So, like 60% of our survey respondents, Bates has been searching out lower-cost alternatives to his company's present coverage. This year he and his wife, Joy, who is Legacy's controller and human-resources director, solicited bids from 20 insurance companies. MAMSI Life and Health Insurance Co. -- which happened to be a client of Legacy's D.C. office -- submitted a quote significantly lower than those of the competition and ultimately enabled the Bateses to keep costs flat for employee-only coverage, while employee-and-family coverage actually decreased 13%.
Of course, the process was not without costs, particularly the three months that Chad and Joy spent researching and soliciting bids. But Chad plans to repeat the bidding process every year. "We're leaving money on the table if we don't," he says. "We've been in business more than 10 years and only changed carriers twice up until this past year. Now we're going to have to keep changing."
Tune up now for growth later
With parts of the economy in a morass, many workers' spirits -- and energy -- are also in a trough. About a third of our respondents said that "keeping employees motivated and focused" had become more difficult. So they are tuning up their companies and improving performance -- a task often neglected when times are good.
Just ask John Metzger and James Clark, CEO and chief operating officer, respectively, of the Boulder, Colo., public-relations firm Metzger Associates. The company was flush in 2000. But by 2001, as its high-tech clients began bleeding, revenues dropped from $3.5 million to $3.3 million, and the company lost money. Trying to choose which of several valuable employees to lay off, Clark and Metzger realized they had to decide on gut instinct. They had poor systems for tracking critical information and performing employee reviews, and they had only handshakes and paid bills as proof of client satisfaction. In the fall of 2001 they started developing a balanced-scorecard effort, a new performance-evaluation process, and a quality-assurance program, which they rolled out over the past year.
"In this market, you try to increase market share, because other companies aren't in the mood. This is the time that company owners should realize that their competitors are distracted, worried, not working hard."
This year the company expects revenues of about $4 million. Although they're operating on thin margins, Metzger and Clark believe investing in those programs will pay off quickly with happier employees, increased revenues, and, by 2004, 15.5% profit margins, up from the industry's standard of 12%. "We want to be a creative company," says Clark. "Reactive companies let all of the external factors impact their processes. Creative companies look internally and say, 'Let's take a look at our situation. How can we improve upon that?' "
Like Clark and Metzger, Matthew Ohrnstein is proactive in down times. The CEO of Caliber Collision Centers, a $220-million chain of 68 repair shops in California and Texas, Ohrnstein is rolling out a 6- to 18-month development program for his store managers in hopes of readying them for even greater growth and profitability when the economy picks up.
For Ohrnstein, improving employee performance is all-important. "At any point, we have 20 stores firing on all cylinders, 35 that are acceptable, and the rest at some level of remediation," he says. "If you could just pull up the ones that are average to be excellent, and the ones that are acceptable to be average, that has an impact on customer satisfaction. And that's the key driver to profitability."
Opportunity knocks -- if you're home
John McMillan, an engineer-turned-CEO, is a low-key kind of guy. You can't help liking him, but you'd love to hate him, because McMillan, CEO of Wise Solutions Inc., a software company in Plymouth, Mich., is a glutton at the feast of opportunities served up by the recession. His company has grown by an average of 42% annually in each of the past six years, with typical profit margins of 25% and no debt. This year McMillan hired 30 employees, jamming his offices with 100 people. No problem. "We moved into a larger building during this downtime," he says. "The lease we got was awesome."
Not envious yet? Try this: McMillan bought mahogany furniture for 5 cents on the dollar. More strategically, he's increasing spending on research and development and is looking for acquisitions. "In this market, you try to increase market share, because other companies aren't in the mood," he says.
His strategy is so commonsensical that you wonder why everyone doesn't chase opportunities in a slowdown. So does McMillan. He thinks most executives are paralyzed by the same kind of anxiety that incites investors to sell stocks when prices are low. "This is the time you think [company owners] should be realizing that their competitors are distracted, worried, not working hard. But somehow they don't think that way."
Bill Oesterle, CEO of Angie's List, is another one who does. He negotiated a 15% discount on $2 million worth of advertising and 12% off the cost of printing 100,000 publications a month.
What does it take to turn a recession to your advantage? A debt-free company with decent cash flow helps. But the right attitude may be more important. "One person sees a brick wall," says McMillan. "And I go, 'What can I do with that? Can I market that brick wall?"
