Assuming that we are at the beginning of what may be a long-term economic downturn (and not going into all the ifs and buts and interesting consequences of that) here are two simple steps to take right now.
Look at your costs
Can you find ways of buying your supplies more cheaply without compromising quality? Can you cut down on expenses that aren't necessary? - maybe using Skype more rather than landline phone-calls, making less short trips, turning down the thermostat a bit? I know these things are all boring, but they add up.
What are we doing? Well, mainly we are busily switching most of our actual bag sewing to an Asian workshop that we like - they do beautiful work. The small workshop that we've worked with for some years here are being partially closed down in any case (owner - a fashion designer of some repute here - is retiring) and we have more than enough "special" work to keep Romana, our main sewing colleague, as busy as she wants to be.
More on the pros and cons of sending work out of the country in another post.
Look at your prices
I'm not going to suggest that you slash prices as sometimes that's quite disastrous. Depending on your margins, even a modest reduction in your retail cost could, in theory, halve your profits. So be careful about suddenly going into "fire sale" mode. I'll do a post soon on pricing but for now, my advice would be to look at the spread of pricing. In times when credit is tight, you may well find that some people are still happy to pay reasonable prices for quality, but others may be looking for smaller, inexpensive things either for gifts or simply as little treats for themselves. Can you produce some new items that are at lower price points? Under $20 - or 12 Euros - is probably the kind of price to aim for.
What are we doing? As our small drawstring bags are already only just over the $20 mark, we aren't sure we can make anything that will retail for less (though we are considering the possibilities). However, we are just about to launch new versions of the large drawstrings and the bucket bags which will be at lower prices than before. Again, sourcing from Asia helps us do this. Also we will switch to a high-quality silk mix rather than pure silk for the larger bags. The end result will be indistinguishable in look and feel - but it will shave some dollars and euros off the final retail price.
Both these steps are perfectly obvious. But the thing that counts is not to sit like a rabbit caught in the headlights of on-coming disaster. Begin both these changes now. You don't have to do everything possible all at once. So just start.
Oh - and see the positive side too. You know, it was only a sense of real panic some months ago that made me finally begin on the long and quite demanding task of finding an Asian workshop that we could form a good relationship with, and that understood quality. It took ages and I would probably have given up if it wasn't for a bit of real lurking fear about the way things were going economically. Once things pick up again (and they will) the changes that you make now will stand you in good stead long-term.