How My Business Survived America's Worst Local Market

By Mike Mnich, CVMedia, Northville, Mich.
The recession hit the whole country hard in 2008. But in Michigan, where my video and media production company is based, it was a full-on depression.

With the automobile industry bankrupt and an unemployment rate that hit close to 25 percent, everything from small businesses to the housing market suffered -- a house worth several hundred thousand dollars three years ago is worth just $50,000 now. And because my company produces corporate videos and other types of media for local businesses in the southern Michigan area, we were seriously crippled by the economic crisis.

Almost immediately, I had to change my strategy from growing the business to simply keeping my company alive.

Seeing the writing on the wall
I saw the tide turning about a year before the recession hit, and decided to downsize on my own terms instead of waiting. I asked most of my employees to work virtually and moved my office into a smaller space. That move alone helped me save $7,000 a month.

After Michigan's economy collapsed, it was virtually impossible to find clients to hire us. Companies showed interest in our services, but they would tell us they didn't have any money. Our revenue instantly went down by more than half, to $600,000 a year. At our peak, we were bringing in $1.5 million. Even with the smaller office space, there was no way I could afford to keep paying all 11 salaries.

We needed to lay off six people, and I still had to cut the remaining salaries by 20 percent. I took a big hit, too: Over the past 18 months, I've only drawn a salary half of the time. No one quit because of the salary cuts -- in this economy they had no real alternative. I promised to restore their salaries as soon as I could afford to, and that helped. As our finances have gradually improved, I've stayed true to my word. I raised their salaries by 10 percent last year, and I recently restored them to their previous levels.

In running the numbers after Michigan's economic devastation, I realized I would have gone out of business if I hadn't downsized ahead of the recession. You can spend 15 years building a business, but one decision -- or in my case, missing one decision -- can put you under.

Prospecting never stops
When I was making the difficult decision of which employees to let go, I identified one position that I would never cut, no matter how bad the economy got: My sales prospector.

He's constantly on the phone and emailing prospects, trying to drum up business for my company. His goal is to give me two appointments a day.

For a while, he was getting me meetings but they didn't amount to new business. Other local businesses had been devastated by the recession, and paying another company to produce their videos wasn't a top priority. Still, it was worth meeting with them and finding out more about who they were and what they did.

All of that prospect information went into my ACT! database. I have 5,702 records in there -- one for every prospective customer -- and I can tell you their emails, cell phone numbers, wives' names and the last projects I worked on with them. That is so valuable to me: I can type in an email, merge it with my records, and have it go out to my clients that same day with information about a new service.

The tide begins to turn back
About eight months ago, the phones started ringing again, and they haven't stopped since. Some of the calls were from companies that had shut down their media production departments, and now needed outside help. Some were from existing clients who finally had a budget for new work. And some were from the thousands of prospects in my database who I'd emailed months ago, even though they hadn't responded at the time. They'd call me saying, "You sent me an email back in November talking about the work you did for another company, and I'd like to talk to you about a new project." Even when a prospect seems like a dead end, you never know if they might come around later on.

This year, we're looking at about a 40 percent increase in sales. Now that I've restored salaries, I'm planning to pour the additional profits into new production technologies that will allow us to edit more video in a day. The extra capacity will let us take on more jobs simultaneously. We're also branching into different fields, going beyond video production into web production and video transferring and encoding.

It's taken a lot of sacrifices and hard work to keep the company afloat in such a depressed local market, but it seems like we're finally on our way back up.

-- As told to Kathryn Hawkins

Mike Mnich has owned CVMedia for 15 years, and is continually striving to help Michigan regain its role as a leading state for business development and opportunity.
Resources

• Learn about how other businesses are using creative strategies to make a comeback in Detroit.
• Find out how other entrepreneurs are riding out the recession.
• Discover options for effective downsizing.