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A Reinvention for the Long Haul

How a focus on innovation sparked a rebound from the recession.

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Small Business Comebacks

Editor's note: Small-Business Comebacks is a series about resilient entrepreneurs and their strategies for rebounding from the recession.

One afternoon in August 2009, Lynn Parker was leading an intense brainstorming session with her company's managers at the Roanoke Inn Tavern, a historic lodge overlooking Lake Washington in Washington State's Mercer Island. But neither the quaint ambiance nor the scenic views could quell the anxiety she felt about her company.

Parker LePla
's biggest clients -- mostly from the healthcare industry -- were slashing their budgets amid the recession. Annual revenues dropped nearly 20 percent compared with the previous year, and no new business was on the horizon.

"It got to the point where we all looked at each other [at that meeting] and asked, 'Now what?' " recalls Parker, who co-founded the Seattle-based brand strategy firm in 1994.

For Parker, it was more like déjà vu. In 2001, her company pulled in record revenues of $3.5 million. But by year's end, after the tech bubble burst, profits evaporated and layoffs followed. Her workforce shrunk from 32 employees to seven. It took several years to rebuild the company and climb out of debt.

With those not-so-distant memories in mind, Parker says, she immediately launched into "response mode" during this second business crisis. This time, she was set on reinventing the business instead of making bone-deep cuts like she did less than a decade prior.

The Low Point
By summer's end in 2009, Parker LePla's average monthly revenues had slipped from roughly $100,000 to about $70,000, she says.

"No money was moving around the table," Parker says. "We went to all 200 of our former clients and sent them a promotional offer, for us to revisit their brands for a very small amount of money. Out of 200, we got only one bite."

By the end of 2009, Parker LePla's annual revenues totaled $1.5 million, down 15% from the previous year.

The Turnaround
Parker began by making strategic cuts. She let go of the firm's one contractor and cut employees' pay by 15% to avoid layoffs, which resulted in monthly savings of $15,000.

Your Reality Check
Parker answered these tough questions to turn her company around. Consider how they may apply to your business:

• What company resources could you shift into initiatives that drive revenue?

• How can you raise your company's profile in new ways? Are you on the radar of potential customers who could have the biggest impact on your bottom line?

• In what ways could you dig deeper to discover and solve your clients' current problems?

She also suspended employee year-end bonuses and used that money to boost the firm's advertising budget by more than 80 percent. New initiatives included an online sponsorship with local NPR radio station KPLU, which gave the 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," Parker says. "A whole bunch of people were talking about that ad, saying they were surprised that a small boutique firm like ours could get so many mentions on the radio station they listen to. It was a small amount to spend, and we're a small company, but for us it was a very successful purchase."

Parker also created a new division of the company to focus on digital branding to get clients thinking about a website's overall user experience.

"For example, we worked with a non-profit in the low-income housing sector to help develop its first social media program," Parker says. "The strategy was to get people talking about the importance of low-income housing via Facebook, Twitter and blogs. It drummed up support in the community for its low-income housing efforts."

By the end of 2009, a small handful of Parker LePla's largest clients returned, and the digital division was generating new business, accounting for as much as 30 percent of annual revenue.

Today, Parker LePla employs 11 full-time employees and 2010 annual revenues reached $2.5 million.

Lessons Learned
For Parker, the most significant takeaway from her company's most recent comeback was that when an economic downturn or other situation causes clients to cut spending or stop doing business altogether, it's vital to continue innovating. Expanding her firm's service offering to include digital branding was precisely what the business needed, not only to stay afloat, but to propel it into the future.

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