Crisis Mode Economic crises are trickling down to entrepreneurs. How are they fighting back?

Things look good for Matthew Stewart, co-founder of College Works Painting, an 8-year-old Santa Ana, California, home improvement and construction firm with 160 full-time employees and 3,000 seasonal workers. His business has grown 400 percent over the past five years, with company sales expected to reach $27 million in 2004.

But underneath the surface, large economic crises are threatening to chip away at the company's profit margin. College Works Painting is paying one-third more this year for gasoline-it adds up quickly when employees have to drive long distances between projects. Stewart is adjusting to rising gas prices by hiring subcontractors if a job requires a lot of driving and incorporating changes such as using five-day delivery instead of overnight mail.

Even though business is picking up, "we're really paying attention to our pennies, so we maintain our profit margin," says Stewart, 32. "That way, we can keep it in our control."