But she remembers it like yesterday. ‘It hit me broadside,’ says Tyler, owner of Tyler II, an interior construction company in Charlotte, North Carolina. ‘Business just stopped.’ Panicking, she cut her salary in half and drained the company’s cash reserves to scrape by.
So with the outlook for 2001 uncertain, Tyler isn’t taking any chances.
She has talked to her bank about doubling the company’s line of credit to $1m, increased her business development budget by 50%, and promoted her office manager to client-relations manager to make sure current customers remain satisfied. ‘I plan to stay on course and not panic,’ says Tyler.
But it’s hard to keep a cool head when hardly a day passes without another ominous economic cloud floating by. The impact on business is plain.
In the fourth-quarter Trendsetter Barometer survey by PricewaterhouseCoopers, chief executives of high-growth companies said they had reduced revenue growth targets for 2001 by an average of seven per cent. And the December survey of the National Federation of Independent Business found only 14% of small-business owners said now was a good time to expand, the lowest number in more than four years.
For William J. Carnegie, CEO of Total Containment of New York Inc, a specialty contractor, the slowdown is already six months old. He founded Total Containment in 1993 and saw sales grow at least 30% a year.
But in 2000, revenues plunged 40% as clients started putting contracts on hold or missing payments. So far, Carnegie seems to be making the moves experts recommend. He hired a collection agency, laid off two of his employees, doubled his bank credit line to $1m, and secured $350,000 in emergency funds.
Of course, for some, a slowdown means a chance to snap up workers.
Ilya R. Talman, president of Roy Talman & Associates, a Chicago-based hi-tech recruiter, expanded his recruiting staff from 12 to 19 in the fourth quarter. ‘We have seen a dramatic upturn in our ability to hire in the last few months,’ says Talman.
Nevertheless entrepreneurs should secure an adequate line of credit before an emergency hits, says Mike James, corporate executive vice-president at Wells Fargo & Co, the nation’s largest small-business lender. ‘As the economy slows, banks tighten up,’ he says.
Many entrepreneurs also plan to identify new market niches, particularly ones that are recession-proof . Matthew M. Zell, president of Prometheus Technologies, says his Chicago-based information technology consultancy is moving into IT to capitalise on a likely increase in mergers during a recession. Rather than fearing a slowdown, Zell is looking forward to it.
With the labour market so tight for so long, Zell has seen his profit margins eaten away by steadily rising wages. At the same time, he has been unable to discipline problem employees who can find a new job in a matter of days. ‘What’s happened has been pretty brutal,’ he says. ‘I am not sure a recession would be tougher.’ Perhaps. But entrepreneurs will need to be just as disciplined themselves.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel