With the economy having slowed, I thought it would be a good time to discuss some of the unwise (some may call them “stupid”) things that business owners do.  Whether it is because of panic or just idle hands, these are things that you really should try to avoid.

1) Don’t Lay Off Employees Just Because

It is tempting when business starts to slow up to start cutting employees to save money.  Here is the downside to that approach however.  If you start trimming employees now, ask yourself what you are going to do when things start to come out of the current downturn?  When requests and orders start to come back in how will you scale back up to handle the demand?  Odds are that those people you laid off are not just going to sit around and wait for you to call.  If you spent time and energy training people letting them go can mean them slipping to you competition who will benefit from your hard work.

A good business plan should include having the cash reserves to weather a dip in the market and keep your company in tact.  I know that is not a flashy suggestion and it means squirreling away some cash that you would probably really love to spend but if you downsize and get consumed by a tidal wave when the economy recovers and don’t have the personnel to handle the load then what?

2) Failure To Conduct Business As Usual

I should note that these suggestions are for when what is happening in the economy is not some catastrophic realignment but merely where the normal ebbs and flows of market forces are in effect.   So when you see me say, “conduct business as usual,” that of course has a caveat.  For example if you are company like the Big Three automakers in Detroit who are being buried because of untenable expenses brought on by idiotic, there I said it, promises to labor and giving huge bonuses to management for operating a company in the red then you certainly should NOT continue doing what you have been doing.

But for most companies that are fiscally responsible, conducting business as usual is a good idea.  If you call your customers regularly continue to do so.  If you have meetings on Monday in the office continue to do so.  If you reward success with bonuses continue to do so.  Failure to conduct business as usual is a sign to those in your company and that your company deals with that something is wrong and people do not like to work for or with companies that they perceive as having problems.

Believe me, your customers will notice if you stop calling and your employees will start acting funny as they look over their shoulder if they anticipate more changes based on deviations from the norm.

3) Remember That 10% Is Better Than 0%

One exception to my previous tip is that when times get rough, often margins must suffer.  It is important to remember that 10% of $55,000 is a lot better than 0% of $60,000.  The later number is what your product would have sold for at 20% markup. Lots of companies stubbornly refuse to realize that competition exists and that the competition is ruthless.  Sometimes survival of the fittest means the fittest have to get a little leaner too.

You may have been fat, dumb and happy making 20% on your products but when the base of customers begins to dry up, it means more competition for those customers.  Supply and demand dictates that prices drop if the number of companies providing a service stays the same but the demand for that service drops.  It is often unwise to ignore this reality.

4) Don’t Get To Nebby

When the economy sags business owners have a natural tendency to start roaming the halls more frequently and getting more interested in what people that work for them are doing.  The problem with this is that it tends to show two things.  First that you don’t trust your employees anymore and second that you, yourself, don’t have enough to do.

You either have faith in your employees or you don’t.  If you left people to their own devices when times were good and are now looking over their shoulders when times are bad you will make them uneasy because this is a change (see point number 2 about conducting business as usual above) that will be seen as a lack of trust.  And the worst part about seeing a boss more often when things are in the toilet economically is that the employees start to wonder why you are not out looking for ways to help turn the company around.

5) Don’t Send Mixed Signals

The email reads something like,

“Dear employees,

Due to the current and ongoing economic crisis the offices will be closed every Friday in December to help curb costs.  As a result, employees will not be paid for the full work week.”

Then a day latter another email is sent out reading,

“Dear employees,

Please do not forget that the company Christmas Party will be held on December 22nd!  Hope to see you all there!”

Well, which is it?  Is there an “economic crisis” or isn’t there?  Are we cutting costs or not?  Christmas Parties are not cheap ya know!  Don’t, what ever you do, send mixed signals like this.  Believe me, your employees will really start to wonder what is going on if you tell them you are cutting costs but continuing to spend money on extravagant events.

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J.J. Jackson is President of Land of the Free Studios, Inc. and Cafepress “Top Shopkeeper”. He has been selling t-shirts on-line since 2004 and is the owner of the T-Shirt Entrepreneur, a site dedicated to helping people get involved in the T-shirt Economy. He is also the owner of Funny When Wet T-shirts, American Infidel Tshirts, Uber Gamer T-shirts as well as many other online t-shirt and gift stores.