Dornbusch's qualifications for the Alan Greenspan "irrational exuberance" award aside, expansions do not last forever, as many businesses know all too well these days. Over the past 100 years, there have been between 11 and 15 recessions in the U.S., depending on who's interpreting the data. For small and mid-sized companies, how they handle an economic downturn can be a make-or-break proposition.

One Houston business owner who has made it through five full swings of the business-cycle pendulum is Sue Burnett, founder and president of Burnett Staffing Specialists.

With her partner-husband Rusty Burnett, the company's executive vice president and chief financial officer-Burnett has seen her company's sales rise and fall on the economic tide over the past 30 years. Through it all, however, Burnett Staffing Specialists has remained profitable and continued to grow. Her experience offers valuable lessons for other small business owners struggling with the challenges of today's rocky economy.

The Houston Business Journal ranks Burnett as the city's largest permanent placement service, third-largest temporary service and seventh-largest woman-owned business of any type. The company is ranked No. 200 among all woman-owned businesses in the U.S. by Working Woman magazine, and Women's Enterprise magazine ranks it the tenth-largest woman-owned enterprise in the Lone Star State.

How your business handles an economic downturn can be a make-or-break proposition.

Sue Burnett has been honored with numerous business and civic awards. Among the most notable are:

Sue and her husband and partner, Rusty Burnett, were named 1998 Entrepreneurs of the Year by Ernst & Young. They also received the Blue Chip Enterprise Award from Mass Mutual and the U.S. Chamber of Commerce in 1997.

PROFITABLE IN A YEAR

In fact, she started out fairly large by small-company standards, launching her business with $10,000 in borrowed capital and five full-time employees whom she trained herself. She repaid that loan and still managed to turn a profit in her first year.

Maybe you can chalk the first one up to beginner's luck, but Burnett Staffing Specialists has been through four more recessions since then and fared equally well. That's been by design, not by accident. It's not rocket science, but Burnett has relied on a four-pronged strategy to weather recessions in 1982, 1986, 1991 and the most recent one, and her company has stayed in the black through all of them.

"The most important thing that has helped us weather economic downturns is that we have always operated debt-free," Burnett says. "That is very important because if you owe money in down times, that is when companies get in trouble."

The company also makes a concerted effort to reduce overhead when recessionary times loom. Burnett says she recognized early in 2001 which way the economic wind was blowing and started cutting expenses wherever possible. She opted not to renew a couple of building leases when they came due, for example.

The third leg of Burnett's recession-beating strategy is a simple one: sell your way out of hard times. "We don't just sit back and wait for things to get better," she says. "The sales function is always a top priority for our business, of course, but in a tough economy we really try to kick it up a notch."

Avoiding debt has been one key to Burnett Staffing's success in surviving recessions.

Finally, Burnett makes it a point to keep a sharp eye peeled for opportunities in recessionary times. The company, originally called Burnett Personnel Services, was primarily a permanent placement firm with a temp division when it started out, and it had grown to about 100 employees by the early '80s. Then the 1982 recession hit.

"That just devastated the permanent placement business in Houston," burnett recalls. "So we decided to take our temp division and focus on growing that part of the operation. It helped us get through the recession, we started growing again, and we were a $5 million company by 1985."

The 1986 recession hit the Houston market particularly hard. Burnett Staffing lost half its income and got socked with a lot of write-offs because so many of its clients went bankrupt. However, the company relied on the same formula to make it through, and once again it was successful.

OPPORTUNISTIC EXPANSION

Remaining debt free, keeping a tight rein on costs and selling hard have helped Burnett Staffing through the most recent downturn. Burnett has also tapped the fourth prong of her recession-survival formula, finding a way to grow through acquisition in troubled times. "I probably would not have had the opportunity to buy that company if the economy had not been bad," she admits.

While expanding through acquisition in weak economy might not be feasible for every small business, recessions do present opportunities that most companies can take advantage of, Burnett suggests. Not surprisingly, she sees some great ones in the personnel arena.

"This is a golden opportunity for business owners to evaluate their staff, lay off the non-performers and hire some very high-quality people," she says. "The job market was so tight a few years back that businesses were sometimes forced to hire people who were not quite right for the job. Now is the time to upgrade your staff."

The other is to do in-depth reference and criminal background checks. "I think most business owners would be stunned to find out how many candidates cannot pass a criminal background check or who have references that don't check out," Burnett says.

Of course, the best way to deal with those sorts of issues is to tap the services of a qualified staffing specialist firm. (Hey, the economy's still weak, and you remember what she said about selling her way out of recessions!) "We have a temp-to-hire program that is just perfect for this," Burnett modestly allows. "That is an excellent way for companies to try out new workers before they hire them."

A downturn presents a golden opportunity for a small business to evaluate its staff.

Keep in mind that economic downturns almost always create opportunities for some small businesses, and there are steps you can take to improve the odds of your business becoming one of those winners.

"Changing conditions open up opportunities for resourceful firms to outsmart larger competitors who, during a downturn, carry on business as usual or are unable to adapt quickly-except to fire employees," pints out an analyst for the U.S. Small Business Administration (SBA).

Such innovative small firms can gain market share by taking it away from competitors unable to adjust to shifting market conditions, he says. They may also be able to maintain a strong cash flow through the downturn while competitors are hobbled by liquidity problems.