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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 businesses

need to accept any client who comes in the door. Getting cash flow

going is crucial, and it may be necessary to undercut the competition

to get the business going.

Be selective. Not everyone who wants goods or needs services

is an ideal client. After the business is established, decide who

you want your clients to be. Continuing to welcome any client who

walks in the door — especially if a discount brought him —

is not good for the business. Many new entrepreneurs confuse a busy

day with a profitable day, says Davidson, adding that it is often

better to have three quality clients than twenty so-so clients. Servicing

more clients can mean stocking more inventory and hiring more employees

— not to mention working more hours. If the profit margin on each

client is not large enough, all the work could be for naught.

Don’t confuse business with family. Early on, clients

sometimes feel like family. They aren’t, says Davidson. Business is

business, and should not be confused with personal relationships.

Don’t fall into the habit of extending special discounts to favorite

clients.

Analyze your clients. It is important to know who your

clients are. Profile them. How old are they? What gender? Where do

they live? Armed with this information, think about what they are

likely to be doing when they are not doing business with you. "Say,

you own a cafe," Davidson offers as an example, "and your

customers are between 18 and 25. Where else do they go?" Make

a list of all the places these customers are likely to frequent. If

a nearby movie theater is on the list, try to strike up a reciprocal

promotion. Perhaps the movie theater could pass out your offer of

a free cup of coffee after the show, and you could pass out the movie

theater’s offer of free popcorn.

Make partnerships easy. The same strategy can work in

any field, Davidson says. A computer networking consultant might partner

with 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 his

clients, so that, if he agrees, he has only to add his signature.

Get less busy. As a business grows, you need to document

every job — including your own. That way, if someone is ill, or

leaves suddenly, the business can carry on. Nothing will fall through

the 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-day

operations — that this step gets skipped. "I ask my clients

what would happen to their businesses if they were in the hospital

for a month," says Davidson. The most common answer, she says

is, "there would be no business." Instead of flirting with

that fate, she says, an entrepreneur needs to spend time "on the

business," generating ideas and supervising, and not "in the

business," working on operations.

Davidson says her clients love this advice. "They’re no longer

meeting and greeting the customer," she says. "They’re planning

for the long term."


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