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Do IT this week: Layering
During downturn, there are strategies besides cutting back
By Paula Schleis
Beacon Journal business writer
Published on Monday, Nov 17, 2008
Recession-proofing your business isn't necessarily about cutting costs.
Some members of the Cleveland/Akron chapter of Entrepreneurs' Organization say a better response to an economic downturn is to grow.
''Everybody looks for ways to cut back,'' local EO president Joel Goldstein said, but a recent informal survey of members turned up far more forward-thinking strategies.
One manufacturer decided to increase its sales staff in order to pursue more customers.
Another construction-related company is opening an office in Canada to take advantage of a growing housing market in Toronto.
A third company actually increased employee benefits.
''Their thinking is with layoffs and cutbacks, there's a lot of good talent out there and his company wants to be in a position to bring them on staff,'' Goldstein said.
Goldstein said he also chose growth over the tempting ''hunker down'' mentality. Last month, he purchased a building in Solon. For the first time, his ad agency, Goldstein Group Communications, is an owner and not a renter.
''We have three times as much space as before,'' he said, and he intends to fill it. ''Like other EO members, we're looking at the long term, not short term.''
Akron businessman David Charlton said he started thinking about ''recession-proofing'' his industrial lubrication distributorship as soon as he bought it in 2006.
The country's declining manufacturing base and auto industry demanded that his Rice Holdings develop new survival strategies long before Wall Street buckled.
Rice and its 15 employees have been able to grow by offering some unique services.
First, instead of just selling oil in an unquestioning routine replacement plan, Rice will test the lubricant a company is using and determine if it can last longer, or if it can be recycled and reused.
The profit margin for Rice is much larger, it's an environmentally friendly choice in an era where companies are interested in sustainability, and it saves the customer money by extending the life of their lubricants.
''We're actively helping industrial manufacturing firms recession-proof themselves,'' Charlton added.
Another service Charlton's company provides eliminates time-consuming paperwork and potential auditing nightmares.
Rice Holdings logs all of the information required of a company that disposes of waste, and keeps it on the Internet so customers can access their own histories in an instant.
To be sure, it's easier for small business owners to react quickly to changes in the economy.
''We have the authority and the flexibility to make the choices that people in larger organizations with a lot of structure don't,'' he said. ''We can be risk takers. In a corporation, managers don't have the comfort to go to a boss and say, 'Let's spend a million bucks trying this.' But nobody is going on a witch hunt with an entrepreneur if his plan doesn't work.''
Still, Charlton said there can be resistance when going against the grain. His company was in a field that was largely unchanged in a century. Distributors concentrate on volume — the more you sell, the more money you make.
The idea of a distributor providing services that actually reduce the amount of product they are distributing ''was so far beyond the core business, I got lots of negative feedback,'' he said.
''But we found a niche,'' he said, ''and we're still the only ones playing in that niche.''
Paula Schleis can be reached at 330-996-3741 or pschleis@thebeaconjournal.com.
Recession-proofing your business isn't necessarily about cutting costs.
Get the full article here.
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