When the economy is in the shape it is in, everyone looks at finding ways to save money. It’s a proven fact that when the economy is good, expenditure expands to use resources – that’s when you buy a fancy laptop even if the old one is fine.

When the economy is bad expenditure contracts to fit available resources – you get your bashed up old mobile phone repaired instead of buying a new one. Now all this is pretty obvious but lets look at some time tested methods of saving money, not just for now but even after the economy picks up – maybe you could then buy a new laptop and a phone.

• You need insurance, but how much do you need? It’s easy to get carried away when flush with cash and over insure yourself. Reexamine your insurance needs and bring down the premiums.

• You need to advertise. But look at all the free and low cost options before spending the big bucks. Word of mouth is still the best and most trusted form of advertising and is free. Maximize on that. Use email marketing – it’s the cheapest way to communicate with a large number of people. Why not start an e-newsletter? Have you thought about using YouTube to promote your business – its free?

• Do you really need all the office space you have, or could you either give some of it up or sublet it? Think about reorganizing your office layout – you may be able to save a lot of space.

• Think about switching to free open source software. It’s as good as the expensive stuff and is compatible with most other software so you won’t have any issues in using it. Refill printer cartridges. There are inexpensive web hosting companies that offer great service. Are you paying too much?

• How many phone lines do you have? If the phones are there they will be used. Usually you can reduce the number of phones without affecting operational efficiency.

• Examine your electricity usage. Does your air conditioning and heating have to be so high? Make sure that you are using energy efficient bulbs. Re arrange the office to make maximum use of natural light – place tables near windows etc. – and cut your electricity consumption.

• Plan your travelling as much in advance as possible so you can get the cheapest tickets. At your destination use discount car rentals.

• When travelling with colleagues, why not share a hotel room?

• Can you outsource some of your non core work? The savings and improved results can be quite dramatic. If you are not in a position to outsource, think about using part times workers and freelancers. Do you need a full time accountant if the work can be done in a couple of hours each day by a freelancer working from home?

• Stop entertaining. Flashing your credit card no longer impresses people. You will create a better impression if you talk about how cutting costs is helping you redeploy resources. If you have a customer with you and its lunch time take him to a fast food outlet – not a fancy restaurant. Tell him that this is how you are holding your price line and not charging him more.

Think of all the ways you and your family try to save money at home. You will be surprised at how many of these things translate into office savings as well.

Most people look at hard times as when the focus is not protecting your existing business and making sure that it does not shrink. That’s a big mistake. It means you are focusing only on the enemies at the gates. A business can never be inward looking. It is not a self supporting entity. A company exists only in relation to its market and unless it focuses on that market, it will soon be separated from it. Then it becomes like a fish out of water and soon dies.

The smart business owner knows that most people do what is outlined above. That provides him opportunities to go into the market and while the competition is so busy looking inwards, occupy some of their territory.

It sounds great in theory, but when times are hard, how do you create the resources to build your business when you are already suffering as much as everyone else? The answer is that you don’t. Money and other resources are not easy to come by. What you need to do is redeploy what you have with you.

The first thing you need to do is not panic when business slows down. Use the time you now have to examine your business operations in detail. Do a SWOT analysis. What about the opportunities you missed in the past – can you do something about some of them now? What are all the organization and systems changes your company needs? Is this a good time to implement them? Is there training that your people need but could never spare time for because of the pressure of work? Would now be a good time for arranging for this?

All these are ways of generating internal strength – what is called “structural strength.” It will not bring you immediate profits, but puts you in a position of strength for when the economy improves.

That is the long term. But the immediate can’t be ignored. Your analysis will have shown you the things you need to do and the things that are either a waste of time or which are important but don’t require management input. Drop all the activities that are wastes – those which do not, at least indirectly, contribute to your profits. The important things that don’t need to be directly managed should be outsourced. This will not only free up management capacity but also improve your cash flow and provide you resources for your growth activities.

Now, you are left with just your core activities, get your company lean – move out people, offices, and equipment and so on that you do not need.

And now to the final stage. You are leaner, more tightly focused and stronger than you were before. Can you use your existing customers as conduits for more business? With your new strengths, can you take some business away from the competition? Has the recession created a new niche market that you can attack? Don’t look only at what opportunities the market offers. Look at what opportunities your new strengths can create.

This is not as easy as it sounds, but is what smart companies have historically done to prosper during hard times. Just remember that your competition may also have the same ideas, so if you don’t grow, he will. And it will be at your cost.

Depending on how old you are, this could be your first real economic slowdown. But whether it’s your first or third, this is the worst we have seen in 70 years. Sure, we will get through it and will come out stronger. But does that mean that it will not happen again. Not at all. This time we brought it on ourselves and we may have learned our lesson. But it’s a global economy the next recession may be triggered by something that happens far away in India or China.

The smart business owner will be looking at ways to recession proof his business. It’s not easy but if you follow these 6 tips, you can make your business recession proof as possible.

The most important thing you can do is to protect your cash flow. When things get hard, your customers may delay payments or renegotiate payment terms. You can’t say no, but your cash flow will be hit. And while cash is reduced, business needs to carry on and you can’t run your business without money. Recession means banks will not raise your credit limits.

There are many things you can do to protect your cash flow but the most effective way is to control your outflow. How much can you outsource? Outsourcing is not a cure for all ills, but it will reduce your expenses and rather than having a regular outflow of money, you will need to make one consolidated payment per month for each outsourced operation. That makes money management much easier. There are lots of other things you can do to control your expenses. You will find hundreds of books, magazine and internet articles devoted to this. Go through them and find what will work for you.

Can you control your inventories better? That does not mean letting your quality or of deliveries suffer. But can you find a cheaper supplier (maybe nearby with lower shipping costs). Are any items over stocked? Are there drop shipping alternatives you can look at?

Continue to market your business. A recession is when customers get restless and look for cheaper sources. It’s easy to cut back on marketing expenses in a recession but low levels of marketing activity and restless customers is a recipe for disaster.

Your customers, even if they stay with you, will be ordering lower volumes. To protect your business you need more orders and the only way you can do that in a recession is by taking your competition’s customers. Research what they do and find ways to beat them at their own game. There will be no new markets opening up during a recession.

Your credit rating is not limited to your business. Your personal credit rating also plays a part. Make sure that you protect both. It’s easy to let your personal finances suffer while focusing on keeping your business afloat. But a business owner with a bad credit rating will always be a lending risk, even if the business finances are in good shape.

Focus on your core competencies. Outsourcing will allow you to focus on what is important. Stick to that and don’t try anything new in the way of products or services just to make your company look more attractive. Focus on what brings in the money today.