Small Business Comebacks

Sales plummet. Long-time clients disappear. Markets dry up. The economic downturn has been merciless on small business owners. But there are many resilient entrepreneurs who refuse to give up, remaining steadfastly determined to turn their companies around. And indeed they do.

Consider the advice gleaned from the turnarounds featured in our 'Small Business Comebacks' series and how it might be useful in your business.

1. Rally your team for ideas.
When revenues at Suzanne Bates' Wellesley, Mass.-based executive coaching firm took a $600,000 recessionary dip in 2009, she turned to her employees to help find a solution. The 10-employee team at Bates Communications brainstormed how to make coaching services more relevant -- and current clients more engaged in the business. Bates' coaches then reached out to clients with everything from weekly emails to grabbing lunch to sending them leadership articles. 

As it turned out, many big clients needed leadership training more than ever -- they just couldn't pay a high price for it. So the company rolled out lower-priced options, including $25 teleseminars and group coaching sessions. Bates also began pitching leadership training to smaller companies, and some non-profits that saw the recession as an opportunity to gain market share. 

As a result, Bates Communications pulled in $2.3 million in annual revenue for 2010, compared with $1.3 million the previous year. 

Related: Rallying the Team for a Recovery

2. Analyze sales data to market more effectively.
Recognizing that its' own website sales would not carry it through the recession, New Hyde Park, N.Y.-based Tuccini Corp., shifted greater attention to selling its fragrances through Amazon.com. Founder Nick Uresin gathered and tested pricing data three times daily for five months to determine how price adjustments -- and the timing of those changes -- affected sales. For example, he learned that adjusting product prices at 6 p.m. drew in more orders than at, say, 2 p.m.

Using the data, he came up with formulas that led to creating a software program to track sales and automatically adjust prices. For the past four years, Uresin had also been developing another software system to monitor where orders were coming from. Combined, the two systems would help Tuccini greatly improve sales and purchasing. 

In 2010, the company more than doubled its annual sales to $3.3 million, compared with the previous year. It also paid off a $500,000 line of credit. The company is now debt-free.

Related: Rebuilding Sales After Deep Discounts

3. Shift resources into initiatives that drive revenue.
At brand strategy firm Parker LePla, the recession knocked 2009 revenues to $1.5 million, down 15% from the previous year. Co-founder Lynn Parker suspended the usual year-end bonuses for employees and used the savings to boost the Seattle-based firm's advertising budget by more than 80 percent. New initiatives included an online sponsorship with local NPR radio station KPLU, which gave the Seattle-based company a mention each time a listener visited the station's website and clicked on an audio clip.

"This particular radio station had the best demographics for people in leadership and marketing positions in the region… it was a very successful purchase," says Parker, who also created a new division of the company focusing on digital branding to get clients thinking about a website's overall user experience.

The digital division quickly began to generate new business, accounting for as much as 30 percent of annual revenue. Today, Parker LePla employs 11 full-time employees and 2010 annual revenues totaled $2.5 million.

Related: A Reinvention for the Long Haul

4. Revamp your pricing structure.
When Great Neck, N.Y.-based GovernmentAuctions.org stopped requiring an annual subscription for customers to view its listings of government auctions, it started to win back customers. The new pricing model started with a free three-day trial followed by only monthly subscription fees – a more lucrative offer for price-conscious consumers. 

"If we made it less risky for our customers, they would be more likely to activate an account," says co-founder Ian Aronovich.

Today, nearly 60% of the people who opt for the company's free trial stay on to sign up for a monthly subscription. The new pricing model generates nearly six times more revenue for every customer who stays for a full year compared with the original $40 flat rate. 

In 2010 the company earned more than $930,000 in revenue, a 58% increase from the $588,000 in annual revenue from the year before.

Related: How Pricing can Power a Turnaround

5. Re-examine your business model.
The founders of HuePhoria LLC had once found success selling its hand-painted party glassware to upscale gift boutiques. But after the recession chipped away at sales, the Syracuse, N.Y.-based microbusiness began forging relationships with drop-shippers, other manufacturers and retailers willing to manage the inventory and ship product on-demand. It was a way to expand product offerings without the hassle and expense of housing the inventory. 

Taking a page from direct-sales companies like Pampered Chef in which sales reps, mostly women, sell products during parties they throw for their friends, HuePhoria also launched "Ball Moms" in November 2010. The direct-sales program offers women start-up kits for $150 to $599 so they can host parties and sell HuePhoria products for a 25% cut of all sales.

With eight direct-sales reps, Ball Moms now account for 44% of HuePhoria's revenues, while drop-shipping accounts for 35% and third-party retail sales only 19%. 

Sales in the first quarter of 2011 are up 72%, compared with the same period last year. The company is on track earn $300,000 in annual revenues in 2011, its best year yet.

Related: Banking on a New Business Model

~ Jane Porter, Jason Fell, and Kelly K. Spors contributed to this article.