5 Ways to Brave the Great Downturn of '08 - Page 2

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#3: Buy the best talent at a bargain

While consumers may be taking another look at their shopping habits, that doesn't necessarily mean that you should follow suit -- especially when it comes to scooping up talented employees.

"Don't be the last to cut expenses, but if you have the cash or cash flow, it's a brilliant time to shop for talent," O'Driscoll said.

"Having management experience really does keep things together in a tight economy," Dash commented.

With more talent available as companies make personnel reductions, companies have more to choose from. "One positive is that it's going to be a more quiet market," Dash said. "It's going to be easy to find talented people laid off from companies."

#4: Market online and offline

It's also critical to remember that, yes, business did manage to get done before the advent of online social networking. As a result, experts urge up-and-coming firms to avoid overlooking the necessity of offline social networking -- like pressing the flesh during an in-person meet-and-greet.

Turning to those tried-and-true methods of getting your name in front of potential customers, and hopefully sealing the deal, may be just what your Web 2.0 company needs to do to compete in a tight market.

Although it's "probably unsexy for Web 2.0 companies, they still need to make those calls and meet with clients in person," Six Apart's Dash said.

While it's important to use online tools such as social networking, Twitter and blogs to produce new leads, don't forget print advertising and face-to-face meetings, he added.

"A lot of companies that have money to spend are not sitting there reading your blog," he explained. "You have to go reach them where they are."

[cob:Pull_Quote]Nevertheless, it's important that companies leverage the social networking and search-engine optimization tools that have become the norm in today's online marketing. Kawasaki recommended keeping a close eye on search positioning, and added that social media startups such as Twitter can prove a valuable part of a company's survival plan and marketing strategy -- assuming those services, Twitter in particular, make it through the downturn.

"I sure as hell hope so, because it's indispensable for my business," he said of Twitter. "There's 5 or 6 million people on it."

#5: Don't look for funding as a lifeline

With the sales climate increasingly chilly, there's also the temptation to hunker down and plead for more money from your backers. Not only are they not having it, it's not a wise use of your time.

"Getting more and more rounds of funding is not a business model," Dash said. He advised that companies use these cash avenues strategically.

"You have to have enough financing to sustain your cash burn until you're sustaining a profit," he said. "You can't rely on some big surprise," he continued. "You have to be cash-flow positive and be realistic on how to get there."

Dash noted that Six Apart was founded in 2002, following the downturn of 2001.

[cob:Special_Report]"There was very little funding available," he recalled. "We have products that people paid for. We self-funded and bootstrapped to get the company started."

Still, with the next 12 months or so looking to be difficult economically, LivingSocial's O'Shaughnessy advised to keep an eye out for funding opportunities, since they may be few and far between. Whether it's a venture fund, an angel fund or a private equity, "make sure you're very prepared to accept the funding when you start having those conversations," O'Shaughnessy said.

Also, it may pay to keep nontraditional avenues of funding in mind. Facebook, for instance, recently announced FBFund, an initiative to fund 25 companies with $25,000. Users will vote on which companies will win funding.

Moving forward

As Web 2.0 companies try to stay afloat through these harsh economic waves, companies that are focused and offer tangible benefits have the best chance to survive.

As Six Apart's Dash said, despite the tough economic climate, even if you're a small company of two people starting in a garage, keep thinking about how to find the right partners and make the right connections.

"If you start thinking about how you fit into that piece, you'll be more successful."