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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


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


but well before economists started whispering "recession."

Now, with consumer confidence at a low and business spending in


the plastic resins guy is seeing the beginnings of an uptick. Is he

right? And what should small business, smarting from a whiplash


turnaround, do in the meantime?

Lonergan addresses this issue as part of a panel speaking on


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


CEO of Obik, a career intelligence company based on Route 27 in


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


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


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


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 businesses

take money from their own accounts to cover expenses. Bad idea, says

Lonergan. 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 offer

cash discounts if you pay early," says Lonergan. Often, accounts

paid within 10 days are discounted 2 percent. "That’s an annual

interest saving of 36 percent," she points out. When she was CFO

of the janitorial supply company, Lonergan often asked for a discount

when 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 leave

money idle in checking accounts," says Lonergan. "Banks


this by waiving fees." There are more efficient ways to use the

cash, she says. There are now financial products, including one


by Merrill Lynch, that zero out cash balances every night, putting

working cash into an overnight financial vehicle with a yield that

beats 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 businesses

to keep afloat until the economy once again soars like the billboards

Mile High Advertising is pulling up and down the shore.

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