If your small business is taking a beating from the most recent economic crisis you are not alone.  About 92 percent of small businesses nationwide have been bruised.  However, the battle isn’t over.  For small business owners unwilling to give into the economy, here are five steps your manufacturing company can take in its defense.

Cut Hours
It is likely your small business spends hundreds of dollars for every hour you’re in operation.  So, for every hour you’re in operation without work hundreds of dollars go to waste.  The first step manufacturing companies are taking is cutting operation hours.  Economic turmoil translates into fewer incoming orders which will mean less work for your employees and equipment.  If you run out of production work during the day, send your floor employees home and turn off your equipment.  Many small businesses in manufacturing have cut hours 30%- 50%, moving from 50 to 60 hour work weeks to 35 hours.

Temporarily Lay Off Employees
If you are facing a significant drop in orders, you may find yourself with more employees than you actually need.  Many manufacturers have managed to keep it under wraps that their floor production employees have been temporarily laid off and management is running production.  It isn’t rare to see management also pick up the responsibilities of inspection and shipping as well.  Consider how much man power your business actually needs to meet its orders.  This single defense move could decrease your payroll 60%. 

(Be sure to check your state’s unemployment law guidelines to make sure your employees can still have state benefits and won’t have to find another job during this time.)

Call Customers
Stay in close contact with your customers; you need their business.  Find out what their financial health is projected to look like over the next few months.  Will their orders continue to be strong and steady or should you expect a reduction?  Also, send them a complete company brochure to remind of all your services.  Perhaps you can give them a better deal on a service or a part they are getting through another supplier?  Investigate their needs and negotiate more purchases.

If you’ve noticed your customers reducing their orders by huge numbers, or in some cases canceling them completely, they have shut down production for a few months to stabilize their business’s failing health.   If this is the case, be on the lookout for new customers.  A great place for a manufacturer to start the search is at production shows and conventions.  Become a regular attendee at your regional powder coating, printing, or electronics show to showcase your services.  If you prefer the conventional route, make phone calls and send samples of your work to potential customers. 

Negotiating Supply and Demand
Small businesses are struggling to find balance between what their vendors are supplying and their customers are demanding.  If your region is suffering from economic recession it is likely two things are happening.  First, your customers are reducing orders to match a declining demand for their products.  Second, your suppliers want to get rid of as much raw material as possible.  For example, your supplier may tell you in order to purchase a certain material from them you must buy it in bulk quantities of 2,000 parts.  However, your customer is only requesting 500 units requiring that part.  This situation sets you up to either lose business or lose cash.  Instead, ask your customer to sign a letter of commitment stating they will pay for the ordering of all 2,000 parts.  Only charge them for the cost of ordering; disregard costs for production and labor until the completed order is actually processed to them.  Also, commit to reserving those parts for that particular customer’s future orders.

Increase Credit Line
In the Midwest it has become a trend among small businesses to request a temporary increase on their credit line for anywhere from 60 to 120 days.  It may seem illogical to spend more money with a shrinking budget but if your business is on the brink of closing because you can’t afford utilities and raw material, this extended account may be the only defense that will save you from closure. 

Simple Steps
Become conscious of unnecessary spending.  Turn off all computers, every light, and unplug the vending machine at night. Eliminate lawn care services, holiday parties, and costly hotel reservations for overnight business trips.  Join the majority of some small businesses in the nation and reduce or banish bonuses.  That alone could save your company thousands of dollars.  Individually these steps seem futile but when pursued as a new habit they produce results.  Every step you take, however miniscule, is another dollar less of stress.