Things to Survive a Recession and
Reasons Why Companies Go out of Business

By Jake Jabs, President/CEO American Furniture Warehouse


1. Over expansion, opening stores when not making money.

2. Management having big egos and not wanting to cut-back or close stores.

3. Owned by investment companies that don't know the industry.
Their agenda is to open new stores, go to new markets and new states.

4. Not knowing competition or market.

5. Owner needs to invest in the company and live below your means.

6. Run lean and mean and don't have too many chiefs.

7. Management and owner needs to be involved on daily basis.

8. Customer service needs to be top priority:
Must have customer satisfaction and good return policies.

9. Under promise and over deliver. Keep control of sales personal.

10. Must have customers recommend you and send you customers.

11. Be honest. Today's customer is intolerant of lies.

12. Keep inventory in stock. Today's customer wants it now.

13. Keep hot sellers and new merchandise in stock.

14. Know and buy for your market.

15. We are in a global market and may need to do importing.

16. Have best prices. Undersell your competitors.

17. Have good delivery and distribution system.

18. Invest in latest technology such as computers, bar coding, radio frequency, etc.

19. Have good credit and companies give you better deals/take better care of you.

20. Buying power.

21. Be positive with your people. You and your people can talk yourself in to a recession.

22. Look for opportunity during a recession / real estate is cheap
/ can find good employees / upgrade your staff / competitors close down.

23. Lean companies come out stronger after a recession.

24. Budget advertising to sales ( approx 3 % ) don't spend your profits on advertising.

25. Have good locations. "Location, location, location" No high rent, i.e. mall stores.

26. Don't be greedy. Give value and service.

27. Business can't be profit center for family or stockholder.

28. Pay employees well and have incentives. This stops costly turnover.

29. Have a quality sales force and train all employees.

30. Keep store clean, customers want to buy at clean well displayed stores.

31. Must have something to offer customer.

32. Keep returns to a minimum.

33. Be realistic in your goals.

34. Have a vision (see trend ahead of time) - be willing to change.

35. No phony debit memos to vendors. You must be honest to suppliers.

36. One must control buying - control inventory - turn inventory.