Weathering the Recession: Economic slump reveals what works, what doesn't

By David Williams

Caught in the gloom of shrinking 401(k)s, a shaky stock market and the threat of layoffs, employees and entrepreneurs alike can have trouble spotting the proverbial silver lining.

But even as the world waits for financial forecasts to brighten, savvy businesses and individuals will find ways to benefit, if not profit, from the recession.

Reflect, revise
The thought of having to live with less requires some re-evaluation at the corporate and personal levels, especially following times of prosperity. However, "downsizing" doesn't have to be a dirty word, according to Burk Tower, College of Business dean at the University of Wisconsin Oshkosh.

"The recession forces businesses to be more analytical and review their expenditures," Tower said. "They are forced into doing things they should have been doing all along."

Tower, who cofounded the Wisconsin Family Business Forum in 1995, describes the paradigm shift as the difference between working in a business and working on a business.

"When the economy is on an upswing, you're too busy servicing customers and making money to step back and find new ways to improve," Tower said. "We should come out of the recession with stronger, more efficient firms."

Tower predicts the recession will lead to an improved regulatory environment with greater accountability in the financial sector. And if those lessons in self-discipline also are learned at the personal level, so much the better.

"Hopefully, people will be more responsible with their own expenditures going forward," he said.

Starting anew
Amid reports that companies are closing the doors of factories and stores, creating a new business might seem reckless. That depends on the alternatives, said M. Kevin McGee, an economics professor at UW Oshkosh.

"There are a number of reasons why starting a business now might not be a bad idea," McGee said. "While growth may be very slow, at least you are starting in an improving climate, as opposed to six months ago. Also, finding good employees and suppliers will be relatively easier."

For those facing unemployment, starting a new business might be a better option than battling back into the job market, particularly for those entrepreneurs providing services rather than goods.

"If these are bleak times for you and you've had an entrepreneurial idea in the back of your mind, now might be the time to jump on it," McGee said, though a solid business plan is paramount, given banks' reluctance to lend.

Added Tower, "Now is a good time to think about starting a new business. Do your research. When things turn around, there will be fewer competitors."

Cash is king
At the office as well as at home, those entering the recession with a firm hold on their finances — i.e., expenditures don't exceed income — will have better odds at weathering the storm.

"Entrepreneurs talk about cash being king. The only thing that will kill a business is when it can't come up with enough cash to pay bills," Tower said. "Cutting money for marketing saves some cash in the short run, but if done effectively, marketing is an investment, and the return will be greater than the expense."

A recession can be a prudent time for certain personal purchases, as well.

"If you have cash and a reliable cash flow, it's a good time to buy a house, a car or other major durables because interest rates are low. Loan refinancing also is a good idea because it will lower your cash outflow on an annual basis," Tower said.

Buying bargain-priced stocks also can be a lucrative investment, though potentially profitable stocks are difficult to identify.

In light of an increasingly competitive job market, many people are making another kind of investment.

Intellectual investment
The recession opens a door to education — and not just lessons learned in the school of hard knocks.

"One thing that universities have noticed over the years is that enrollment goes up during hard economic times," McGee said.

Programs at UW Oshkosh emphasize skill sets employers seek, as outlined by U.S. Department of Labor surveys, including leadership, networking, prioritizing, and managing people, time and money. Flexible scheduling allows students to enroll in bachelor's and master's degree programs while keeping their day jobs.

Martin Tadlock, assistant vice chancellor for UW Oshkosh's Lifelong Learning and Community Engagement (LLCE) division, sees ongoing education as an opportunity for professionals at all levels to gain a competitive edge. LLCE provides credit and noncredit programs for nontraditional, working adults and the community.

"One problem many older working adults have is a lack of understanding of the impact the global society in which we live and work has on their lives. This new society requires additional education," Tadlock said.

Exposure to technology and interaction with a diverse student body are two bonuses that re-enrollment brings, no matter what discipline a student chooses.

"The campus environment today is dramatically different from 20 years ago," Tadlock said. "Just by being on campus, professionals will encounter many opportunities to learn new technologies and interact with students and faculty from a wide range of ages and backgrounds."

The University is preparing for a 20-percent increase in its nontraditional, working adult population for 2009–2010. The number of students who are over 50 also is increasing nationally in part because employees are delaying retirement.

"You can't get everything you need on the job," Tadlock said. "We live in a world that changes much too quickly for that."

Recessions come and go. Careers wind down new avenues. But whether in the midst of a financial windfall or economic doldrums, wisdom never loses its value.