To listen to an interview with Michael Carroll on this topic, click this link. This interview was broadcast July 2, 2008 on KZYX, Mendocino County Public Broadcasting.

A slow economy to a business is like winter to a farmer. It is part of a normal cycle. Things may be dormant, but there is still lots to do. And winter is always followed by spring. Unfortunately, economic cycles are far less predictable, and the slow periods may be years long. But here are a few things to think about.

1. Lower interest rates Interest rates are at historic lows. It may be possible to refinance your debt and lower your monthly expense. It is not necessarily a good idea to borrow against losses just to maintain lifestyle. Rather it is more appropriate to tighten belts and spend less.

2. Slow economy weeds out your weaker competition If the slower economy is hard on a strong, well-run business, it will be much harder on businesses that were just barely making it in the good times.

3. Sometimes easier to find new employees Recruiting good employees is always a challenge, but when the economy slows down, more people are out of work, and it is often easier to find new employees.

4. May be cheaper to have new construction done When the construction industry is down, there are more out-of-work construction trades people, and it might be possible to get construction work done sooner or more inexpensively.

5. Be frugal This is not a time to spend extravagantly and even to continue to spend as you have been. This is a time to be extremely careful with your expenses. If you need to cut, cut owner’s salary first. For a while, live on less.

6. Watch the business expenses even more closely Use your P&L and cash flow. If you do not have these essential tools, get them and learn how to use them. Costs are going up in spite of what they government is announcing about low inflation. Your suppliers may not notify you when they increase prices. Stay on top of it.

7. Revise your cash flow forecast regularly This tool is important anytime, but in questionable economic times, it is essential. If you have a sales forecast and cash flow forecast, review and revise it more often. If you don’t, get urgent about getting one.

8. Increase, not decrease marketing A common mistake is to cut marketing. It is often the only way to reduce expenses without reducing owner draw or payroll. Other expenses like rent are usually fixed. But if you are doing effective marketing, reducing the effort will guarantee your sales decrease. Rather, find other ways to cut, and spend more effort on marketing.

9. Avoid fear-it’s corrosive Watching Fox News or CNN on TV will convince you we are in trouble even if we are not. Fear is good for keeping you from going over a cliff, but staying in the state of fear over a long period is unhealthy and unproductive. The antidote to fear is action. Ask yourself what can you do differently – then do it.

10. Might be a good time to start a new venture This doesn’t seem to make any sense. However, if you use the time during a slow economy to do the groundwork for the new business–make a good plan, perhaps raise money, hire key employees–you might struggle some in the beginning, but you’ll have a year’s head start on a competitor who’s just thinking about getting started in the same business. The enterprise can follow the growth of the economy when it does turnaround. Think about the difference between starting an internet company in 1993 verses 2000.

Don’t misunderstand me. Things are tough and may get tougher. It may not be as much fun as boom times. But usually a well-run business can survive, even thrive, during an economic downturn.