Growing Nervous

 

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?"


Elaine Appleton Grant is a senior editor at Inc. Senior associate editor Christopher Caggiano provided reporting assistance for this article.

Slowdown? What Slowdown?

Everybody's worried, right? Well, not everybody. Asked about the mood at their companies, nearly a quarter of Inc 500 survey respondents checked the box that said "Fantastic ... we're going great guns." Explain that if you can.

Part of the explanation lies in the overall economy, which itself is sharply fragmented by industry. Health care is doing well. So are educational services, along with mortgage banking and everything else related to housing. "But," says economist Mark Zandi of Economy.com, "that's it. If anyone else is telling you the world is good, it's because they're taking market share from some behemoth."

And maybe that's the rest of the explanation. Take Topics Entertainment, which publishes educational and reference software, such as World Book encyclopedias and Rand McNally maps. CEO Greg James says that retailers like Best Buy and Circuit City have made Topics their vendor of choice, so his success has come at the expense of other software companies. Thanks to such market swiping, James expects Topics to grow from $22 million in 2001 to $35 million or more this year.

Optimistic ...
How do you think your 2003 revenues
will compare with 2002's?
Up more than 20% 49%
Up 20% or less 41%
Flat or down 10%
How do you think your 2003 profits
will compare with 2002's?
Up more than 20% 40%
Up 20% or less 47%
Flat or down 13%

... But Nervous
Based on your experience, does it feel
as if the economy is in a recession?
Yes 61%
No 39%
Are you worried about a slowdown
in consumer spending?
Extremely worried 13%
Somewhat worried 65%
Not worried 22%

To-Do List: 2003

Which activities do you expect will remain difficult
or will become more difficult in 2003?
Winning new customers 43%
Collecting accounts receivable 29%
Keeping employees motivated and focused 27%
Raising capital and getting financing 26%
Retaining existing customers 16%
Retaining valuable employees 13%
Other 7%

As the economy picks up, how will you
run your business differently?
Increase sales and marketing expenses 46%
Run with leaner staff 35%
Reduce overhead expenses 28%
Reduce compensation or benefits 13%
Cancel or postpone capital investments 12%
Reduce sales and marketing expenses 6%
Do nothing different 30%

Note: Respondents could choose multiple answers.

For this project Inc teamed with Inquisite, the survey product group of Catapult Systems, an Inc 500 company. Inquisite (www.inquisite.com) provided the survey technology, reporting, and hosting for the on-line survey.

Please E-mail your comments to editors@inc.com.

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