Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the September 18, 2002 edition of U.S. 1 Newspaper. All rights reserved.
Tough Times, Good Times For Small Business
During the past year Margery Davidson, a business
consultant and CPA, has incorporated more businesses than she did
in the previous three years put together. She is seeing people who
spent years working for big companies, but who now want more control
over their destinies. “Before everything was wonderful,” Davidson
says of a vanished paternal corporate culture. “You had a pension,
and medical guaranteed for life.” Not to mention a job guaranteed
further down the road than the next round of profit-shortfall-induced
downsizings.
Davidson, whose businesses are based in Aberdeen, is seeing the formation
of large numbers of consulting firms, many technology-related. The
owners of these fledgling companies tend to be former corporate employees,
bruised by reductions in force, and deciding to suspend a job search
in favor of starting up a business in the field they know best. But
she is also seeing individuals, some of them retirees, who want to
try something entirely different. “One client is opening a dog
grooming business,” she reports. And another is getting into vending
machines.
“It’s prime time for small business,” says Davidson. “People
are turning away from larger companies.” The oceans of ink thrown
at the high profile problems of the likes of ImClone, Arthur Andersen,
and Enron are making some potential customers think twice about retaining
the services of any large corporation. Small businesses stand to profit,
but only if they take the time to plot effective strategies.
Davidson offers advice on formulating a good game plan when she speaks
on “Businesses Getting Results in a World of Competition”
on Thursday, September 19, at 6 p.m. at a Mercer NJAWBO meeting at
the Merrill Lynch Conference Center. Cost: $35. Call 609-924-7975.
Davidson is a dynamo, a bookkeeper who went back to school when she
realized she could do everything a CPA could do, but would never move
ahead without a degree. “It was the most frightening thing I ever
did in my whole life,” she says of trading a paycheck for a stack
of books in her 30s. She began her education at Brookdale Community
College, and then transferred to Rutgers, where she earned her accounting
degree in 1983.
Going out on her own, she first built a practice in accounting, and
then added another business, Davidson Business Development Team, to
give clients advice on how myriad issues around starting, growing,
and selling a business. Her husband and daughters have since joined
one or another of her companies. She enjoys working with family, she
says, “as long as I’m the boss.”
Starting from zero — no money, not a single contact, no corporate
experience — Davidson has built two successful businesses. This
year’s crop of entrepreneurs can do the same, she says, offering this
advice:
Get busy. At first, Davidson says, most new businessesneed to accept any client who comes in the door. Getting cash flowgoing is crucial, and it may be necessary to undercut the competitionto get the business going.Be selective. Not everyone who wants goods or needs servicesis an ideal client. After the business is established, decide whoyou want your clients to be. Continuing to welcome any client whowalks in the door — especially if a discount brought him —is not good for the business. Many new entrepreneurs confuse a busyday with a profitable day, says Davidson, adding that it is oftenbetter to have three quality clients than twenty so-so clients. Servicingmore clients can mean stocking more inventory and hiring more employees— not to mention working more hours. If the profit margin on eachclient is not large enough, all the work could be for naught.Don’t confuse business with family. Early on, clientssometimes feel like family. They aren’t, says Davidson. Business isbusiness, and should not be confused with personal relationships.Don’t fall into the habit of extending special discounts to favoriteclients.Analyze your clients. It is important to know who yourclients are. Profile them. How old are they? What gender? Where dothey live? Armed with this information, think about what they arelikely to be doing when they are not doing business with you. “Say,you own a cafe,” Davidson offers as an example, “and yourcustomers are between 18 and 25. Where else do they go?” Makea list of all the places these customers are likely to frequent. Ifa nearby movie theater is on the list, try to strike up a reciprocalpromotion. Perhaps the movie theater could pass out your offer ofa free cup of coffee after the show, and you could pass out the movietheater’s offer of free popcorn.Make partnerships easy. The same strategy can work inany field, Davidson says. A computer networking consultant might partnerwith a computer retailer, for example. The important thing, she says,is to make it easy for the other business to say yes to a collaboration.She suggests writing a letter from your prospective partner to hisclients, so that, if he agrees, he has only to add his signature.Get less busy. As a business grows, you need to documentevery job — including your own. That way, if someone is ill, orleaves suddenly, the business can carry on. Nothing will fall throughthe cracks, and extensive training will not be necessary.It is all to easy to get so busy — and to stay so focused on day-to-dayoperations — that this step gets skipped. “I ask my clientswhat would happen to their businesses if they were in the hospitalfor a month,” says Davidson. The most common answer, she saysis, “there would be no business.” Instead of flirting withthat fate, she says, an entrepreneur needs to spend time “on thebusiness,” generating ideas and supervising, and not “in thebusiness,” working on operations.Davidson says her clients love this advice. “They’re no longermeeting and greeting the customer,” she says. “They’re planningfor the long term.”Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
