“I learned to do without, to make tough choices, to economize, to ‘make do’. Unfortunately, the fear you are seeing now in the current recession is because lifestyles have had to be drastically changed. The reaction is more emotional than economic from a whole generation that has been prosperous and never lived through real poverty.”

“We must learn how to be poor,” says Smith. “Being poor requires a certain skill set. Simple skills can be learned, like how to budget and not to worry about inane things like keeping up appearances. If you can’t afford it, learn to live without it. It teaches us discipline and value for the things we have. And importantly, it teaches us the virtues of moderation.

“These are tough lessons, but ones that will help us weather many storms in life.”

Smith has a no-nonsense philosophy when it comes to facing financial crises in business as well as on the personal level. A cancer survivor, she went through debilitating chemo and radiation treatments while working on a commission basis for a major business technology corporation. She came through that period as one of their top producers Canada-wide.

“You can’t afford to give up. If you fail, does that mean you sit back and stop living? Put on your pants and go out the door. Go out and find something to do. As long as people need food to eat, clothes to wear and a place to sleep, there will be work,” says Smith. “At last check, Canadians were still doing that.”

Stay afloat. When hard times hit, our instinct is to retreat and take cover. Business owners cannot afford to do this, says Kay Saunders, a veteran advisor to fledgling entrepreneurs at the Toronto Business Development Centre. Making wholesale reductions and taking a passive role waiting for things to improve could worsen the situation for a struggling entrepreneur. 

“Positive action not only relieves anxiety but can bring surprising results in tough times,” says Saunders.

“We’ve all heard the cliché ‘tough times need tough measures’, but tailor your survival action plan carefully to your particular circumstances,” says Saunders. Focus on solidifying your current status in the market, bolster your credibility with your clients, weed out the stuff that isn’t working and source out free or less expensive options.

“For example, on a local level replace expensive advertising with an aggressive targeted networking plan. But do realize that marketing expenses are not expendable. You have to keep promoting your business, even in tough times, especially in tough times.”

“Stay visible, stay connected,” says Saunders. “Go where the referrals are. Remember your competitors are tightening their belts, reducing their advertising and oftentimes pulling up stakes. Be diverse and accept small accounts. Do not become overly dependent on certain clients. These small accounts now in operation may eventually turn into big ones once the economy is rolling again.”

When your business suffers a downturn it is a good time to review and re-evaluate your business profile, revamp it if necessary to make your customers see you in a more positive light. How do you do this? 

“Look after your best customers,” says Saunders. “Do the little things that show them that you value their business. Offer information and useful tips without charge. Be flexible and compromising. In a recession, remember your customers are hurting as well. Offer different payment plans that may ultimately work in your favour.” 

On the administrative and financial side, look out for alternative sources of financing. Speak to your bank about refinancing your existing loan and switching to lower interest options. Keep expenses low, yet make sure your cost cuts don’t cause you to compromise on quality or safety issues. 

“Try to stay afloat,” says Saunders. “Do what you have to to sail over these rough patches. Use them as a learning experience. You’ll come through stronger.”

Everyone needs a Plan B. In spite of your market research and your business plan, things aren’t going well. Customers are not responding and more money is going out than coming in. Do you panic, do you fold, do you give up the dream? “No,” says Lynn Tremblay, business advisor at the Toronto Business Development Centre. “That’s when you switch to your ‘Plan B’. Everyone should have a Plan B and know when to kick it in.”

If you don’t have a Plan B, get one, says Tremblay. “You need to chalk out specific alternative courses and strategies. Whether these alternatives involve minor changes or major shifts in concept and focus, you need to plan for ‘what if’ situations. Set up options ahead of an anticipated crisis and you will ease the transition over a difficult period when it happens.”

Starting again from scratch is a daunting prospect. “Go through the ‘mourning process’ if you must, but a smart entrepreneur will pick him/herself up, get into the right frame of mind, ask for help if needed, and launch into Plan B with newfound determination.”

“It is not an easy call to make. You wonder if success is just around the corner. And it could be. You have to decide whether you can afford to continue to lose money in your current strategy or cut your losses and alter your plans.  When we have invested so much of our resources and ourselves into a current situation it is hard to look beyond,” says Tremblay. It is crucial to watch for the warning signs of a downturn and act before the loss is significant.

“Listen, listen, and then listen even if you don’t share the opinion. Pay attention to market forces. That should be your reality check,” says Tremblay. “Then if you see the door closing on your business, open the window to your Plan B.”