Will You Be Ready When the Recovery Comes?

Neal Communities sees a rainbow amid the clouds. The homebuilder, in business for 39 years, has hired a vice president of land acquisition, bought new land, scheduled the opening of an 800-home community next year, and even created a custom-pool division, Neal Signature Pools.

“Clearly, people don’t build pools in depressions,” says company spokesperson Sondra Guffey, noting that her company took orders for nine pools in the first month after opening its pool division. “This is a sign of a warming economy.”

Neal Communities isn’t alone. Many small businesses have begun planning for the day when the economy turns around. They’re taking advantage of the downturn by scooping up talented workers who have lost jobs elsewhere. They’re spending money on technology to make their firms run more efficiently. And they’re boosting their efforts at promotion, through advertising, social media, and other marketing media.

“People are feeling much better,” says Steve King, a partner at Emergent Research, a research and consulting firm that focuses on small businesses. “There have been a number of small business surveys that show people are more optimistic about 2010 than they were before.” But King says that those attitudes reflect more of a zeitgeist than hard numbers, adding that the new spirit isn’t yet reflected in sales or hiring. And even when sales do rise, he estimates that hiring will probably lag.

Recessions can also be a good time to get a business going. Businesses that make their debut during a downturn often boast a built-in discipline that not only sustains them in hard times, but also serves them well in periods of more robust growth.

“People have learned how to do more with less,” King says. “They’re using technology and they’re increasingly outsourcing and using third-party contractors.”

Barry Soicher, chief executive officer of AdPerk, a firm that helps retailers and manufacturers promote videos of their products to consumers, says he probably won’t grow his staff much more, but he’s investing in technology, marketing, and forming new partnerships.

That goes along with what David Wiggs of Hitch, an agency search consultant, is seeing. “What I hear in talking to lots of agencies is that they’re getting busier,” he says. “It’s certainly not a huge shift I’m seeing, but for sure a lessening of fears and a willingness to invest in marketing.”

Cari Kraft, who runs executive search firm Jacobs Management Group, reports that her clients are seeking to fill more positions, which in turn has her ready to hire more people at her 16-person firm. “A large percentage of our work is done in the sales and marketing arena, and we’re seeing an increase in hiring in those areas,” she says.

The recession certainly took its toll on many companies. Granite Source, a 75-person countertop company, suffered along with the home-construction industry. Granite Source had to triple its client base just to stay even at $10 million in annual revenue, says company President Nicholas Draper.

“It was in this environment that Granite Source was faced with the decision to modernize or risk losing all of the momentum and industry recognition that we had collected over the past decade,” Draper says. His solution: He bought a $1 million machine that can fabricate the granite for a complete kitchen in 15 minutes.

Others are preparing for recovery the old-fashioned way -- by hiring.

Soyring Consulting, a clinical health care consulting company, has hired employees with IT and marketing expertise and is getting ready to start two new service lines. “We think a lot of our competition has cut R&D and marketing,” says Adam Higman. “For example, at some of the conventions we’ve been to as a part of our marketing efforts, we’re the only consulting firm there, which would have been unheard of before the recession. We’re really trying to use this as an opportunity to get a leg up once things do turn around.”

Still, it’s not as though a big boom is around the corner. Even companies planning for growth remain realistic.

Dolcera, a firm that specializes in patent and market research services, plans to hire just three new salespeople, says CEO Samir Raiyani. “We’re also constantly in touch with our older customers and are seeing some signs of recovery in select companies and in select industries, though the recovery does not seem to have taken hold across the board.”

King, at Emergent Research, advises businesses to be cautious. “I’d be looking to expand but I’d keep very tight control over my cost structure in case the recovery turns out to sputter, which I think will be the case.”

David Langton, a principal in the interactive agency Langton Cherubino Group, saw his firm’s revenue drop 30 percent in the recession. But because he’s in the technology market, where optimism generally rules the day, he poured his staff into bolstering his own company’s Web site and tech offerings.

“What is remarkable is that even as business languishes, technology surges ahead,” he says. “There’s a lot of changing landscapes and for me, as a designer working in communications, it’s a very exciting time. So even though we’re not billing as much as we should be, we are truly moving ahead.”

Curt Finch, CEO of Journyx, a time sheet, expense, and project-management firm, says better times mean putting out a different message to customers. “For the last two years, our message has been recessionary: ‘You should track time and execute projects well in order to survive difficult times. You should know where to cut and how to do so intelligently, with a scalpel instead of a chainsaw.’“

“Now our message is going to be more in line with, ‘Propel your success with excellence in project execution,’” he says. “‘Now is the time to nail it -- and get your fair share of the coming prosperity.’”

---

Dan Fost writes about technology for the Los Angeles Times, The New York Times, and other publications. He is the author of Giants Past and Present, coming in Spring 2010 from MVP Books.