The worst of the global economic downturn may be over, but businesses are not out of the woods yet. Not everyone is sure that economic recovery will be strong this year. And certain sectors of the economy may suffer for some time to come. Nobody seems to be predicting a return to the runaway growth of the late nineties and business owners would be well-advised to heed two recession catch cries: "be frugal" and "be prepared". From a management perspective, this means getting back to basics.

Getting back to basics does not mean adopting an entirely defensive posture. Many of the tactics that help a company survive a recession may also enable it to emerge with an increased market share when the economy recovers.

Companies can gain market share because their competitors think "frugality" means hunkering down, cutting costs across the board, and postponing new initiatives.

What it means to be "frugal" and "prepared".

You will see such companies cut their budgets for marketing, product development and training. They hoard cash and lay off employees indiscriminately. They harm their productive capacity in the process and, when the upturn comes, they need to undo the damage before they can move forward.

frugal adj. characterized by or reflecting economy in the use of resources. (Merriam-Webster's Collegiate Dictionary, 2001)

In fact, "frugality" means exposing all aspects of your business to intense scrutiny and identifying all activities that do not actually add value. It means cutting costs in those areas or doing away with the activity entirely. It also means investing in areas that do add value and assessing future prospects, so that you emerge from the recession in good shape to take advantage of business opportunities.

prepare v. 1 (a) to make ready beforehand for some purpose, use, or activity (b) to put in a proper state of mind. 2 to work out the details of : plan in advance 3 (a) to put together : COMPOUND (b) to put into written form (Merriam-Webster's Collegiate Dictionary, 2001)

"Being prepared" means taking an analytical look at all aspects of your business and your business environment. For example, it involves collecting detailed data on your customer demographic, on their changing needs and tastes, what they value in your product, and how much they feel it is worth. You may also need to assess the way the recession is affecting your customers, their inclination to spend, and their ability to pay. It also involves keeping an eye on your competitors -- what strategies, technology, and innovations they are employing. Are they about to introduce new products that will compete in your market niche? Or might market conditions be subject to sudden changes due to government regulation?