Small BusinessWeathering the Recession

By Martin Davis

When the economy sinks, larger businesses face difficult choices to keep themselves competitive; smaller businesses often struggle simply to stay afloat.

This is certainly true of the current economy. According to the Small Business Association's third-quarter indicators, bankruptcy filings are up 2.5 percentage points over the same time in 2007, while other key data such are hiring, optimism, sales, and orders are down sharply. "The top issue now is sales," says Chief Economist Chad Moutray of SBA. "There's a huge decline in demand." And news that the Gross Domestic Product is down 3.5 percent offers little hope that the situation will improve in the near future.

Despite the challenges, however, some small ICT businesses are not just surviving, but thriving. ICT2020 has interviewed a number of these to learn their reasons for success. We received a variety of answers. Whether through careful management, niche marketing, original products, competitive pricing, business collaboration, or flexibility, these small companies are doing more than keeping their heads above water. They're riding a wave of new business and growth.

While each company is its own interesting case study (see profiles), some common threads tie them together.

The R&D Curve — This is not the time to undertake risky ventures that require expensive and lengthy R&D investments. Simply put, the investment capital isn't there. At the same time, however, companies with good products already on the market should continue to invest the R&D time necessary to keep their products ahead of the curve. Jack Blumenstein, CEO of Aircell — the maker of GoGo and the sole provider of ground-to-air broadband service to U.S. airlines — says his company continues to engage in research that will keep its products at the forefront of the industry. "In the areas of property and intellectual property, we're constantly coming upon and thinking about new ways to put patent innovative ideas in some of the things that we're doing." [Emphasis added]

'True' Customer Service — It may sound quaint, but customer service can be the difference between your company sinking or swimming. Nearly all the companies interviewed credited their success to a firm commitment to meet customer needs. But no one said it as plainly as Toni Gibbs of Shields Environmental, which provides re-use, recycling and solutions to the telecommunications sector, enabling ICT companies to manage their networks with maximum financial efficiency and care for the environment. "Our company is built on honesty, integrity, and true customer service. In no way should the OEM or vendor be in the driver's seat as to what the customer should want. Listen to your customers, big and small, provide a good product, at an honest value, and always provide excellent customer service. Create an internal environment that promotes growth, reward, and satisfaction to its employees.  If employees are happy they portray that same trust, satisfaction, and happiness to the customer" says Gibbs. "All employees are empowered to do what it takes to make the customer happy."

Efficiency Matters — With corporate dollars tight, smaller companies that can address specific problems efficiently are increasingly attractive to clients. VPIsystems is a 10-year-old Siemens spin-off based in Holmdel, N.J., that specializes in planning telecommunications companies' networks so that they operate more efficiently. According to Robert Smithline, senior director at VPIsystems, there are many point solutions to the problem of network planning, but the company's OnePlan product is the only one that offers an end-to-end solution that works with the client's current system and brings significant savings in client network management costs. "Our business is growing," says Smithline. The key is simple: "Find a problem to solve and a more efficient way to do it for your customers."

Niche Markets Rule — A small company in Texas, Accudata Technologies, has buoyed itself on 10-digit numbers. The company began validating numbers for calls made from pay phones. Today, Accudata is among the few non-telephone companies with access to the major telephone company databases. Marketing companies, credit card companies, any company needing to verify data that can be associated with a phone number comes to Accudata. By focusing on this niche, the company has been able to expand greatly. "We connected with the big guys, then got into other databases — credit card databases, 911, 411, etc.," says President and CEO Gregory Smith. "None of this was a big stretch from what we were originally doing."

Break the Rules

In talking with these small companies, it became apparent that each has a bit of the rule-breaker in it. Each was willing to measure the waves of trouble and find the opportune curl to set its boards into. As such, the commonalities these companies share only give us part of the picture.

The real lessons to be learned come from a close examination of each business on its own terms. So grab a wave and see how these small ICT businesses are beating the odds.