New businesses start every day here in the land of opportunity, but how many last?
A new report from the Census Bureau and the Kauffman Foundation shows a decline in the number of business startups last year as the nascent economic recovery continued to challenge U.S. entrepreneurs. At the same time, closings have increased, with some 1.5 million small businesses shutting their doors in 2009 alone.
So how is it that so many small business owners manage to defy the odds and keep their ventures going decade after decade? What’s the secret to maintaining the creativity while navigating the daily operational obstacles that all small businesses face?
“In a way, you almost have to be a little bit naive at the start,” laughs Jo Kling, president and co-founder of Landry & Kling, which plans events at sea for businesses and will celebrate its 30th anniversary in June. “If you saw ahead of time what you’re up against, you might have second thoughts about starting a business.”
Here’s what Kling and more small-business owners have to say about the secrets to their longevity:
When times are tough, consider taking a risk
As the economic downturn accelerated in 2008 with mounting layoffs and a tanking stock market, consumers became much more careful in how they spent their money. For Tracy True Dismukes, owner of Collage Designer Consignment, a clothing consignment business, it became go-time. To promote her three locations around Birmingham, Alabama, and lure customers back, she bought a 30-minute slot on her local CW TV station affiliate. The result: “Consignment Chic,” a fashion TV show she produces that highlights her high-end clothes, with a new emphasis on value. The show won its timeslot, led to a new ecommerce site that has a national focus, and even offers a bus tour for consignment-savvy customers. With more people also focused on recycling and reusing clothing as a greener alternative, everything has come together for Dismukes at an otherwise shaky time.
She views her decision to create her fashion TV show as an important lesson in the importance of risk-taking in business. “When you throw small business owners a curveball, we’re going to find a way around it, or over it or under it or whatever,” she says. “It’s either that or you’re going to go down. You have to keep innovating and finding ways to survive.”
Look for an edge
Every small business owner gets in a rut. What sets successful entrepreneurs apart is how they get out of it. Karen Port and her husband, Dale, have been selling hot tubs since the late ‘80s at their St. Louis shop, Mirage Spa. The past few years have been a struggle for many sellers of luxury items, and their business was no exception. About 18 months ago, the situation became so dire that Dale had to leave Mirage Spa to get an additional job. “We knew we had to keep going with our company—for health insurance,” Karen says. So how do they keep up their enthusiasm for the business? Dale still attends important industry gatherings and gets rejuvenated by new products and ideas from others in the industry.
For Karen, it can be something as simple as a cool new technology that makes it easier to engage customers. For instance, she recalls recently standing in a local yogurt shop when she noticed that it offered customers Getpunchd, a smartphone app that digitizes business-loyalty punch cards. Karen says she ran right back to her shop, signed her business up for the app, and, ever since, has been offering loyal Mirage Spa customers a free enzyme pack after 10 purchases of hot-tub chemical supplies—a feature that’s proven to be popular. The lesson for her: Even the smallest bit of an edge can matter to your customers. “Finding little ways is exciting and gets my brain going to look for other options,” Karen says. “We don't have an advertising budget, we are five people and I have to find a way to get our name out to the public without spending a dime.”
If it’s not broken, break it
Believe it or not, reality TV may good for businesses other than gyms, tanning salons, and laundries. Pawn shops have seen a resurgence, too, as cable favorites like “Pawn Stars” and “Hardcore Pawn” have shown the world of loans-for-goods in a new light.
Robbie Whitten has been in the pawn shop business since 1979, when he started buying gold and silver as the billionaire Hunt brothers tried to corner the market. Now the founder and chief executive of Columbus, Georgia’s Money Mizer Pawn & Jewelry, Whitten says he has seen some of his stores’ revenue triple in the past few years. His secret to staying afloat: Adapting to changes in the economy, technology, and his clientele. He’s opened three new franchises (with five more in the works) and started a new online foray, PawnConfidential.com, where shop-shy, white-collar customers can negotiate prices from afar and then ship to Whitten’s site for free. Next up: a smartphone app that takes a picture of an item and then helps to calculate a price for it. “I absolutely love what I do,” says Whitten. “Traditionally, the image is that our business takes advantage of people. In reality, we’re helping people get the money they need when don’t have any other options.”
Find the right partner
Kling and her business partner, Joyce Landry, left the cruise line Holland America they were working for in the depths of the 1982 recession for the high seas. No, they didn’t become cruise directors. The duo found a market niche by linking meeting planners and corporate clients (Aflac, Motorola, Harley-Davidson, and Miller Brewing to name a few) with an entirely new venue for company events: cruise ships. Along the way, they hauled in a roster of household-name clients as travelers and broke ground with a “floating hotel” concept that helped Jacksonville, Florida, land the Super Bowl in 2005. In addition, they launched an ecommerce site, seasite.com, which functions like a Travelocity-type search engine for cruise meeting planners.
“Looking back at the challenging times, we were confident or patient that things were always about to turn around,” says Kling “And we used it as a perfect opportunity to innovate and do things differently. The technology creeps up on you and change happens in every industry. So you can either get out in front and anticipate change or get run over. Look at Kodak or BlackBerry.”
And the journey also depends on your travel companion—in this case, your business partner.
“We’ve been through economic downturns, wars, 9/11, several weddings, deaths, divorces, moves—but we’re resilient. It really is a blessing when you’re working with someone who’s equally committed,” Kling says. “It’s our mind-set. That’s what makes it interesting. We can back each other up and share in this satisfying experience. There is nothing finer than sharing success.”