03.25.2010

Riding the Wave - Small Businesses Navigate the Recession

When the credit markets convulsed, it was millions of small businesses that were swept up in a tsunami of bad news. While many small businesses failed to recover, others have weathered the storm, through a combination of grit, determination and good old-fashioned common sense. Like you, they are hoping the worst is over as they ready for better days ahead.

Michelle Olson, APR
President, Olson Communications, Inc., Phoenix, Arizona
As a public relations agency specializing in the luxury real estate market, Olson Communications enjoyed the rewards of the real estate boom that preceded the bust. Representing some of the top properties and luxury developers in the country, Olson and her growing team established a reputation for flawless program execution and top-notch results.

“In October 2008, everything changed,” says Olson. “It seemed as though every phone call was from a developer explaining that either they’d lost their funding or were going bankrupt. Ten-year relationships were gone in one phone call.”

The impact was immediate. Like many small businesses, Olson had to shed staff and contractors. But with no new business coming in, Olson focused on retooling her remaining staff for the future.

“In May 2007 I attended a social media seminar that changed my perspective,” she explains. “We had dabbled in social media before, but now there was an opportunity to really get smart about using social media as a growth platform.” Olson and her remaining staff became social media mavens, writing their own blogs, establishing their collective presence on Twitter and attending every social media seminar and conference that they could. Today, they have become social media experts, offering prospective clients a new set of cost-effective communications tools and differentiating themselves from traditional communications companies.

Lessons Learned:

• Diversify before you become desperate. A few years ago, Olson had deliberately expanded her business beyond homebuilders to encompass luxury developers. That expansion set her up to better weather the downturn.
• Look at your key performance indicators weekly, not quarterly. When times are good, we tend to let the numbers take care of themselves. But watching her company’s metrics is now paramount for Olson.
• Always be authentic to who you are and what you do best. Olson tried her hand at cold calling prospects to drum up business. “I spent a lot of time calling people who didn’t have money to spend, instead of trusting my network of contacts and referrals that had built my business in the first place.”

Melinda Jordan
Director of Operations, RidgeviewTel, Longmont, Colorado
By bringing telecommunications and networking services to rural areas of the country, RidgeviewTel was on the fast track to growth in 2008. The company was expanding rapidly beyond its core networking and software capabilities into building telecommunications infrastructure throughout the country. But in February 2009, RidgeviewTel found itself in a perfect storm of bad news: Its major client declared bankruptcy amid scandal and with the economy stalled and the industry contracting, the company faced dire choices.

“In February, our whole world changed,” says Melinda Jordan, director of operations. “We began to cut, cut, cut. We investigated federal stimulus money, but as a private company that was a daunting proposition. There wasn’t even anyone who was interested in buying the business or any of our assets. In short: everything stopped.” The key survival for RidgeviewTel was focus and transparency.

“We thought that if we could make it through the downturn, we would come out of the other end as one of the few left standing,” explains Jordan. “The challenge was making it through with the economy in a state of gridlock.” “We found that many of our creditors and partners were in our same boat, so we were honest and merciful with our suppliers and, in turn, for the most part, our suppliers were willing to work with us,” says Jordan.

At the same time, RidgeviewTel focused on its core strengths: network and traffic management software development. The company also focused its efforts on the underserved rural markets where it holds a competitive advantage. “We have a never-say-die attitude,” says Jordan. “We have a great platform and really smart people. We may be a trimmed down organization, but by focusing on the fundamentals, we are ready to grow.”

Lessons Learned:

• Establish and stick to your policies and procedures. Through all the layoffs and vendor negotiations and renegotiations, RidgeviewTel didn’t have any exposure to costly and time consuming lawsuits.
• Focus on core competencies. Engineers and programmers don’t require the same capital investment as warehouses, trucks and materials.
• Relationships and honesty prevail. “At the end of the year, one of our suppliers actually forgave a $40,000 debt. It was astonishing but a testament to the power of maintaining your integrity and being honest with your partners.”