I read a great article by James Surowiecki in the New Yorker the other day titled "Hanging Tough." In the piece, James gives a historical perspective on companies that thrived and grew during previous recessions by increasing spending on on advertising and R&D. While I am not advocating that companies go out and blow their cash on ads and spending on far-out development projects, I do want my readers to understand that it is possible to gain market share during difficult times.
A personal example that sticks with me is of former portfolio company GoToMyPC which is now Citrix Online. We had our huge exponential growth years from 2000-2004 during a difficult time in the technology markets. And yes, we did increase our spending on ads and at one point in time became one of the largest advertisers on the web. However, what we did was negotiate for pay for performance contracts where we would only pay if we signed up new customers. While not a novel idea today, it was quite novel back in the day. Subsequently we were able to turn a fixed cost that could have been a huge cash drain on the business into a variable cost. In addition, our ads had tremendous impact because every other competitor was not advertising and our brand became quite recognizable. Were it not for our creative and aggressive approach to acquiring customers, I would argue that while we would have been ultimately successful it certainly would have taken a lot longer. So reread the article and think about ways that you can creatively grow your business by turning a fixed cost into a variable cost based on revenue growth and you may find a way to efficiently grow while managing your precious cash. Remember in times like these, everyone is willing to negotiate and what may have been a hard deal to come by 2 months ago may be possible today.