Some Firms Find Special Ways to Prosper During Recession : New focuses: Many are thriving because they found and exploited unusual niches created by hard times.
Some companies--most notably bankruptcy law firms, pawn shops and outplacement firms--traditionally do well during tough economic times.
But other firms are growing in spite of the recession, largely by relying on strengths that were identified and developed before the economy soured. In many cases, the companies have restructured themselves to focus on narrow niches where they can best serve the needs of recession-weary customers.
“There’s a lot of scrambling going on, as manufacturing and service sector companies look for new niches and fight for what’s left of the remaining niches,” said Dan Pegg, president of the San Diego Economic Development Corporation.
Local lending institutions that thrived on real estate loans during boom years now are courting small businesses. Commercial office space brokers who once hustled tenants on behalf of building owners now are working as “hired guns” for tenants seeking sweet office-space deals. More local firms--most notably insurance companies and lending institutions--are looking to Mexico for market niches to exploit.
One niche player is Ahern Marketing Group President Bruce E. Ahern, who quickly realized that the recession would slow sales of his company’s “Technology Directory Buyer’s Guide,” a listing of high-technology companies, products and key executives. Ahern’s target market for the guide was suppliers and service companies.
But when a handful of out-of-work San Diegans started using the $75 guide to help find job leads, he quickly published a slimmed-down version that is retailing for $25 per copy at local book stores.
“We’re selling lots of them,” said Mark Villegas, spokesman for San Diego Technical Books. “We sell them in our career section, but we’ve given it its own little stand . . . because people are specifically looking for that particular book.”
The job-seeker’s guide “is keeping us going,” Ahern said. “We know we have a good product, we’re serving people and we’re not ripping anybody off.”
Ahern’s prompt response to the soured economy made sound business sense, said Oliver Galbraith III, co-director of San Diego State University’s Small Business Institute.
“The rules (for business success) are the same regardless of the economy,” Galbraith said. “You need to look at the market and see if there’s a demand for your product.”
Galbraith, for one, is practicing what he preaches. The 66-year-old business professor last week “took a golden handshake from the university . . . after 37 years (at SDSU) I’m retiring,” Galbraith said.
Galbraith agreed to early retirement because a part-time consulting firm he owns is prospering--and demanding more of his time.
State of the Art Computing Inc. is another local company that narrowed its focus--and, in the process, doubled its size to 70 employees during the past year.
Two years ago, the Mission Valley-based company was a multipurpose computer consulting firm. But State of the Art executives believed that the recession would lead to a growing market for firms capable of developing sophisticated engineering software packages for corporate customers.
The demand for software experts eventually materialized because local high-technology companies cut their overhead by laying off their own senior programmers and farming the work out to other companies.
Computer experts are still “vital” to many high-technology companies, but they are now “too expensive to keep on (company) payrolls,” said Peter Van Horne, vice president of State of the Art. So, even as General Dynamics, Hughes Aircraft, TRW and other companies were laying off senior programmers, State of the Art was hiring experienced personnel.
The company now handles product design for about 70 customers that lack the “the time or the staff needed to get projects done in time for customers,” Van Horne said. State of the Art anticipates additional growth because it has identified 300 potential customers that likely will need outside help to complete software programming.
Trigild Corp., a San Diego-based hotel and motel management company, is another firm that has grown despite the weak economy.
While the nation’s tourism industry is being hammered by an oversupply of rooms and a lack of tourists, Trigild is “busier than any time in our history,” said Trigild founder and President William Hoffman.
Instead of managing sound properties for absentee owners as it does during good times, Trigild now specializes in managing hotels and motels that have been forced into receiverships by lenders.
“We’d be growing in good times, but our growth definitely has been accelerated” by the bad times, Hoffman said. “It’s sort of like golf: instead of playing in the fairway, we’re operating in the rough or a sand trap, but we’re still busy swinging the club.”
Trigild now manages 16 properties--most of which are financially troubled--in the Southwestern United States, including five hotels and motels in San Diego and three in Orange County. Trigild has managed troubled and prosperous Holiday Inn, Ramada, Marriott, Rodeway and Best Western properties in Southwestern states.
Bad economic times also are creating niches for Campos & Stratis, a Teaneck, N.J., accounting firm that recently opened an office in San Diego.
Campos & Stratis provides accounting services to insurance companies that generally are hit with an increase in fraudulent loss claims, said Richard Holstrom, the firm’s San Diego-based partner. The company studies policy holders’ books to determine if there is motive to submit a fraudulent claim.
“We’re involved in one claim right now where the (policy holder) is reporting his third claim inside of eight months,” Holstrom said. “That’s a suspicious circumstance for an insurance company.”
