Five bad-economy falsehoods that can lead to business failure
By Jenny C. McCune • Bankrate.com

While a business owner's first reaction to a bad economy may be to go on the defensive, that could make things worse. Couple such an approach with common business misconceptions and many a small company will falter, particularly during tough times.

Here are five myths about running a company during economic slowdowns that you shouldn't unquestioningly buy into:

1. The economy's bad, so my business will be bad. There's nothing I can do.
2. The way out of a downturn is to slash my budget.
3. During bad times, the cheapest product or service will sell the most.
4. If my sales are drying up, the way to revive business is to try to be as many things to as many niches as possible.
5. Let's think short-term and forget about the future.

"You need to have a longer-term perspective," says Stan Mandel, director of the Angell Center for Entrepreneurship at Wake Forest University's Babcock Graduate School of Management, Winston-Salem, N.C.

He gives the computer industry, specifically Dell Computers, as an example. Currently prices have reached historic lows for personal computers. Computer makers are selling product, but not making much in return.

"What they're going for now is market share so that when the economy revives, they will be in a good position to get new sales," Mandel says.

Jenny C. McCune is a contributing editor based in Montana.

-- Posted: Oct. 5, 2001