NECESSITY IS THE mother of reinvention , too.
While the economic downturn has many business owners cutting back and curbing investments, a handful of companies are actually expanding into new markets or taking their business in an entirely new direction in order to stay afloat. Some businesses, like RTI Laboratories in Lavonia, Mich., are turning overcapacity into rental income, while others are providing services they’ve never offered before – and at cheaper rates and faster turnaround times than the competition.
“If you realize that your business is suffering, rather than wait for the economy to turn around, take this opportunity to reexamine your business,” says Donald F. Kuratko, executive director of the Johnson Center for Entrepreneurship and Innovation at Indiana University’s Kelley School of Business. Look for opportunities in your market or new markets, then consider how your company might meet them, he says.
Here are four businesses that are doing just that.
Lab Exploits Its Now-Unused Assets
The timing couldn’t have been worse for Jerry Singh, president of RTI Laboratories , an environmental lab that tests for everything from lead paint in toys to toxins in water. In 2006, he had just finished an $850,000 expansion of his lab, when his biggest customers General Motors and Chrysler hit some serious financial trouble. By the time RTI’s construction was complete, the two auto makers owed his company $75,000 and sales had all but dried up.
To bolster the company’s revenue, Singh converted RTI’s research facility into six separate lab spaces and started renting them to outside researchers, charging $30 to $46 per square foot a month. Even better: Another revenue stream unexpectedly popped up. Singh’s tenants started referring new customers to RTI. Now those referrals make up about 5% to 8% of the business, he says.
Jerry Singh, president of RTI Laboratories, rents his unused lab space to researchers.
Builder Picks Up the Competition’s Slack
Boaz Gilad, CEO of ORE International , a luxury condominium developer in New York, saw the number of projects his firm worked on plummet from 15 to zero earlier this year. With the construction industry in shambles, Gilad couldn’t help but notice the number of buildings that were left incomplete. Knowing that banks are leery to lend even more money to cash-strapped developers, but are also eager to get the unfinished buildings off their books, Gilad started pitching the banks. He offered to finish the buildings and to do so in a timely manner. To boost their confidence in his company’s ability, he pointed to ORE’s track record on finishing projects on time. Today, the firm is finishing nine buildings that were started by other developers. “Three months ago, I was bored in the office because I had no new projects,” says Gilad. Now, he’s hiring.
Partners Yossi Ariel and Boaz Gilad, atop one of the incomplete condo buildings they’re working on.