How to Recession-Proof Your Business

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Focus on service. While expanding your business into markets abroad may be avenues for growth, many small-business owners should focus on their existing customers and clients for a boost in revenue. With this in mind, Sugars suggests focusing on service. "It is one of the best ways to add value without costing money," he says.

Invest in employees. When the going gets tough, the employees you have will be your productivity all-stars, says Lenhart. Make boosting productivity — within reason, of course — a focal point. For those that rise to the top, be sure to reward them accordingly. "You don't want to lose your most productive people at this time," he says. Consider offering vacations or time off, which can be cheap incentives.

Free up cash flow. While you're attempting to cut costs and grow sales, "now is the time to call in favors," says Howard Applebaum, chief lending officer of Sterling National Bank in New York. Be sure to free up your business's cash flow by asking to have payments to suppliers extended. Also, if you have old debts, call them in. Having a good amount of cash on hand, especially in light of the credit crunch, will help you do everything from make payments to employees and vendors to spend on marketing campaigns that may grow future business.

Renegotiate contracts. If a contract, a lease or other obligation will soon be up for renewal, try to negotiate lower prices. At this point, you may be able to also make cuts, says Applebaum. If you don't need 50,000 square feet of office space, consider paring down. "It is really a reality check that requires a tough look at your expenses," he says.

Look to expand your business. If, on the other hand, you're sitting pretty, Carmen Bianchi, director of San Diego State University's Entrepreneurial Management Center, suggests giving the competition a gander. "Look for weaknesses and instability," she says. If they've been having trouble, you may be in a good position to pick up their business at bargain-basement prices. Obviously, make sure you can afford it, says Bianchi, but their loss may be your gain.

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