The A³ Solution: Analyze, Adapt, Advance
Finding ways to maintain, and even grow, a small business in a down economy is a puzzle for most entrepreneurs. But when times are tough, the tough try harder. That approach has worked for Zack Schuler, president of Cal Net Technology Group, a systems-integration firm that designs, sets up, and maintains local and wide-area business computer networks. Revenues at the Northridge, Calif., outfit rose 64.3% from 2001 to 2002, and net income was up 44.6%. Schuler talked to BW Online Small Business columnist Karen E. Klein about capitalizing on tough times.
Q: From your numbers, it looks like you've had a significant level of growth during the past year. A:
Q: From your numbers, it looks like you've had a significant level of growth during the past year.
A:We have grown a lot. We're now up to 11 employees, which is a 57% increase in staffing, and our contract client base increased 45% in 2002.
Q: How did you manage it during a year when a lot of companies were suffering or going under? A:
Q: How did you manage it during a year when a lot of companies were suffering or going under?
A:First and foremost, instead of taking cover from this economy and retracting, I found ways to take advantage of it. Because of budget cuts, many firms have had to cut their inhouse IT staff altogether and outsource that work. We began to market our firm as a full-scale "outsourced IT department" to provide a solution for those companies. For smaller companies that had a single person in charge of their IT infrastructure, we have been able to replace that person at a fraction of the cost and [provide] better and more experienced service. Even companies that kept some internal staff on board have had to outsource a lot of their "project" work because it fell outside of the range of knowledge of their staff.
Q: So you filled in where needed at companies that were making cuts, but not eliminating their I.T. departments entirely? A:
Q: So you filled in where needed at companies that were making cuts, but not eliminating their I.T. departments entirely?
A:Yes. In a few instances, we have worked as a "co-source" partner with companies. They may have eliminated their senior level staff that took care of their servers and infrastructure, but maintained their help desks for the day-to-day computer questions and problems. By replacing their seasoned I.T. folks with our people, they were able to eliminate a lot of higher costs associated with in-house staff.
Q: What else did you find that helped boost your company last year? A:
Q: What else did you find that helped boost your company last year?
A:Well, we took advantage of the labor pool by hiring the best and brightest unemployed people around. This allowed us to provide our clients with rock-solid service and intelligence. Due to the level of expertise of the previously unemployed talent we brought on board, and the broad range of knowledge that they've accumulated, we have been able to save our clients a boatload by providing solutions to their computer problems quickly and effectively. News has gotten around about our expertise. Now, well over 50% of our business comes in through word-of-mouth.
Q: Did you continue to do traditional marketing and advertising as well? A:
Q: Did you continue to do traditional marketing and advertising as well?
A:Yes, primarily targeting industries that have been less affected by the recession. While a fair share of our regular clients had to tighten up their budgets a bit and spend less on their computer contracts, we looked for new "project" business in the industries that were doing well.
Entertainment and defense are two industries that we focused on that paid off in 2002. We found that companies in those industries were less willing to let their I.T. staff go, but more willing to spend money on cutting-edge computer solutions that we could sell to them. We also have quite a few clients involved in home construction and remodeling, as well as architecture and interior design that didn't do too badly last year, either.
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