Reprinted courtesy of EntreWorld.org
Conducting business in New York City these days might appear daunting for some entrepreneurs. However, a group of seasoned company owners are showing resourcefulness in difficult times. Those who acted early and adjusted their business models have been able to survive the economic downturn and the embarrassment of Corporate America in the wake of the Enron scandal, to say nothing of the devastating terrorist attacks of a year ago, on September 11, 2001.
As technology went into a tailspin in 2001, for example, Connie Connors, founder of a New York advertising agency that serves high-growth companies, acted quickly and decisively. Early that year, she slashed her operating budget by reducing staff and selling off two West Coast offices. She positioned her agency, Connors Communications, as a boutique and held her pricing. Today, the company is operating with a comfortable profit margin and is positioned well for an economic rebound, Connors says.
Another New York company, iVillage, a popular Web site for women, survived the change from dot-com to dot-bomb and is close to operational profitability, again by adjusting its business model. Even prior to September 11, 2001, the company was slashing staff, redirecting sales efforts and creating a second source of revenue - a variety of paid services - to supplement advertising, according to CEO Doug McCormick, who took over from founder Candace Carpenter. Post 9/11, the company has streamlined further and is now sitting on enough cash to see its way into the black, he says.
Tough Times, Unexpected
Resourcefulness aside, not all entrepreneurs were fortunate enough to anticipate tough times. Understandably, few could have foretold 9/11. In just a single day, more than 600 small businesses located in the World Trade Center were wiped out, offices and storefronts destroyed, inventories and records lost. Many owners made the ultimate sacrifice, paying with their lives.
In the wake of the most devastating tragedy our nation has ever faced, the small business people who survived have had to fight back with all the ingenuity they could muster. Fortunately, some relief has been granted, and more is on the way. A group set up by New York State, the World Trade Center Business Recovery Program, for example, has written more than 7,200 checks totaling $200 million to companies that were directly affected by the attacks. Another $500 million is earmarked for distribution.
Another $291 million is coming from a federal fund entitled Small Firm Attraction and Retention Grants. Earmarked for companies with 10 to 200 employees, it requires that the firms' leases that were to expire from the date of the attacks to the end of 2004 be renewed for at least five years. The fund has benefited owners such as Karie Durgin, whose company, Fine Composition, received a $77,000 grant.
Some advocacy groups, however, point out that the restrictions on these grants need to be eased. While 12,800 small businesses are located south of Canal Street, the area most affected by the disaster, a number do not qualify for the funding. The 10-employee minimum has meant that Bob Van Dyke, who owns a recording studio on Stone Street, has been shut out. He has only one employee. For Rosiland Resnick of Access Business Center, the issue was the five-year minimum lease renewal requirement. She was able to secure only three years at her 85 Broad Street location.
All Around the Town
Elsewhere in New York, entrepreneurial businesses in some neighborhoods are faring better than those located downtown. Uptown in Harlem, the redevelopment effort underway prior to 9/11 pushes forward. The Apollo Theatre, once the center of the neighborhood's social and cultural life, is rebounding with great fanfare. A newly renovated theatre comprises the core of an entertainment complex that will debut a new musical, entitled "Harlem Song" and directed by George Wolfe, who presides over the Public Theatre in lower Manhattan. New office complexes, a huge shopping mall, and restored brownstones are bringing life back to upper Manhattan.
In between these two Manhattan anchors lie a plethora of restoration dramas, too numerous to recount in detail. Reeling from the lack of tourism last fall, Broadway has suffered, with eight shows closing prematurely. Through innovative state and city promotions and grants to save the arts, others have survived, and the community has righted itself. Although business isn't back to the all-time highs of a year earlier, box office receipts have come to within 90 percent of the record level set the previous spring. Faring less well have been downtown theatres, off Broadway and off-off Broadway. Many experimental theatres have shuttered their doors for good, truly a loss for the city.
Mid-town inhabitants include largely investment firms and corporations, which haven't fared well at all. The devastation of 9/11 lurks in the memory of all. In many ways, the nightmares have only begun, this time brought on by the enemy within rather than the enemy without. In the wake of the Enron scandal, confidence has eroded in New York's most powerful business sector, finance. In corporate America, shadows lurk behind every balance sheet. While recent CEO/CFO verification of financials has restored credibility to the numbers for some, it appears that it will be awhile before investor confidence is renewed.
Bright Shining Lights
In the year of 9/11 plus one, the bright shining lights looking out over Manhattan can be found in the resilient spirit of the new breed of entrepreneur - those looking to carry on the dream of creating the next great company. I can speak to this because of my work with Springboard Enterprises, a national initiative to pair women entrepreneurs in high-growth businesses with sources of equity funding.
In the two and a half years since Springboard conducted its first forum, the organization has held another eight forums. In all, 214 companies have been introduced, 85 percent of which are in business today. More than $750 million has been invested in about 40 percent of those companies, and new alliances are being made every day.
New York entrepreneurial companies have fared no better or worse than the national average, despite the terrorist attacks. That is saying quite a lot. Thanks to organizations such as Springboard, the city's entrepreneurs are getting their day on stage. These are the companies that will start New York - and America - growing again. They are the lifeblood of our nation's economy, and they will pump life back into our city and our country. It is the owners of these entrepreneurial companies who will restore confidence through the resiliency and ingenuity of the human spirit.
Kay Koplovitz is the founder of USA Networks, and was the first female network president in television history, serving as chairman and CEO from 1977 to 1998. Under her direction, USA became the largest provider of original basic cable programming. Koplovitz also launched the Sci-Fi Channel and USA Networks International, which operates channels in Latin America, Europe, and southern Africa. She served as the Presidential appointee to Chair the National Women' s Business Council from 1998 to 2001, created Springboard2000, a national organization that matches venture capital and women entrepreneurs in high growth businesses. She also founded Angels4Equity (now called Boldcap Ventures) in 2001, a fund comprised of high net worth women who invest early stage companies.
Winner of numerous awards, Koplovitz has been recognized throughout her career for her entrepreneurial spirit and industry accomplishments. She is the author of Bold Women, Big Ideas, published in 2002.
Koplovitz, a Phi Beta Kappa graduate of the University of Wisconsin, holds a master' s degree in communications from Michigan State University. She lives in New York City with her husband, Bill.
Copyright © 2002 Kauffman Center for Entrepreneurial Leadership at the Ewing Marion Kauffman Foundation. 4801 Rockhill Road, Kansas City, MO 64110. All rights reserved.