Corrections or additions?
This article was prepared for the June 27, 2001 edition of U.S. 1
Newspaper. All rights reserved.
Smart Ways to Ride Out the Economic Slowdown
Sue Lonergan, a finance manager at Merrill Lynch’s
Roszel Road offices, has an economic barometer she trusts implicitly.
She will divulge the seer’s identity only so far as to say that he
is a client who brokers plastic resins, the particles used to make
plastics. “He’s the first to see a turnaround,” Lonergan says.
The materials he brokers, often shredded castoffs from industry giants
like DuPont, are reincarnated as PVC pipes used in construction
projects.
Sitting a ways down the supply line, he knows when business is picking
up — and when it isn’t.
“He began to see a downturn last July,” she says. That would
have been just a few months after the dot-coms began to bomb on
Nasdaq,
but well before economists started whispering “recession.”
Now, with consumer confidence at a low and business spending in
hiding,
the plastic resins guy is seeing the beginnings of an uptick. Is he
right? And what should small business, smarting from a whiplash
business
turnaround, do in the meantime?
Lonergan addresses this issue as part of a panel speaking on
“Managing
Your Business Smarter in an Uncertain Economy” on Thursday, June
28, at 8 a.m. at the Hyatt Regency Princeton. Sponsored by Merrill
Lynch, the event, which is free by reservation, also features David
Horner, a Merrill Lynch financial economist; Jane Applegate,
author of 201 Great Ideas for Your Small Business; and David
Collins,
CEO of Obik, a career intelligence company based on Route 27 in
Kingston.
Call 609-282-4196.
Lonergan, who holds an accounting degree from Allentown College (Class
of 1986), has been with Merrill Lynch for 3 1/2 years. Previously,
she worked in commercial banking for CoreStates (now First Union;
soon to be Wachovia) and served as the CFO of a suburban Philadelphia
janitorial supply company. Her insight into how companies can make
it through a tough economic cycle come not only from her business
experience, but also from discussions within her own home.
Jim Lonergan, her husband, owns Mile High Advertising, a Doylestown,
Pennsylvania-based aerial advertising company. His clients are
national
brands that want sunbathers to lust after their cars or corn chips.
He puts their messages up in the sky, not only along the Jersey shore,
but anywhere in the country that the masses gather outdoors. His
company
doesn’t pull those little banners that read “Ladies’ Night At
Joe’s! $1 Beers!” Rather, his clients’ messages glide by on giant
billboards pulled along by small planes. And this year he find himself
working harder to keep those planes busy.
“He is seeing people cutting back,” says Lonergan. “People
are not spending as they did in the past.” He is coping, Lonergan
says, by “working a little harder.” He is doing more
marketing,
she says, “and taking on jobs he wouldn’t ordinarily take.”
He wants to stick to higher margin accounts. For the most part, he
is still able to do so, but as the downturn in demand for advertising
continues, he needs to take on other work as well.
In addition to devoting more time to marketing and reaching farther
for clients, small businesses need to make every penny count now,
says Lonergan. Here are some of her ideas for stretching cash.
Get a line of credit. Many owners of small businessestake money from their own accounts to cover expenses. Bad idea, saysLonergan. Better to draw the cash from a business-only credit line,thereby keeping tax and accounting records separate.Get every discount you can. “Many suppliers offercash discounts if you pay early,” says Lonergan. Often, accountspaid within 10 days are discounted 2 percent. “That’s an annualinterest saving of 36 percent,” she points out. When she was CFOof the janitorial supply company, Lonergan often asked for a discountwhen none was included in payment terms. Most of the time, she says,she got it.Make money work 24/7 “A lot of business owners leavemoney idle in checking accounts,” says Lonergan. “Banksencouragethis by waiving fees.” There are more efficient ways to use thecash, she says. There are now financial products, including oneofferedby Merrill Lynch, that zero out cash balances every night, puttingworking cash into an overnight financial vehicle with a yield thatbeats that offered by a checking account.Raising prices is just not possible for many businesses now,so these penny-wise tactics could be a good way for small businessesto keep afloat until the economy once again soars like the billboardsMile High Advertising is pulling up and down the shore.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
