On the mend
After riding out the worst of the recession, some firms are cautiously adding new jobs
As the economy sputters back, franchise owner Judy Briggs is hiring again after having made some painful cutbacks and lowering prices during the recession. Manoj Shinde kept his technology consultancy afloat by courting new customers and is now planning to quadruple his workforce. Dominic Coryell gave up office space during the downturn but is now beefing up the payroll and expanding operations at his dry cleaning delivery service.
Like many American companies from different industries, these three local small business owners all had to make tough decisions during the recession, and are coming out on the other side with a shot of cautious optimism. While the economy is not exactly booming again, some small companies — especially ones that adapted during the recession by cutting costs or finding new ways to generate revenue — are starting to invest in their businesses and hire again.
According to a survey by the Washington, D.C.-based National Federation of Independent Business, a net of 1 percent of owners said in August that they are planning to create new jobs over the next three months — a point worse than July, but positive for the fourth time in the past 22 months. Locally, Massachusetts has added jobs every month since February, and analysts say small businesses are driving much of that hiring.
“It’s a pretty active market,’’ said Jane Kennison, president of the Boston job placement firm Kennison & Associates Inc. “2009 was just awful — could not have been worse. 2010 is much, much better.’’
And companies are starting to expand their operations, too. Government-backed real estate loans for the fiscal year ending Sept. 30 totaled $116 million in the state, up 11 percent from the previous year, according to the US Small Business Administration.
“People are starting to feel better and are looking to grow their businesses again,’’ said Joseph Bator, director of business banking at Boston-based Eastern Bank, where small business loans are up about 40 percent from last year.
To be sure, many small business owners are in “maintenance mode,’’ some analysts say, only investing in vehicles and equipment when needed or hiring staff for replacement purposes. But they say that the firms that are in the best position to invest during the recovery are the ones that retooled and became leaner during the downturn.
“This was a big, bad recession,’’ said Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce. “You had to look at every aspect of your business. You had to ask very hard questions about what you were doing and what you were spending and why. If you asked yourself those questions and you changed those things as a result, you’re in a better position today to grow.’’
During the downturn, the company gave up its office space; employees now work from home. Coryell also had to lay off about four employees — nearly a fifth of his workforce.
“There came a point where we were not profiting,’’ Coryell said. “We started to challenge everything on our income statement. It took us shedding almost every expense, and it included, unfortunately, people. That was a wake-up call.’’
In addition to cutting costs, the company stepped up its marketing efforts. Garment Valet didn’t spend much additional money — it simply wasn’t there — but instead offered incentives for customers to refer friends and worked with colleges to promote the business to parents of incoming students.
The changes made the company stronger, Coryell said. Revenues have been increasing for a year, and Coryell said that they continue to rise by about 20 percent a month. As a result of the pickup in business, earlier this year, the company expanded into New York City.
The company now has about 2,800 customers in Boston, Brookline, and Cambridge and handles about 270 orders a day, along with about 15 orders a day for a couple hundred regular customers in New York.
And now, Garment Valet, which started in 1999 and has 17 employees in Boston and four in New York City, is looking to add half a dozen or more employees to its payroll in managerial, quality control, and delivery positions.
In addition to the word-of-mouth marketing efforts, Coryell said business is improving because his customers are simply less scared of spending money than when the downturn began. “Instead of wearing their suit three, four times before it gets cleaned, maybe they’ll wear it twice,’’ he said.
Still, Coryell said he is cautious. He is hiring slowly, making sure not to bring on more people than the company can afford. “After having to fire people, especially when you’re friends with them, you learn not to hire on impulse,’’ said Coryell, who received more than 300 responses to a single Internet ad for a delivery job. “You don’t want to hire just to fire again in another six months to a year.’’
The company specializes in taking away large and unwieldy items people no longer have any use for, like old furniture and appliances. But when times got tough over the past two years, people simply put off discarding those things.
“Our service is a luxury to a lot of people,’’ Briggs said. “If you’ve been living with the junk for 25 years, and times are getting tough, what’s another year? We saw the call volume start to decline.’’
It didn’t help that in a down economy, people may be more likely to sell old appliances and furniture, rather than throw them out.
To get her business back on track, Briggs took some steps to cut costs, including slashing employee hours, drafting more efficient pick-up routes, and selling two of the eight trucks in her fleet. But she wanted to do more to drum up business: So, she lowered her prices, dropping the rate for removing a full truckload — around a ton of junk — to $598 from $658. For smaller loads, the company charges by the piece. A washing machine, for example, costs a little more than $100 to remove.
“During the recession, it became a very competitive market,’’ said Briggs, who is now looking to hire four to six workers to add to her current staff of 16. The price cuts, she says, “got us a foot in the door in a lot of cases.’’
That was a saving grace for Briggs, who started the franchise in 2003 and saw revenues grow annually by around 35 percent until 2007 when they began dropping just as sharply as they had grown. Revenue began to increase at the end of 2009, and this year, it’s up about 40 percent from last year — bringing revenue back to pre-recession levels.
In addition to price cuts, Briggs said she thinks business is picking up because people feel better about the economy. Still, she said she will keep the cost-saving measures in place so she will be ready if there’s another downturn.
Shinde, the firm’s chief executive, started the company in 2003 in Boston and moved the offices to Newton on July 1. In 2006, he opened a branch in India, where the company employs about 55 people.
Before the recession, the company worked mostly with corporations, but that work began to dry up: at one point revenue was down about 10 percent. So, tCognition began aggressively pursuing government contracts.
“It’s a big change,’’ Shinde said. But, “we realized there is a lot of opportunity for small businesses in government.’’
Earlier this year tCognition won a contract to help the Worcester Police Department create a software system to manage its incident reports. And Shinde said he expects the firm to get several more government contracts.
Because of the increased work, Shinde said tCognition revenues are up about 25 percent since June, and he expects them to climb higher. The company now is looking to hire about 25 employees — mostly salespeople and consultants — to add to its current staff of seven in Newton.
Shinde said there’s one good thing about hiring in this down economy: companies that jump back into the hiring market now can afford to be picky because so many people are still looking for work.
“As a small business, we get whatever is available in the market, but now we have a choice,’’ he said. “People who come from bigger companies with good experience are now available in this economy.’’
TRU Corporation has been in business since 1949 and makes precision components used in products such as flat-panel televisions and cellphone towers. But when the recession hit, and businesses and individuals stopped spending, the company suffered: At the lowest point, in early 2009, revenues were down more than 50 percent from their peak.
Company executives realized they needed to do something to stabilize the business. So, they improved turnaround time so more products could be made to order, rather than stockpiled in anticipation of future demand.
Because of that improvement and a better overall economy, chief executive Linda Moulton, said TRU Corporation, which currently employs about 50 to 55 people, is growing again.
TRU Corporation, which is hitting near-record revenues every month, is looking to hire about four people in the immediate future, with more hires expected to come next year. The new jobs will include some senior positions, as well as manufacturing jobs.
“A recessionary environment is a great tool to drive learning,’’ Moulton said. “If you want to survive and thrive, you’re either going to learn how to do things better, or maybe you don’t make it.’’