Increasing flexibility helps weather tough times, experts say
Running a small business during a recession often requires creative alternatives to the traditional business model. For some small businesses, one strategy is to increase the flexibility of their business models, helping them stay afloat during downturns and positioning them for growth when the economy rebounds.
Turning fixed costs into variable costs "reduces the need for upfront capital and the risk of runaway costs when things are slow, while allowing you to scale up quickly when orders start pouring in," said a recent article in the Wall Street Journal.
To do so, many small businesses are cutting down on overhead costs such as office space by having somewhat of a virtual office, allowing employees to work remotely or outsourcing the work to online freelancers.
Some small businesses are going so far as to rent server space, paying only for how much they need, the Journal reported. This strategy keeps costs low when the business is small and does not require much space, while allowing room for expansion when revenue picks up.
Small business owners should not stretch too far for variable costs, however.
"The key is understanding what is core to your business," Steve King, a partner at research and consulting firm Emergent Research, told the newspaper. "Things that are noncore is where you try to remain flexible."
Approximately 77 percent of small business owners reported having to reduce or control costs during the recession, said a recent survey by the Families and Work Institute.
