How small businesses can survive and thrive in a recession — part two

Some small firms have weathered the economic storm by cutting expenses and reducing staff. But others have continued forward by focusing on what they do best: exemplary customer service, employee excellence and innovation. They tweaked their business plans to react to the new economic realities. They diversified their product lines. In short, they plumbed the depths of their entrepreneurial spirit. Ten such companies in the Phoenix area have been named Spirit of Enterprise Awards finalists by the W. P. Carey School of Business. In Part Two of a continuing series on small business success, the 10 Spirit finalists were asked what they've done to succeed in the face of extreme adversity.

The extreme and prolonged economic downturn has left in its wake many failed businesses that might otherwise have prospered. High unemployment and reduced consumer spending have made it difficult for even the healthiest of companies to hang on.

Despite the prolonged slump, many have survived. For some, that has meant hunkering down and weathering the economic storm by cutting expenses and reducing staff. Others have continued forward by focusing on what they do best: exemplary customer service, employee excellence and innovation. They tweaked their business plans to react to the new economic realities.

They diversified their product lines. In short, they plumbed the depths of their entrepreneurial spirit. Ten such companies in the Phoenix area have been named Spirit of Enterprise Awards finalists by the W. P. Carey School of Business.

The annual awards are sponsored by the school’s Spirit of Enterprise Center to recognize ethics, energy and excellence in entrepreneurship. The winners will be announced Sept. 23 at the Arizona Biltmore Resort & Spa in Phoenix. All 10 Spirit of Enterprise finalists have found ways to succeed in the face of extreme adversity.

Most of them attribute their success to their employees. Some credit product innovations for helping them expand their customer base. Still others say they never lost sight of their mission. Whatever they did to survive and succeed, their experiences can be helpful to other businesses struggling to make it through the downturn.

Surviving the downturn

If there is a common theme among the Spirit finalists it is their support for their employees. Their founders, owners and leadership teams agree that one of the keys to their success is their staff members. Treating your employees right is a sure-fire way of insuring that they will treat your customers right, they say.

"Our people are our single biggest asset," says Michael Watts, chairman of Phoenix-based Sunstate Equipment Co., one of the largest equipment rental companies in the country. "If we focus on their training and their involvement and hold them accountable they will take care of the customer and drive our success."

Watts says the Sunstate management team includes its employees in discussions about ways of lowering the company's cost structure. Involving the employees has resulted in new ideas, and frequent, candid communication with employees about the status of business, the challenges the company faces and the outlook for the future has been crucial.

"Our success depends on the quality of our service as all of our competitors provide the exact same equipment," Watts says. "Our service depends on our people." Sunstate is shaking off a double-digit decline in business and plans to resume its growth over the next five years, and possibly expand internationally over the next decade.

Employees are job one

Sanderson Ford Inc., a 55-year-old family-owned dealership based in Glendale, also attributes its success in surviving one of the worst car-sale slumps ever to its employees. Company President David Kimmerle says that as the economy worsened his biggest concern was keeping his team together.

"Overall, the auto industry has a high rate of employee turnover, but not at Sanderson Ford," Kimmerle says. "One of our keys to success is the longevity of our employees, especially in more challenging times. Having a trained and experienced team that works together certainly gives us a huge advantage to compete for and win new customers.

It also provides peace of mind in protecting, maintaining and growing our all-important loyal base." They must be doing something right. Sanderson is ranked No. 1 in Arizona for Ford retail sales and No. 1 in the nation for Ford parts sales and fleet/commercial sales. Kimmerle's top tip for companies struggling in the sluggish economy is simple: "Take care of your employees and they'll take care of you."

Blowing up the business plan

Product diversification was the key to surviving the recession for Arizona Air Boutique Inc., which started as a balloon business but grew to be one of the largest helium distributors in Phoenix. The company tripled its business in 2007, only to be hit by the double whammy of recession and a global helium shortage later that year.

Helium prices skyrocketed, and the company was in danger of going out of business. Company President Angela Lepore says Arizona Air Boutique was transformed into a complete advertising and promotions company offering its core products of helium and balloons for outdoor advertising to attract customers to car dealerships and other retail establishments.

It also began offering such promotional items as flags, banners, vinyl blimps and vinyl balls. The company's nonflammable gas distribution business also was expanded to include CO2 for soda machines, nitrogen for car tires and beer mix, a combination of nitrogen and CO2 used for beer taps at bars and restaurants. The company is now one of the largest nonflammable gas distributors in Arizona.

Lepore says Arizona Air Boutique also began promoting the "green" aspect of latex balloons, which are 100 percent biodegradable, and stressing to customers that helium balloons are a cost-effective advertising strategy at a time when marketing budgets were shrinking. What she learned from the experience, Lepore says, is to always be on the lookout for new opportunities.

"Opportunities are presented to you every day, but if you are not looking, you may miss the next big thing for your company," she says. "Also, always remember that your customers are your most important asset. Always be looking for new ways to 'wow' your existing customers, whether that is with new products or offering exceptional service."

Staying the course

The last three years have been challenging for Dircks Moving Services, a 20-year-old moving, logistics and real estate company. When the housing bubble burst, the number of people moving slowed significantly. Rick Dircks, executive vice president of the family-owned Phoenix company, says the recession forced the firm to hunker down and get smarter.

"When times get tough, it's so important that everyone pulls together for the common good," he says.

"We take a closer look at our processes and make sure that we're always on our 'A' game. I think it's even more important to stick to our business plan during a recession. We can't afford to waiver from it. I think that there's kind of a bunker mentality that we adopt — 'we're all going to weather this storm as a team.' This creates a tight- knit organization."

That's not to say the company didn't evaluate its business plan and tweak it in an effort to reflect changes in the marketplace. And the company did make some big moves, some of them planned before the recession hit. It bought out a competitor last fall and it added an international freight component, coordinating moves of military personnel around the world.

That now accounts for 22 percent of the company's business. Dircks Moving also decided to end its 17-year affiliation with Allied Van Lines and entered a new agreement with Mayflower. In the first year of the new affiliation, the company was named the top-rated Mayflower moving agent in the country and also won Mayflower's top customer choice award.

Dircks says that if he has any advice for other businesses struggling to survive in a down economy, it would be to "stick to your plan and try not to let the negative forces that are occurring on the outside get in the way of running your business.

There are a lot of excuses that are easy to latch onto, so resist the temptation and deal with your own situation the best that you can. I'm a glass-half-full person, so this wasn't too difficult for me to do." The remaining Spirit of Enterprise finalists are:

1. All About People Inc., a Phoenix minority-owned staffing and recruitment firm with operations in 22 states.
2. China Mist Brands Inc., a Scottsdale-based company that distributes iced and hot teas to the food-service and grocery industries.
3. David and Sam PR, a Phoenix public relations and marketing agency with a collaborative management style.
4. Elontec, a Phoenix company that provides technology, telecommunications and commercial relocation services.
5. International Cruise & Excursions Inc., a Scottsdale-based global cruise and vacation marketing company.
6. Maintenance Mart, a Phoenix minority-owned janitorial-supply company that emphasizes the use of environmentally friendly products.