Surviving a recession is tough enough for entrepreneurs; managing to grow your company when the economy flagging is nothing short of miraculous. Or is it? Scott Stropkay and Richard Watson, the co-founders of Essential, in Boston, seem to have hit upon a winning formula for growth in good times and bad. Essential is a product and service innovation consultancy that does work for companies such as, iRobot, P&G, Altec Lansing, EMC and Puma, and was started in 2001, after the tech bubble had burst and right before 9-11. "We established ourselves when things were really bad," says Stropkay. And that taught them a thing or two about operating in the current environment: Essential is on track to do $4 million in revenue in 2010 - the company's best year ever. "We learned a lot of lessons about ourselves, what it takes to stay business and what it means to be responsible for our employees and their families," says Stropkay. I recently spoke to him about how he and Watson kept Essential healthy and growing during the recession.
Maniacal focus on sales. "We engaged the whole office in thinking about selling," says Stropkay. The company has no official sales force, and prospecting responsibilities usually fall on just a handful of senior people. But with the recession, Essential increased its Salesforce subscriptions from three to seven to "get people involved in tracking every lead." And everyone was required to network. "We'd say, we're going to an industry event and during the breaks, we're going to introduce ourselves to people because everyone has to start sniffing around," says Stropkay. The practice paid off. A connection made at a conference by a young employee with no sales training resulted in a significant amount of work form Dell.
Expanded scope of work. When times are good, you can afford to be fussy about they type of work you'll do. In a recession, not so much. "We expanded our definition of what we would do," says Stropkay. "We would take smaller projects, or even phases of projects, offering clients bite-sized ways to engage us that would offer them high value and low risk." For instance, the company began marketing three day brainstorming workshops to clients - a service they had always offered but one that they marketed more aggressively when times were tough. Taking smaller jobs meant that the company could keep its employees motivated and engaged. In 2009, Essential laid off only one person on its staff of 16.
Shared sacrifice. "When things were getting tough, my partner and I took a serious pay cut," says Stropkay. "Then we asked the directors to take a cut, and then we asked everyone else to take to a cut." The company, says Stropkay, has a reputation for not laying off employees, so the staff understood that the pay cuts, which took effect in June of 2009, were necessary to keep everyone employed. That kept moral up and employees motivated to help grow revenue. "By the fall of 2009, all of our networking paid off and we were back to full pay by January. We've been busy ever since," says Stropkay. "And we're having our best year ever."
Strategic partnerships. Essential competes with big companies like Ideo (Stropkay's former employer, actually) by partnering with five other small companies that have complementary skills. The partnerships allow Essential to be involved in big projects that require the kind of multidisciplinary thinking that no one firm could manage on its own. Collectively, the alliance has expertise in technology development, service design, management consulting, communication design, and electrical engineering. "We'll pitch together and whoever has the biggest chunk of work will take the lead, " says Stropkay. "You have to check your ego at the door and say 'I'm happy to be a subcontractor to you'."
Have you managed to grow your company during the recession? Tell us how you did it.
Image courtesy of Essential Design
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