The Big Apple Example
By Kay Koplovitz
Conducting business in New York City these days might appear daunting for some entrepreneurs, but 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 outfit, iVillage, the 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, it 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.
A MASSACRE'S AFTERMATH.
Resourcefulness aside, not all entrepreneurs were fortunate enough to anticipate tough times. None could have foretold September 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 can 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, 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.
A further $291 million is coming from a federal fund entitled Small Firm Attraction & Retention Grants. Earmarked for companies with 10 to 200 employees, it requires that leases set 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 TOWN.
Elsewhere in New York, entrepreneurial businesses in some neighborhoods are faring better than those located downtown. The Apollo Theatre, once the center of the neighborhood's social and cultural life, is rebounding with great fanfare. 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, Broadway has suffered, eight shows closed prematurely. Through innovative state and city promotions and grants to save the arts, others survived, and the community has righted itself. 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.
Midtown inhabitants include large investment firms and corporations, which haven't fared well at all. The devastation of September 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.
In the lingering aftermath of September 11, 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.
Since 2000, when Springboard conducted its first forum, the organization has held another eight of them. 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% of those businesses, 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.
Founder of USA Networks, Kay Koplovitz is the principal of Koplovitz & Company, founder of Springboard 2000, and former chair of the National Women's Business Council.
Entrepreneur's Byline comes to BusinessWeek Online readers courtesy of EntreWorld.org, which is sponsored by the nonprofit Ewing Marion Kauffman Foundation
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