How have they done it? Turns out, in a bad economy, successful small businesses tend to be successful in their own ways. In some cases, for example, the secret lies in offering customers more bang for the buck, and in others, it is in expanding overseas. The bottom line: for each company, the solution depends on a variety of factors, like business model and the industry.
“The answers are very specific to the company’s circumstances,” said Ken Gaebler, chairman and chief executive of Gaebler Ventures, a business incubator and investment firm in Chicago. “A good entrepreneur knows which buttons need to be pressed to thrive in a tough situation and make it through to the other side.”
Take Princess Jenkins, the owner of the Brownstone, a New York City clothing and accessories boutique. Based on Harlem’s bustling 125th Street, it has two employees and sells unusual fashions for women 40 and older. Last fall, Ms. Jenkins surveyed the market and realized how difficult the next season could be. She met with her five top designers and urged them to produce the boldest fashions they were capable of — designs she knew would appeal to her customers’ flamboyant tastes. “I told them, it’s going to get really tight next year,” she said, “and I need the best you have to offer.”
They also mapped out a bigger marketing plan focused on three major events. In February, Ms. Jenkins rented a ballroom next door and staged her first fashion show, to which she invited 200 top clients. Sales from the event, she said, were “incredible.” Six months later, using decorations, curtains and designs from the show, Ms. Jenkins set up four booths — she usually books just one — during a small-business fair held as part of “Harlem week.” And, in early November, during the marathon, using three of those booths, she held another fashion show, this one with a D.J.
“The next time people come to 125th Street, they’ll remember there was something big going on there,” she said. “It’s all about building a lasting impression.” According to Ms. Jenkins, the moves have paid off with year-to-year sales up about 10 percent. She expects them to total about $350,000 for 2009.
For other companies, the secret has been tightening expenses to make prices lower. In January, Travis Harris spun off his cellphone accessories business in Ephrata, Pa., from New Covenant Software, his software development firm, founded seven years ago. For one thing, the spun-off company, which Mr. Harris named TheCellGuru.com, begun two years ago and which has four employees, had been growing much faster than the original business. Plus, the two companies had very different business models. “It was easier to handle them as separate corporations,” Mr. Harris said.
While he said he usually sold his products at about 10 percent less than competitors did, Mr. Harris decided to reduce his marketing budget and cut prices even further. He eliminated all of his paid advertising on the Web, choosing instead pay-per-click sites like Google Products, through which customers can shop by comparing prices. Mr. Harris was able to pass his savings on to customers, lowering prices by $2 to $3 an item and increasing traffic 200 percent. Year-to-year sales, according to Mr. Harris, have also grown by that amount. “We knew people were searching deeper, looking for the best prices they could find,” he said. “And when they discovered us, they’d say, ‘O.K., this is it.’ ”
At Inside Sports and Entertainment, Ety Rybak, a founder, and his partner concluded that the difficult climate called for a significant change in the type of events the 14-employee company organized. The company, based in New York and started five years ago, usually provided deluxe packages to the Super Bowl, Master’s Cup and other major events, which clients used to reward employees or curry favor with their own customers, often spending $10,000 a person. But, last fall, Mr. Rybak realized that his “clients couldn’t possibly spend the kind of money they used to spend. We had to get creative.”
Mr. Rybak decided to focus on local extravaganzas that didn’t require paying for airfare or hotels — organizing, for example, a number of large events during the openings of the new Yankee and Citi Field baseball stadiums in April. Another example: For a law firm, he put together a day at the Central Park Zoo, to which clients, employees and their families were invited. Usually, the firm held separate events for each constituency. Alan Baum, president of the company, estimates that revenue will be up about 25 percent this year, to more than $13 million.
Even before last fall’s crash, sales at Lexington International, a 12-employee maker of a laser device for treating hair loss, started heading south. “People cut down on nonessential health care items, and we really felt it,” said David Michaels, managing director of the company, which is based in Boca Raton, Fla., and was founded nine years ago. When he analyzed his company’s performance, Mr. Michaels concluded that the possibilities for domestic sales growth were slim. But he had started exporting his product, called HairMax, to Canada and Australia in 2001. Perhaps expanding to other countries was the answer.
Mr. Michaels turned to the Gold Key Service of the Commerce Department, hiring consultants who spent several months conducting industry research and visiting a handful of countries, the better to pinpoint potential distribution partners. Then, Mr. Michaels traveled to those places to meet his partners in person. At the same time, the consultants helped him understand the regulatory issues he would have to tackle in each country. Ultimately, the licensing process took three to nine months, depending on the region. The most difficult country was South Korea, which, Mr. Michaels said, has a particularly rigorous licensing procedure for medical devices.
Now, he is also selling to Russia, Brazil and Saudi Arabia, in addition to South Korea, where, Mr. Michaels said, “There are significant social advantages to having a great head of hair.” He figures that international sales have more than compensated for the decline in the United States.
