But what doesn’t shut us down makes us stronger, and there were plenty of valuable lessons to be mined from these tough times. So, we asked local leaders what tactics helped them stay afloat and even grow despite the challenges. Ten local business executives share what they learned during the past year, and explain how they were able to use that information to their advantage.
The Lesson: Value customer service.
The Leader: Dan Love (pictured), Vice President, Operations, Radwell International, Lumberton
While every business must invest in customer service, a slow economy makes client relationships more important than ever, Love says. Radwell already monitored customer service across every client transaction, but during the downturn, the company beefed up its service even more, tying compensation to quality service. “We added staff, including a vice president of customer service,” Love explains. “We also hired someone whose full-time job is to call customers who haven’t placed an order in 60 days, to make sure there isn’t a problem. A new process improvement manager now evaluates our processes based on customer feedback,” Love explains. As well, they’ve been distributing surveys to customers, who rate their satisfaction with the level of service. Love says that, given how vital each client is in this challenging market, every dollar spent to improve service has proven a worthwhile investment.
The Lesson: Don’t over- leverage your assets.
The Leader: Fred Berlinsky, Esquire, President of Markeim-Chalmers Commercial Real Estate and Appraisers, Cherry Hill
Keeping your ledgers in balance is a basic rule of business, but in the rocky 2010 economy it became especially relevant, Berlinsky says. He’s observed that firsthand through the brisk business his company now does helping banks dispose of foreclosed properties—many of them due to businesses or individuals over-leveraging, or borrowing more than they could afford to pay back. “Typically a bank will lend you 70 percent to 80 percent of property value. If I go buy a $1 million office building, they’ll lend me $700,000 or $800,000,” he says. “Many borrowers convinced banks that there was so much value in real estate and so many expectations for increased value, that lending 100 percent would be OK. That is OK as long as everything with regard to the property stays perfect," he adds. But “the minute they don’t stay the same, you’re over-leveraged and you can’t pay the bank.”
The Lesson: Do more with less.
The Leader: Jeffrey Vasser, President, Atlantic City Convention & Visitors Authority
It’s no surprise that Atlantic City hotel occupancies are down. As a direct result, the Atlantic City Convention and Visitors Authority has seen its budget for marketing the city as a destination shrink—at a time when that marketing is most needed. Vasser says his organization responded both by tapping into financial reserves and by rethinking its business plan. They now travel to where their clients are instead of bringing them to town. “In the past, we would bring potential customers into Atlantic City around a big show that we had at Boardwalk Hall—say, Madonna—and used that as an opportunity to showcase the city. We’d have dinner at one place, a cocktail party at another place, a reception at the pool at one hotel, spa treatments at another. In the new reality, where it’s cost prohibitive to do something like that, we have had to rely more on direct sales, getting in front of the customer where they live and bringing the road show to them,” says Vasser. By cutting extraneous expenditures, they were able to reach more potential customers on a tighter budget.
The Lesson: Diversification is key.
The Leader: Stephen Hovnanian, Principal, J.S. Hovnanian and Sons, Mount Laurel
When new home sales slumped across the region, this company decided to use its four generations of experience and core knowledge of real estate to tap new markets, explains Hovnanian. Within residential products, they diversified to reach new demographics through more varied price ranges and styles of housing. Additionally, they delved into commercial, office and warehouse real estate. Today, non-residential projects—such as Town Square, a neighborhood shopping center, and Twin Ponds office condominiums—comprise a quarter to a third of the company’s business. “The depth of diversification enables us to better navigate these difficult times, because some sectors of the market may be more in favor than others. That gives us some other alternatives than just housing,” says Hovnanian.
The Lesson: Focus on Growth Fields
The Leader: Stephen M. Sweeney, New Jersey Senate President
Governments were forced to cut their payrolls as ratables fell in recent years. In New Jersey, that meant slashing jobs—a whopping 10 percent of all state employees. So the struggle has become how to create new jobs. Emerging industries, specifically clean energy through wind and solar power, offer an answer, Sweeney says. “Right now, there are hundreds of construction jobs with solar projects. Salem County just announced a 600-acre solar field, the largest one in the Northeast. We have multiple projects coming. There are a lot of jobs in the construction end, but our goal is to capture the manufacturing. If we can capture a windmill manufacturer of offshore wind turbines, which is what we’re looking for right now, that would be a thousand jobs just in direct manufacturing of windmills. There are also a lot of other jobs in the manufacturing of components,” he adds. In particular, Sweeney posits that Paulsboro, the site of a new shipping port, could be a viable site for such a manufacturing facility.
