Stump the Slump

Stick to the Basics

During the heyday of the dotcoms, many businesses spent and spent and spent-with little attention to generating revenue. The mantra of the day was market share. The more you got, the more successful you would be.

Not so, says Davis. Anyone starting a business today must foresee a clear path to profitability. And they must build that path. "A company's right to exist is predicated on its return [on investment]," says Davis. "Some lose sight of that. I think we're back to business as usual. You have to have a real business model."

If you do, the rewards can be great. "Because there is more risk, there are more rewards today," says Stephen E. Roulac, CEO of The Roulac Group Inc., a global strategy and financial advisement firm in San Rafael, California. "If you do it right, you can get a better payoff."

Can't Stop Me Now!
No industry is recession-proof, but some typically weather storms better than others.

EXPORTING:Some overseas markets are not suffering as much as the United States, says Don Graves, executive director of BusinessLINC, a Washington, DC, government-sponsored group that brings together small and large companies. "Everyone is feeling the pinch right now across the globe, but there are markets out there that small businesses need to take a look at," he says. The U.S. Office of Trade and Economic Development reported that in October 2001, exports were down 1 percent from 2000. Total export volume, however, stood at $697.7 billion-and some industries, such as agriculture, business services and chemicals, saw increases in export volume.

Canada, Germany, Japan, Mexico and the United Kingdom have traditionally been good markets for small companies, according to the SBA.

You can also learn more about starting an import/export business here.

CONSULTING:When the economy goes south, many large corporations lay off workers and outsource work-thereby saving money on benefits and such. "I think there's a slight tendency for consultants to do better in a recession," says Rob Frankel, a branding consultant in Los Angeles. "They can get the job done faster, and they don't have the costs that employees have." Business consultants who can help companies run more efficiently-and cheaply-will be in high demand.

You can also learn more about starting a consulting business here.

SECURITY:In addition to financial concerns, today's consumers are worried about terrorism and war. So any products that help them feel safer are bound to do well. "In describing a product's features and benefits, you might emphasize safety, as opposed to prestige," says Stephen Roulac of The Roulac Group. Popular consumer products might include security products and home alarms. Businesses will look for antivirus software programs, data backup systems and smoke alarms. Many will invest in disaster-recovery systems.

TECHNOLOGY:Technology products and services will remain hot, says Bob Davis, a venture partner at venture capital firm Highland Capital Partners in Lexington, Massachusetts. "There's a tremendous amount of opportunity there," he says, "particularly in high-speed networking, digital management and software that improves business productivity."

Michelle Marrinan is a Long Island, New York, writer specializing in small business, technology and e-commerce.

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This article was originally published in the February 2002 print edition of Entrepreneur with the headline: Stump the Slump.

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