After being in business for 14 years, Paul Moyer was ready to close shop at his Sterling-based business.
“We were on the hairy edge. We were as close to closing our doors as anyone can get without closing our doors,” said Moyer, who lives in Vienna and commutes to Loudoun County to oversee TestPros, Inc. as CEO and president.
Moyer and his partner opened TestPros in 1988 to provide software-testing services. Business there was fine until April 2001, when the telecom industry started to stumble and TestPros’ largest clients declared bankruptcy and did not pay their bills — a 10 percent loss for the company.
“That meant not only did we lose our consulting practice, we lost all that money,” Moyer said, adding that in order to remain in business, he and his partner did not pay themselves for two years. They laid off most of their staff from 53 to 8 employees.
FOUR MONTHS AGO, “We changed our focus to concentrate on government, health care and large software development organizations, not dotcoms,” Moyer said.
TestPros built back up to a staff of 28 employees, sticking to a business philosophy of “slow calculated growth” and focusing on customer service and customer satisfaction, Moyer said. “If you don’t have those things, you won’t survive. I don’t care what the product is. I can tell you that’s what kept me alive,” he said. “I wasn’t indebted. I was always profit conscious. If I wasn’t generating a profit, I wasn’t having a good day.
Business consultant Guillermo Sohnlein said, “Getting back to basics and slowly building up again” are key to business survival in a downtime. In February, Sohnlein opened Fortivo Consulting in Leesburg to provide technology companies in Northern Virginia with strategic planning, outsource marketing and business development services. Some of the companies he consults were founded or grew during the dotcom boom and now are facing the “recent contraction,” while others may have provided parts and services for companies in the Internet Technology (IT) market. “They’re suffering from this big downturn related to the economy and more specifically to the stock market,” he said. “None of the big players are spending money on IT because of the economy.”
As a result, some of the companies need to find an outside funding sources to make up for the shortfall, Sohnlein said. “A lack of available funding is a general problem,” he said.
THE LOUDOUN COUNTY Small Business Development Center (SBDC) helps businesses get those loans when other funding options might not be available. Small businesses might face financing their businesses through high-interest consumer loans or credit cards, unlike major corporations that have more options, said Caroline Mansi, director of the SBDC. “We help them find loans through programs like the Small Business Administration (SBA),” she said.
Eliot Jardines obtained a four-percent SBA loan for his business, Open Source Publishing, Inc. in Leesburg, with the help of the SBDC.
“Our struggle was directly related to the Sept. 11 attacks. Most of our work at that point was for the Department of Defense,” said Jardines about his business, which provides open source intelligence by researching unclassified sources of information. “No new contracts came through.”
By December, Open Source Publishing’s revenues dropped to 30 percent, staying low until May, when the company was able to continue work on the federal contracts. “My goal was not to lay off anyone,” Jardines said about his staff of 14 employees. “The money we got for that loan was able to carry us through when the contract arrived.”
Jardines minimized his expenses and began marketing to other agencies, expanding the company’s services to government, law enforcement and commercial clients. “We decided it wasn’t a good idea to have all our eggs in one basket,” he said. “We diversified our business base, [so that] no one customer is bigger than 35 percent of our business.”
“People don’t have any idea about the complexity of owning a business. You have to be on top of everything. If you let one thing slip, it can be death for a business,” Mansi said.
THE SBDC, which opened in Sterling in 1987 and now is in Cascades, provides entrepreneurs and existing small business owners with management and technical guidance, training seminars and one-on-one counseling on anything from setting up a business to record keeping, hiring and writing business and financial plans.
“They need to realize there’s no such thing as an overnight success,” Mansi said, adding that a new business typically takes two to five years to become profitable. Two of the biggest reasons businesses fail are from lack of planning and under capitalization from not anticipating business costs and not drafting a budget, she said.
“Small businesses are risky. One event for a small business owner can be rather significant,” Mansi said. “When our corporate economy suffers, so do the small businesses.”
“They have to think ahead, and they have to do well during the good times, so that when the economy turns, it’s just a matter of time,” said Randy Collins, president of the Loudoun County Chamber of Commerce. “If they do well during the good times, they can survive the bad times.”
Collins said business owners need to have a working relationship with three key people, including a banker to manage business growth, an attorney to provide legal advice on starting a business and an accountant for bookkeeping. Another resource for business owners is the SBDC, along the chamber, he said.
“Ironically, when the economy is not booming, the chamber can do well, because people need us more,” Collins said. “We offer members an opportunity to network and market themselves at various events. … The chamber offers a business community, a larger group of people from which they can draw help from.”