Part 1 of a Series

It occurred to me recently that to be able to remember first-hand the last really serious recession (1980-1982) as adults, individuals would have to be in their late 40s. While there have been a few relatively short-lived downturns beginning in 1990 and 2001, they were nowhere near as deep as the 1980 contraction. The one we face today may prove to be every bit as severe, if not more so. This means that employees and managers working in the retail furniture industry have never been through anything like this unless they have worked in the business for a very long time. I wonder how many have a definite action plan to deal with it.

Many experts say the recession has peaked and the turn-around is at hand. I certainly hope so. But, if this optimistic outlook is not evident on a particular selling floor, and sales are few and far between, then at least to that company, the recession is in full bloom.

History shows that there have been 32 cycles of expansions and contractions since the mid-1800s. Each time, the economy turned around and eventually found its way back to prosperity. The great depression took many years, a world war, and many failures to find its way out while other contractions were barely blips on the screen. Businesses go under and businesses survive. Few make it however, without recognizing the reality and seriousness of the economic situation, developing an action plan to deal with it, and executing that plan.

It seems to me that the challenges are relatively simple to list:

• Minimize the erosion of revenues and the loss of gross margin dollars;
• Reduce the company's expense structure without causing significant losses of revenue or margin;
• Minimize debt;
• Retain at least the most effective employees;
• Maintain the company's mission, even if changes are made to strategy and tactics; and,
• Weather the storm.

Doing nothing and hoping that somehow the recession will simply go away may produce disastrous results. Additionally, psychologically and emotionally taking action to survive this economic crisis puts control back with the company where it belongs.

Indeed, it establishes the sense that "we are proactive and are doing what must be done to survive and be ready to thrive when the economic downturn, turns up." A strategy is needed and should be vigorously executed to successfully navigate the choppy waters of an uncertain time.

Obviously, any strategy designed to deal with difficult times should address the areas of the operation of any company that, at the very least keeps the business afloat and at the very best allows it to flourish. A company must have strategy with effective tactics designed to increase its revenue stream (sales), conserve cash flow (asset management), and limited outflow (expense control).

In the next two installments, we will attempt to offer some positive and effective ideas to help accomplish these goals. They may not all be applicable to every business concern; but, if one or two ideas help the company, then everyone benefits. Be sure to read the next installment.

Jim Green is the author of Furniture Retailing 101, a book written after spending more than 30 years as an executive for a Top 100 publicly held furniture retailer in the United States, an independent furniture retailer and, finally, as a manufacturer sales representative. To order a complete set of his books for $80 (in Canadian funds, including shipping and handling or to ask Jim a question, send an e-mail to