1. Don't be caught off guard if the slowdown hits your company, says Gregg Landers, director of growth management consulting at a San Diego-based accounting tax and advisory services firm.  "Prepare a worst-case, 12-month cash flow scenario.  Assume a 10% to 20% drop in revenues and identify what changes you would make and when," he says.  If you need to, improve your management reporting so you can identify leading indicators for your firm.  You don't want to react late after you notice a drop in your monthly financials.

2. To keep your company lean, set and measure inventory targets and keep in daily or weekly communication with your sales and operations staffs, Landers says.  You may also want to weed out unprofitable customers (BusinessWeek.com, Oct./Nov., 2007).  "Every company has customers that cost more than they add to the bottom line.  Identify them, evaluate how to make them profitable customers, and if that's not possible, politely hand them to your competition," he says.

3. To keep from losing business, keep in close touch with your customers.  "Show that you care.  Understand how their business is being affected and look for ways you can help.  Lasting relationships are built in hard times."  And look for new market opportunities, recognizing that when the business climate changes, customer needs will change as well.  That may mean new markets will open up for you, Landers concludes.

4. Develop strategies to land more customers.  If you want to make your company grow, you may have to steal customers from your competitors.  "The pie is shrinking," says Jay Siff, chief executive officer and founder of direct marketing firm Moving Targets and Loyal Rewards.  He also says: "For the auto repair shops, cars are more reliable and need less frequent service.  In the restaurant world there's been overbuilding and the average number of meals eaten out has declined for the first time in a number of years.  The successful smaller business is going to have to win a bigger share of that shrinking pie."

The way to do that, particularly for multichannel retailers, is to create a positive experience.  "Make sure you give every customer the best experience you can.  You've got to do this better than the other people out there," Siff says. 

5. Spend on hiring.  Tom Gimbel, CEO of a Chicago staffing and executive search firm says business owners should hire - not fire - during a recession.  "Most of the time, economic downturns are short-lived," he notes, a powerful incentive to keep the bigger picture of long-term growth in sight.  "It's easier to invest training time for new hires during slower growth periods.  Employees that are fired during a recession will have to be re-hired - which costs companies a lot more money in the long run," he says.

Another effective strategy is to team up with local schools and colleges and start an internship program.  For many of our clients, it's proven to be a valuable, low-cost way to recruit and develop talent. (See my June 2007 newsletter).

6. Continue to get the word out about your business.  Dan Feder is co-chief executive officer of an equipment leasing firm whose clients include many small businesses.  He counsels those clients to continue marketing and advertising, rather than dropping those expenditures and decreasing cash flow.  "The first instinct of many businesses is to kill the marketing expense.  What they don't realize is that could make things worse," he says.  If you can't afford a full-blown marketing program, choose cheaper alternatives such as e-mail marketing, blogs, public relations, and online newsletters.

He also recommends staying positive.  "Think of ways to bring in new types of customers, maybe partnership opportunities, or new products and services.  Many businesses stop doing things that will help them grow in fear of the recession, and then do just that - stop growing."

7. If you're a small business, keep your personal credit ratings high, since business borrowing often depends on personal credit.  "Curb your spending and don't give the bank a reason to charge you more money by being late on payments," says Ken Kamen, president of Mercadien Asset Management.  That spending and borrowing advice applies to mid and large size businesses as well.