Downturn’s the Right Time for Expansion


Dana Smith-Rogers, owner of Spiritual Essence Yoga, a wellness studio in Upper Marlboro, Maryland, has seen the effects of the recession on her clientele. “More people are seeking ways to manage stress,” the 34-year-old says. Sensing an opportunity, Smith-Rogers plans to hire three contractors to teach classes and one part-time administrative assistant so “I can explore the business’ creative side,” she says.

Like Smith-Rogers, 44% of small business owners plan to hire more staff this year, according to a survey by financial solution provider Intuit. But that still leaves more than half of small business owners putting expansion plans on hold, a move that could prove to be a mistake, experts say.

“Historically, more than half of the top 500 U.S. companies were started in a recession or depression,” says Rhonda Abrams, author of Hire Your First Employee: The Entrepreneur’s Guide to Finding, Choosing and Leading Great People (The Planning Shop; $24.95). “You have a better chance of growing a company in bad times than in good times.”

Here’s why it makes more sense to hire now than to wait for a full economic recovery.

1 Customers are more receptive. When times are good, customers tend to be happy with the status quo. But when times are tough, “they are looking for new alternatives,” Abrams says. By adding employees that can solve customer problems or free you up to do so, you can introduce new products and services as customers look for added value and more efficient ways to spend their dollars.

2 Marketing messages will stand out. One of the first things large companies cut during tough times is marketing. William R. Patterson, chief executive officer of The Baron Solution Group, a business consulting firm in Washington, D.C., says that by ramping up on employees that can better communicate your brand’s relevance, your products and services will be more likely to resonate once other companies feel comfortable spending marketing dollars again.

3 The labor market is flexible. With the unemployment rate at 10%, people are willing to work not only for less money, but they may be willing to work part time or as an independent contractor if your business is unable to handle the cost of full-time employees. Abrams adds, “You can have great people who’d be willing to work for you for 10 hours a week who would have only looked for a full-time job with full benefits before.”

4 There’s more work to do. In tough economic times, it often takes longer to make a sale or close a deal. Additional staff can help, says Patterson. “You want to focus on hiring people where they’ll be in a position to generate revenue as opposed to more overhead positions where they don’t directly contribute to the bottom line.”


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