Some small businesses can turn profit amid downturn

An economic downturn, while fraught with pain and problems for so many small businesses, can also have some upsides for companies. Some are to be expected — a tough economy motivates businesses to find new ways to work more efficiently — while others are serendipitous, coming in the form of opportunities for expansion.

The retail industry’s struggles have helped boost business for Inwindow Outdoor, a New York-based company that installs advertising displays in vacant retail locations. Over the past few months, the number of stores that have closed and created advertising space has increased.

“We’ve sort of been bracing for a downturn in our business, but we’ve been surprisingly very busy,” said CEO Steve Birnhak. “The past month has been our best month ever.”

David Wexler, owner of The Little Guys, a suburban Chicago custom electronics retailer, said many of his rivals are closing down, and that’s given his company about a 10 percent increase in business over the past three to six months.

“The last month and a half has been pretty crazy,” he said.

As rivals falter, some of their employees are calling The Little Guys, looking for work. Wexler said his company has hired some — but like so many other owners, he’s also been restructuring his business, which means he has let some workers go.

“I think it’s truly a matter of looking inward, fixing the process,” he said. The result is one of the upsides of the bad economy — a more productive company.

Many businesses find growth opportunities because their products or services are in demand when the economy weakens.

At Infusionsoft, a Gilbert, Ariz.-based maker of software aimed at small businesses, orders are increasing from companies that have been laying off employees but find a way to get work done with fewer bodies.

“They have to pick up the hours of the people they just had to cut,” Lee said.

Infusionsoft is also finding another benefit from the weak economy — vendors hungry for business are willing to offer lower prices. And sometimes, dramatically lower prices. Infusionsoft has been approached several times by sellers of Internet advertising space who had lost a sale and wanted to replace it.

“We started to get calls six weeks ago, saying, ‘Hey we know it’s last-minute, but one of your competitors dropped out, do you want to do it?’ ” Lee said, adding that the prices were half off the original quote.

Small businesses may find that they don’t have to passively wait for lower prices to come along — vendors are more willing these days to negotiate not only on price, but on delivery and payment terms as well. So a company can be more aggressive in demanding a better deal.

Along that line, many small businesses are finding opportunity in the downturn because their competitors charge more than they do — a local diner is probably doing better than a more upscale eatery right now.

For some companies, the upside comes from employees who are working harder, trying to ensure that their companies weather the downturn. Scott Gingold, CEO of Powerfeedback, an Easton, Pa.-based market research firm, said his staff of 35 have voluntarily taken on more responsibility.

“We’ve always been a strong group and always had tremendous people,” he said. “Now, without any prompting from my wife or I, each one has collectively and individually come forward and said, ‘Scott, what can we do?’ ”

Joyce Rosenberg writes about small business for the Associated Press.