How to Dominate in a Recession

Lower the Breakeven

Classify expenses as “Fixed” or “Variable.” Variable costs (expenses) go into every product or service. Fixed costs are determined by decisions about the business’ structure and size. In a weak economy, expect volume to drop. This means you must cut fixed costs fast, and resize the business to the market. Pricing must recover variable costs, and contribute to covering fixed costs, SG&A (sales, general and administrative costs), interest and, hopefully, yield a profit. (Note: Using EBITDA as a metric is dangerous; it excludes interest — a cash outlay.)

Getting through a recession is like getting in shape after gaining weight. Exercise (make the right moves) and eat properly (feast on competitors) by selling the best products to the best customers. Don’t quit when the going gets hard. Running a business is supposed to be hard. If it weren’t, everybody would be doing it. Now get out there and don’t just survive, attack and dominate!

It’s a lot more fun than the alternative.

John L. Mariotti is president and CEO of The Enterprise Group and former president of Huffy Bicycles and Rubbermaid Office Products Group. An author of eight business books and hundreds of articles and columns, he serves on several corporate boards, advises companies and does public speaking. His latest book, “The Complexity Crisis: Why Too Many Products, Markets & Customers Are Crippling Your Company – And What To Do About It” is available at www.amazon.com, www.800ceoread.com and most leading bookstores. John can be reached at www.mariotti.net.