The Lesson: A down economy creates opportunities.
The Leader: James Carll, Chairman, Archer & Greiner, Haddonfield
As their competitors downsized, Archer & Greiner realized that they were in a perfect position to expand, says Carll. With a small Philadelphia presence, and other firms facing financial stress, the firm seized the opportunity to grow its Center City staff. “When many experts were saying that law firms were going to face all kinds of pressures, we actually went ahead with a merger with a 25-person law firm in Philadelphia. Even though it was a challenging economic environment, we thought that the merger had long-term benefits for both firms,” Carll says. “Change is inevitable, and the real key when you’re facing change is how you react to it. You have to take a very honest look at what’s happening to your industry and business, but you also can’t be in a panic.”
The Lesson: New revenue streams are vital.
The Leader: Dr. Donald Farish, President, Rowan University, Glassboro
As a state university, Rowan has been hit with a major reduction in state aid at a time when more families need financial assistance. The university responded by tapping into underserved populations that were not dependent on financial aid: adults and online students. It has paid off. Rowan now serves more than 11,000 students, an increase of 1,300 over the past two years. And Farish predicts gross revenues will exceed $20 million this year, an all-time high. New programs, such as an online nursing program and a doctorate in education leadership will, he says, “pay money back to the campus to help subsidize the undergraduate education that the state is no longer subsidizing as significantly as it did before.” Thinking beyond its traditional mission enabled the university to move forward with a more sound economic plan in place.
The Lesson: Things are not going back to the way they were.
The Leader: Joseph F. Coradino, President, PREIT
Though many people hold out hope that the economy will revert to its pre-recession buoyancy, Coradino says that’s not likely. The head of the real estate company that manages the Cherry Hill Mall, among others, argues that a paradigm shift has occurred and the retail landscape has changed. National retailers will no longer open as many stores as they had, and malls need to find new and creative ways to fill their space. “We needed to begin to rethink the concept of a mall and differentiate ourselves,” he says. “Instead of waiting for retailers to come, we introduced mixed use, to bring in residential, office and restaurants into the mall environment. Cherry Hill is a good example of that—it’s about dining and entertaining, not just shopping. Instead of those homogeneous national tenants, we’ve gotten good quality local retailers, such as Rizzieri Spa in Voorhees. We are also in talks with colleges and universities, medical facilities and governmental agencies. Now a mall is a place where you can shop, dine, take care of your healthcare needs, take your continuing education class, and work through your Social Security office issue.”
The Lesson: Expect the unexpected.
The Leader: Denise Kassekert, Executive Vice President, Relationship Banking, Beneficial Bank
When the economy went south and homeowners found themselves underwater on their mortgages—meaning they owed more than their houses were worth—borrowers were affected and so were lenders. It was a rapid and unexpected turn of events, says Kassekert. “Clients were good people with great credit, but when the economy went down a bad course, it had a negative impact. We had to respond to that and craft a new plan to go forward,” she adds. That meant more proactive measures and a greater emphasis on savings. “We now recognize the importance of staying in close touch with our customers and having an open and ongoing dialogue. We stress customer savings by providing workshops and employee training. Previously, our country was in an all-time low of savings, because everyone was borrowing and spending. Through saving, if the unexpected occurs, you have allowed yourself a cushion so financial devastation doesn’t occur.”
The Lesson: Invest in the future.
The Leader: Thomas Bellia, Co-Owner, Bellia Printing and Copy Centers, Woodbury
Printing companies were dealt a one-two punch in 2010: a sluggish economy combined with increased competition from national retailers. That made it even more vital for Bellia to find an underserved niche and focus on excelling within that niche. That meant investing in new equipment, renegotiating leases, and cutting payroll through consolidating positions. “We examined what our business would look like a year ahead, and closed three departments within our company. Now we concentrate on our printing, copy and duplicating, and office furniture businesses. We looked at our heavy-duty competition, like Staples and Home Depot, and figured out that they are not equipped to do large-format color printing and customized invitations. We hired graphic designers and now the chains will refer customers to us,” he says. “We also bought new state-of-the-art digital equipment and worked with our staff to improve customer service. We are betting on the future.”
Published (and copyrighted) in South Jersey Biz, Volume 1, Issue 1 (January, 2011).