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Experts Offer Strategies to Manage and Thrive in the Current Economy

Despite the downturn, small and mid-sized businesses can find opportunities for growth and lay the groundwork for a more prosperous future

In an article written for the U.S. Small Business Administration (SBA) website, SBA Portland District Office Director Harry DeWolf notes:

“Do not bury your head in the ground waiting for things to get better. Look how your business can leverage this time to actually increase your opportunities to outsmart larger competitors who, during a downturn, carry on with business as usual or are unable to adapt quickly. Proactive small business entrepreneurs can actually thrive:

• Maintain a strong cash stream throughout the downturn, in contrast to other companies that may have liquidity problems.
• Become a leaner, more cost-effective and more efficient operation, better positioned to do well when the market improves.
• Gain market share by taking it away from competitors unable to adjust to shifting market conditions.

“The challenge is to be aggressive and imaginative,” DeWolf also writes. “Entrepreneurs who survive and prosper during hard times look beyond the present day to overcome the constraints of tradition. They see the firm from a new perspective, and do business differently. A status quo attitude will assure a steady decline and possible failure.”

Local economists concur, pointing out the importance of businesses being adaptable, looking for opportunities in growth sectors, connecting with consumers more than ever, and maintaining good relationships with their banks.

“Remain flexible, nimble and cost-sensitive,” noted Chris Thornberg, the Los Angeles-based principal of Beacon Economics. He still sees a rough economy ahead, but notes that as with all downturns, this one too will end. “Play your cards right and in a year you will be in a better position than your competitors.”

Opportunities and Relationships

Jack Kyser, senior vice president and chief economist of the Los Angeles County Economic Development Corporation, says that even in today’s economy, certain sectors offer great potential – one being exports.

“The dollar is down, and there is always interest in something from Los Angeles that carries the LA mark,” he said. “There’s a huge window of opportunity in exports.”

Another opportunity, according to Kyser, lies in tourism and hospitality, with the weak dollar again the impetus, this time for bringing international travelers to Southern California. (See end of story for business resources on exports, tourism and more).

Even for businesses that can’t tap into the export or tourism markets, there are important key points to keep in mind – namely the vital relationships with customers and banks. Kyser noted, “Usually a small percentage of your customers represent the bulk of your business. You have to figure out if you are connecting with your customers and if you can better meet their needs with a perceived value add-on. Look at differentiation factors, and keep in frequent touch with your better customers.”

Long-Term Strategic Assistance

As for banks, it’s important in challenging times for businesses to make sure their lenders understand their financial position to help them make the best possible decisions.

“Having a strong relationship with your banker to bring valuable insight to the discussion regarding how to avoid repeating past difficulties, as well as leverage future opportunities, can help you plan in uncertain times,” said Lisa Mazzola, vice president of business banking in the metro Los Angeles area for Wachovia Corporation, one of NAWBO-LA’s corporate partners.

She added, “Business owners should view their banking relationship as one of their most significant business partnerships, and develop an association with a bank and a banker that have the resources to deliver thoughtful, strategic assistance over the long haul.”

So what’s the bottom line? It’s that small and mid-sized businesses can take actions to succeed, even when the economic going gets tough. As SBA’s DeWolf concludes in his article, “Resourceful entrepreneurs take advantage and capture the opportunities, they take advantage of the extra time to develop action plans and take steps during today’s hard times to lay the groundwork for tomorrow's prosperity.”

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