You Can Weather the Economic StormProduct price sensitivity and financial creativity can help you thrive in any economy.

In the Pennsylvania Rust Belt, things aren't as dire as headlines would suggest. In Allentown, the quintessential blue-collar city, a renaissance has taken root downtown. At the heart of the action is a 400-seat brasserie housed in a former furniture factory. Demand for steaks, burgers and ale hasn't slacked off at Allentown Brew Works, but that doesn't mean the proprietors haven't had to stay on their toes to battle the economic downturn.

"There's a change in spending habits," says restaurant marketing director Mike Fegley, who's a member of the family that owns the enterprise. "You have to keep ahead of it."

The Brew Works' lubrication for wallet rust has been to trim the gilded end of its menu, deleting, for example, a low-profit, $23 Kobe-style steak. "When you get into a time like this, you remove those items from the menu so people don't look at them and say, 'This place is expensive,'" Fegley says.

At the same time, the restaurant is cranking out $8.50 hamburgers while keeping its standards consistently high.

"We use fresh ingredients," he says, "and we are not making cuts in the kitchen."

Indeed, experts say weathering the economic storm sparked by bad housing loans, investment-bank collapses and stock market schizophrenia means business owners must be vigilant. Adjustments to pricing, marketing and cash flow will likely be necessary, but the core values and goals that inspired entrepreneurs to launch their dreams are the same ones that will carry proprietors through this malaise.

"You never want to compromise on the quality of your products," says Vincent Williams, owner of two Honey's Kettle fried chicken restaurants in the Los Angeles area. "Whatever happens, no matter how hard it is, even if I'm not making a profit, if I deliver to the customer an unchanged, quality product, I have a chance. That philosophy has paid dividends. Right now, when we might be tanking because of the economy, when people are choosing between buying gas and eating out, they're finding us as one place where they still want to treat themselves."

Many franchise owners, too, have "businesses that will do well in good times and bad--that will be successful, period," says Jeff Elgin, CEO of Minneapolis-based FranChoice, a franchise consulting firm (Elgin is an Entrepreneur.com columnist). There are franchises--fast food restaurants, hair salons--that might even be "recession proof" so long as quality and commitment are maintained, he says.

Still, entrepreneurs have more jitters than freshmen on the first day of school. Discover Small Business Watch, a monthly survey from Discover Financial Services, found last month that 73 percent of small-business owners it polled believe "the U.S. economy is getting worse."

"Nearly 42 percent of business owners told us they have temporary cash-flow issues," says Ryan Scully, director of Discover's business credit card division. "We are seeing Wall Street make an impact on Main Street. Small-business owners are very independent, and they're in survival mode."

Indeed, the biggest effect of the financial crisis on entrepreneurs is tightening credit, which can be crucial to business owners who want to launch, expand or just pay their personal expenses. "Almost three-fourths of small-business owners are taking home less from their own paychecks than they have previously," says Discover's Scully.

The National Small Business Association surveyed small-business owners in August and found that 67 percent reported being "impacted" by the credit crunch. What's more, the association states that nearly one-fifth of small-business owners have loans leveraged by second home mortgages at a time when real estate values have often dropped below the loan amounts.

David Gass, president of Las Vegas-based Business Credit Services, a firm that advises business owners on how to obtain financing, says banks have raised business lending standards: A year ago, Gass says he could have lined up bank loans for clients with personal credit scores as low as 660 and who had only been in business six months.

"If you have three years-plus in business, a good business credit score and a good personal credit score above 720, your chances of getting a loan are greater," Gass says. "Your annual revenues, if they're over $1 million--that helps as well."

The squeeze can leave business owners broke at the worst times--namely on payday.

"The day payroll is due is not a small event," Elgin says. "It's a normal part of business to have lines of credit to even those things out. It's not that the business is unstable. But the first time you don't pay your employees or suppliers, you're not going to last very long."

The credit crunch can also mean businesses that have been treading water could sink. "If there are businesses on the margin that, if they could borrow they'd be okay, those are the businesses that are going to get in trouble," says Scott Shane, professor of entrepreneurial studies at Case Western Reserve University.

While many business owners aren't happy about the $700 billion federal rescue package for Wall Street, experts say it could help loosen up much needed credit.

Michael A. Holbrook, senior business advisor at Clark University's Massachusetts Small Business Development Center, says "something has to be done to get credit flowing again."

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Survival of the Prepared

Here are six ways you can get through external financial turmoil:

1. If you're just starting out, look for businesses and franchises that are recession resistant.Michael A. Holbrook, senior business advisor at Clark University's Massachusetts Small Business Development Center points to a few: Repossession outfits, collection agencies, businesses that collect accounts receivable, companies that provide services to secure foreclosed property and alternative energy firms.
   
2. Prospective entrepreneurs should secure locations, licenses and business phone numbers before asking for financing.“看,像一个合法的生意,”达说vid Gass, president of Las Vegas-based Business Credit Services. "Don't use your cell phone for your business. Get your business licenses. People come in and talk to us and say they were declined. It's often because they never took the steps to become a legitimate business."
   
3. Seek alternative credit sources:smaller commercial banks unaffected by the Wall Street turmoil, peer-to-peer lending groups, "factoring" (selling your accounts receivable for cash at a small loss), trade credit (where firms give you needed goods on credit), equipment leasing and leaseback programs, and merchant-account cash advances against credit card sales.
   
4. As much as possible, use a cash-on-delivery policy.It'll come in handy for cash-flow issues, like when payroll is due. "Reduce the amount of credit you extend to your customers," says Scott Shane, professor of entrepreneurial studies at Case Western Reserve University and author of Illusions of Entrepreneurship. "Get the money fast by offering a discount" to those who pay up immediately.
   
5. Cut costs and tailor your prices to reflect the times.For example, restaurants that offer and highlight value items will likely draw consumers who want to save money but still have options.
   
6. If you have cash in reserve, consider stocking up on non-perishables和其他物资,可能要出售discounts as a result of the lagging economy; it's a buyer's market. "There may be excellent opportunities to purchase raw materials, distressed companies' inventory and equipment and non-perishables--if you have the cash," Holbrook says.