Recession Delivers Timely Wake-up Calls The financial crisis shook these 3 entrepreneurs out of complacency. Their renewed focus has delivered dividends.

When Kent Lewis returned from a family vacation in late January, his first day back in the office was anything but business as usual. To his surprise Lewis was handed a sobering report on what his team had been working on.

"My vice president sits me down and walks through seven, single-spaced pages of criticism and suggestions from our entire team," says Lewis, 37, founder and president of Anvil Media, a search-engine marketing (SEM) agency based in Portland, Ore.

After several years of growth, the fourth quarter of 2008 was full of change: Lewis just started a second company, Formic Media, to offer affordable SEM services to the small businesses that Anvil did not serve; Anvil Media's vice president was on maternity leave; and the recession created a business slump in December that suddenly left his Gen Y team plenty of free time to think about the company, its leader and their futures.

"Basically, I wasn't spending enough quality time with the team and, in a time of crisis, I chose to tell them what we're going to do instead of having a discussion about it," Lewis says. "They didn't necessarily disagree with the direction I took, but the way I communicated absolutely freaked them out. I lost connection with the team."

Lewis is like the many entrepreneurs who have found the worst financial crisis in decades to be a crucial wake-up call, one that has served their businesses for the better. In fact, the latest survey of 1,005 small-business owners, conducted in December by Global Strategy Group on behalf of Intuit, found that nine out of 10 entrepreneurs (89 percent) still see opportunities for their businesses during the recession.

A New Soul
Some of the most valuable insights can come from painstaking decisions, as Nicole Cober Blake learned when she laid off her assistant at Soul Day Spa and Salon in Washington, D.C., at the beginning of the year. Faced with a stifled credit line and 2008 sales of $489,000, Blake decided to funnel the equivalent of her assistant's salary, or about $35,000, back into the business.

Before the recession, Blake says she never felt the need to interact face-to-face with customers. But without her "right hand" to answer phones, check in guests and help run the day-to-day operations, Blake was now at the salon all day, every day. Little did she know how much she had been missed by her 10-employee staff and her customers.

"For whatever reason, we were missing a great deal of calls. Now I'm better able to monitor timeliness and quality of service," says Blake, noting a 20 percent drop in customer complaints within a month of her daily presence. "I feel so much more connected to the business and I'm a lot happier, ironically, then I was before." Revenues also rose 10 percent in January, compared with the same month last year.

Catalyst for Growth
The recession also became an impetus for growth at Fort Worth, Texas-based Tara Wilson Events, an event planning company. Despite the downsizing of corporate events and an uprising of plan-it-yourself brides, founder Tara Wilson uncovered new revenue streams by broadening her services.

In January, she launched a dessert-only division of the company for the most cost-conscious clients, tapping an upscale sweet trend. Dessert Scapes creates themed dessert tables to give events that 'wow' factor, but at a fraction of the cost required to plan an entire soiree. As for Wilson's full-service planning business, last October she broadened marketing efforts to include the oft-overlooked nonprofit sector.

"I once thought nonprofits didn't have the financial backing like corporate and bridal business," Wilson says. "But when the recession hit, I saw nonprofits were looking for someone to handle the logistics of their events, so they can focus on what they do best, which is raise money."

The expansion and marketing efforts are paying off: With annual sales of $281,000,Wilson projects a 25 percent increase in first-quarter revenues.

"The recession has allowed me to take the blinders off and see other places to make money I wouldn't have normally focused on," Wilson says.

Lewis feels the same way. He is a "big-picture guy." His team of twentysomethings just wanted the plan. They also wanted to learn about company changes as a group, not individually. Line by line, covering the seven pages his vice president handed him, his employees collectively unleashed months of pent-up frustration. The criticism cut deep, but it was just what Lewis needed to turn the company around.

"If I didn't have that information, I couldn't have understood how important it was and then made an action plan to change how I communicate," Lewis says. "If not for the recession, not only would I have not had the feedback, but I also think some people, if other jobs were available, would have left the company. And my team is highly valued; they're very good at what they do."

With the lines of communication now functioning in a way Lewis didn't understand before, the employees at his companies are working hard to bring in business, with a combined 19 employees and 2008 revenues totaling $1.9 million. Although they're not out of the woods yet, Lewis says they're not losing money, and he's learning new ways to communicate this--and all other messages--to his diverse team.

In February, he also shifted the focus of his monthly one-on-one employee meetings. "The half-hour is now just for their personal development," Lewis says. "It's their agendas."

It appears to be working. Lewis found new connections with his employees, and the faces of skepticism are now replaced with smiles.

"I realize that if they cared so much to give me the feedback, they care a lot about being here for the long haul," Lewis says. "This is a wonderful opportunity for us, and I'm not going to miss it."