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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
Horner, a Merrill Lynch financial economist;
author of 201 Great Ideas for Your Small Business; and
CEO of Obik, a career intelligence company based on Route 27 in
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.
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.
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.
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.
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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