Doing Business: Save more, diversify, upgrade workforce, enhance marketing.
The Economy: Corporate profit moving back up, as is residential remodeling.
Financial Services: Credit unions, though, are getting shakier and more costly.

Doing Business
In the brutal slump of the past two years …
Few businesses have been left untouched. We asked firms around the U.S. what the recession has taught them and how it’s changed their operations.
Here’s what they say they’ve learned:

Borrow less, save more. The biggest change businesses say they’ll make: More caution about debt and more commitment to rainy-day funds.
Firms felt blindsided by the financial crisis, caught in a maelstrom not of their own making. A commercial truck dealership, for example, was stung by a big interest rate hike, even though its credit rating and balance sheet were rock solid: It was the bank backing the firm’s corporate bonds that was wobbly.

Diversify. A Kentucky machinery business acquired new appreciation for its broad customer base … 5,000 customers, none accounting for more than 15% of its business. A Florida builder learned the hard way when some of its few, large clients faltered.
And be flexible. A Virginia compressor company expects ongoing payoff from newfound responsiveness to its customers’ needs and a resulting shift in the business’s product mix.

Stay vigilant on costs. A surprising number of company owners and managers confess to complacency in the years leading up to the slump. Administrative expenses and personnel costs had escalated too far. Clauses for automatic increases had crept into contracts. Small charges for nonessential niceties were adding up to big bucks. Economies forced on firms by the recession will add to the bottom line in better times.
Make compensation more flexible … more closely tied to both performance and workload. Some companies are slicing expenses by shifting middle managers … a big chunk of payroll … off salaries and on to day wages. An anesthesiology practice moved nurses from salaries to hourly wages and doctors from salaries to a share of profits. More bonuses, fewer salary hikes. And more folks working on commission.

Upgrade your workforce. Recessions are not only a time for judicious pruning, they’re also an opportunity to nab top-notch workers. A Midwest accounting company let subpar workers go and expects to benefit from more productive new hires for years.
When cuts are necessary, don’t dawdle. Most firms that bit the bullet early credit doing so for their survival. Many that didn’t act swiftly wish that they had, avoiding a deeper hole. But there are exceptions. A Tennessee scrap metal operation that held on to its workers was able to do the jobs when big new contracts turned up.
Finally, focus on marketing. A Michigan construction firm that advertised throughout the slump is gaining market share. Rivals that abandoned ads are gone. And a metals company owner says succinctly: “Only sales will get you out of a hole.”

The Economy
The outlook for corporate profits is sunnier these days … and not just for big blue-chip companies. After sliding nearly 12% last year, the average for all companies … big and small, public and private … rose a smidge in the first half of 2009 and will do even better in the second half as the economy picks up.
Next year … an increase of about 10%. While welcome, that’ll still put profits well below the 2006 peak of $1.6 trillion. In fourth quarter 2008, they sank 23%.
The gains should ease worries about rising stock price-earnings ratios.

Is the recovery in home building petering out? Although construction starts of single family homes continue to increase, builders are seeing less buyer traffic. That’s due to the rise in foreclosures and unemployment and the scheduled expiration of the $8,000 federal tax credit for first time buyers, though an extension is still likely.
The trend is still up, and 2010 should see an annual gain for the first time since 2006. Despite the recent dip in builders’ confidence, there are positive forces: Price declines leveling off in more metro areas, historically low mortgage rates and the prospect of economic growth generating at least some hiring in early 2010.

Meanwhile, the home remodeling business is showing signs of revival. Existing-home sales have climbed steadily this year, sparking improvement projects … owners looking to spruce up homes for sale and buyers who want to make changes.
Remodelers are seeing more big projects … additions and kitchen makeovers … with price tags of over $25,000. Window and door replacements and upgrades of electrical and plumbing systems have remained more or less steady.
But homeowners’ access to credit remains an obstacle to industry growth, as banks and other lenders continue to treat all residential lending with great caution.
By spring 2010, dollars spent per quarter should start to climb again, though the total … around $107 billion … will still be almost 9% below one year earlier.

No kick to the economy from holiday hiring this year. Retail sales aren’t likely to top the 2008 level, and neither will the number of seasonal workers put on payrolls. Prospects are somewhat better at shipping and distribution centers plus warehouses, with more customers than ever shopping online, hunting for the best possible prices.
Not much joy from corporate celebrations, either … another low-key year.

Financial Services
Mounting woes at credit unions. Deposits will dwindle, delinquencies are increasing, and the number of credit union failures is on the rise. By the end of next year, 60 to 70 of the cooperative banking institutions will fold as climbing mortgage foreclosures and unemployment ripple through the economy. Costs are rising, too. This year, credit unions are paying $15 per $1,000 of assets to replenish their deposit insurance fund and pay off an emergency loan made to it by the Treasury Dept. Credit unions hadn’t paid any extra fees for nearly 20 years.
It’s one more crimp on business growth. Many sole proprietors … doctors, dentists, landscapers, and so on … rely on credit unions for start-up money.

Think the SEC is getting too powerful? Then you won’t like a new proposal giving it even more independence and control over how it allocates budget resources.
Look for a congressional battle over a bill to let SEC keep the fees firms pay. Fees now go to the U.S. Treasury, and funds to run the SEC must be appropriated by Congress each year. Sen. Charles Schumer (D-NY) wants SEC to be self-funded. That would give the financial watchdog about a 30% funding jump and let it decide which of its tasks should get more money and which of them should get less.
Lawmakers are ready to give the SEC more cash … maybe doubling its budget from an expected $1.1 billion in fiscal 2010 to as much as $2.25 billion by 2015.
Yielding control of the purse strings to the regulators is a harder sell. Critics fear the agency will set filing fees too high and will come down too hard on the 35,000 publicly owned firms and financial institutions it now oversees.