if possible, with your organization or your clients, to get the work covered and your schedule to suit you. You can’t get what you don’t ask for.
4. Get rational about your promises to deliver goods or services. Add some buffer into your projects for the unexpected. The supply chain may falter, or you may have an off-day creating that project or delivering that service. Make some space for yourself and the real world in your commitments.
5. Set boundaries on your personal time. These boundaries are to protect your pro-active, positive time with your self and your loved ones.
6. List all your favorite things that bring you happiness – especially the simple ones. The ball game with your buds. Competitive physical challenges. Learning new ideas. Poker. Long talks with a close friend. Horror movies. And set up your life to do at least one of these each day.
7. Do not justify your personal time, or explain it to your colleagues or your clients. They don’t need to judge what you need the time for – a sick parent, a child’s dance recital, or your bubble bath.
8. Unplug your devices – phone, email, PDA. You don’t have to be “always on.” You can be “off.” What a concept. The work, the gossip, the news – it is there 24/7. Let it be always on, and you tune in when you are finished reading that new mystery.
9. Don’t turn on your computer. Yes, I know, your friends are there, your social networks are humming, your Lists are there… but you know what happens, right? You turn it on to check the weather or look up a phone number or a TV listing, and 3 hours later you are still there – answering one more email, updating one more file, fixing one more glitch. And your day is gone into that machine that is your work life, and your body only knows it has spent 3 hours in the machine (like it does every day at work), and not outside in the sunshine, or curled up in your chair watching your favorite movie, or walking on the beach with your true love.
10. Get physical – whether you love it or not. Some folks wait all week for the time when they can run or bike for miles on the beach, or get sweaty at dance class or the gym. Others want a big chair and a good book. No matter – you must keep physically active for your sense of balance. If you are a book person, go out anyway. Take a book on tape on your MP3 player if you like, but get moving. Find an activity you can love (tennis? dance? beach walking? weight lifting?) Doesn’t matter, just do it every day. Yes, every day – do something. Your brain as well as your body will thank you for it.
11. Slow down. Take little breaks from the work and the worry to remember the larger picture of life. Remember when you fell in love with your partner, or when you child was born. Remember places and times when life was spontaneous and easy and pleasures were on hand. These are not gone, just because we are pressured by an economic downturn, the search for work, the worry about finances. The joys are there too, if you remember to find them, protect them, and give in to them.

To change your mind from dread to joy is the easiest and the most difficult thing of all. But all it takes is to change it from the dark side to the bright side. Try it.

A colleague asked me to offer advice to entrepreneurs about how to survive economic downturns. I sent him a list of 6 strategies:

1. Create cash reserves during the good years to get through the bad years;
2. Adapt your offerings, value proposition and pricing structure to what is needed now, not what you offered before;
3. Always market and network while you are working, even when you are fully booked;
4. Remain positive and confident about the value you can deliver;
5. Don’t waste energy worrying about what you cannot fix — fix what you can.
6. Keep balance in your life — non-work pleasures — to remind yourself of what you value beyond work.

I shall begin a series this week (every Friday for the next six weeks) expanding on this list of strategies. Please send me your thoughts and advice and stories to share with our community.