By Jack Speer, BizWatch Publisher

Is the economy getting better?

Greg Steele, CEO of Nelson and Associates in the Bay Area sees business as picking up, based on temporary employment services as a leading indicator.

For those of us who were affected by the recession, what did we learn? What will be do differently? We were able to put together some of the key thoughts of our BizWatch experts.

For many, it’s been a long haul toward recovery. Most people believe there will continue to be improvement in the economy. They hope the economy is on a sustainable course upward, but in this volatile world, they’re not sure. If long-term recovery is, in fact, occurring, BizWatch experts are taking it very slow.

When I spoke with a senior executive of a Fortune 500 company in 2002 and asked him how business was, he responded, “The best way I can describe it, Jack, is that business is brutal.” At that time, people like this senior executive who were to finally survive this recession were attempting to move heaven and earth—but very little of anything really seemed to be moving. Nonetheless they kept moving, even at times when it didn’t seem to make sense.

BizWatch Publisher Jack Speer says the economy is great down on South Congress Avenue in Austin. Many funky Austinites are just not all that concerned about “stuff” and didn’t sweat the downturn. Don’t get um started, though, about politics.

Competition for business was--and is—brutal. One CEO of a Fortune 500 company we know came back from retirement to a company he had founded in order to lead that company through layoff after layoff—unprecedented in their history. That company is now doing better, but its headcount is now between a quarter and a third of what it was in January, 2000.

The downturn took its toll on those who went and those who stayed. This CEO’s rallying cry to his sales force was, “We’re not going to sit here and starve to death. From now on, we’re going to eat from the other dogs’ dog-food dishes!” That in an industry where a large percentage of sales had previously been, in large part, a matter of writing up the order and executing well.

When recovery begins, you see tiny indications that are so far to the periphery of your vision that you’re not really sure you saw it.

I was having lunch about six months ago with Jeff Johannigman, an outplacement consultant in Austin, Texas. When the recession hit, companies in Austin were suddenly laying off thousands of workers, and outplacement, including seminars and personal consultations on how an employee can weather the storm and prepare himself or herself for other employment, was often part of the severance package. Needless to say, Jeff had been very busy for the past three years, but their business was now slowing due to fewer layoffs.

Anne Robinson, 90-year old active creative consultant and humorist, wants us to develop some perspective on recessions, having lived through several, including the Great Depression.  Anne tells us we’ll live over it.

Summing it up, Jeff said, “Two years ago, companies were laying off hundreds of people at a time. Last year, they were laying off dozens of people at once. While there are still some layoffs this year, they are only handfuls in number. So yes, there is at least a slowdown in the cuts.”

Greg Steele, CEO of Nelson and Associates, an HR employment firm in the Bay Area, pointed out that the demand for temporary employees is strengthening.” We are in the temporary help business, which tends to be a leading indicator of an economic recovery since companies hire temporaries before being confident enough to hire full-time employees. Our business is up 10-15% over last year at this time.”

Aryae Coopersmith, President of High Tech HR Forums, who runs an educational and networking organization in the beleaguered Silicon Valley for high tech human resource executives says the once golden location now down-and-out is on its way up. Other signs are that venture capital “angels” are beginning to make investments after being dormant for almost three years.

State and local governments are seeing some signs of recovery. Poor tax receipts, federal mandates, that is the shifting government burdens downward, as well as the costs of homeland defense, have left many governmental entities reeling. 18 months ago, Austin Mayor Pro Tem Jackie Goodman reported to the South Austin Culture Club that in city tax receipts, “there is a hole where money used to be.” November, 2003 sales tax receipts jumped nine percent, although these figures are still poor compared to more “normal” times.

And even in a recovery, there’s a landscape full of collateral damage--even among the survivors--to chart your way through. Energy giant Kinder Morgan’s Vice President Jordan Hunter reports that their pipeline business is getting better, but that many vendors have been left weak and that vendors’ credit may keep them from performing. For businesses with the flexibility of available cash, there are some real bargains out there.

Here’s how BizWatch readers are reacting to recovery:

1. One of the most important actions right now is getting ready for the next recession. I was talking with one fellow entrepreneur in the midst of this recession and he made the statement, “I wish that people could realize that the economy is cyclical---especially me!” As early as 1997, and certainly by 1998 and 1999, most of us realized from the numbers and our own experience that the economy, although flying high, was poised to take a dive. Yet it seemed unpatriotic to state the obvious: what goes up, the economy included, must come down.
   
   Some organizations and individuals thrive because of recessions. Cash reserves enable them to survive downturns that others enter already heavily leveraged and allow them to buy goods and services at deeply discounted prices.
   
   
2. Don’t let your organization be put in the position of having one or two industries as your markets. Build a stool with three or four legs, not one or two. Those of us who had the worst problem were those of us who were leveraged in one industry, especially if it happened to be high tech. It’s an old story. In the recession of the 1980s those who went down in flames were highly leveraged in the areas of oil and real estate. Whatever the dominant industry of the ‘000s is, you’ll need to be in other industries too.
   
   
3. Create Flexibility in your business and personal career plan. Many of us felt that we had come to the place in our careers where our talents and abilities were indispensable to the market, that organizations would need us no matter what how the nature of the marketplace changed. We were wrong. We needed flexibility, agility, personal growth and learning to be ready to change and move from one market to the other, using multiple skills and abilities. The same was true for organizations. They needed to make quick, strategic changes in their business strategy to help them move into areas that were just emerging as present markets disappeared. Many have learned a relearned that skill.
   
   Jim Ashby, Vice President of Finance of AMD, wisely summed it all up this way: “One significant impact of the past three years of economic malaise on our strategy has been a focused effort to build more flexibility into our business model so we will be better able to respond to fluctuations in the future. The experience of the past three years has also driven home anew the lesson that one is ultimately responsible for one's own well being, including one's own career progression. There is no such thing as a secure industry or a secure job.”
   
   
4. Get Back to Basics in Managing Your Business and Career. As much as possible, we’re going to follow our own advice of acting as if we’re in the midst of a recession even as the economy improves. We’ll invest in growing our business in areas such as advertising and promotion, but we’ll make our budgets with the flinty heart of Ebenezer Scrooge. It made good sense before the recession. It makes better sense now.
   
   Many of us learned a new kind of tight management during the recession. Hal Harvey, President of EDP in Denver, CO into a company that was in trouble. His strategy was fundamental:
   
   “We had to take dramatic steps to reduce our costs - both fixed and variable to reduce our break-even position to what the economy allowed. This allowed us to generate improved bottom line performance despite flat and slight declines in sales. With the repositioning we are in a better position to realize greater operating income from even slight improvements in revenue.”
   
   At the same time, cutting cost is not about cutting quality. Skimping on quality is a temptation when costs are high and revenues are low. Mr. Harvey says that during the recession he “always focused on the concept of continuous improvement, value added business, and ROI.” During the recession the customer is even more important. “The recession just reaffirmed the fact that to be in business you have to satisfy a customer, sell for more than cost, and consistently engage in projects with ROI.”
   
   
5. Have a Strategic Plan—Don’t Panic. Beth Slifer is president and owner of Slifer Designs in Vale, Colorado. As president of a high-end interior design company, she has faced some serious challenges during the recession. Consumers with the economic firepower to invest in high-end homes in Colorado have certainly diminished during the recession. Real estate sales have fallen by 20% or more in resort areas such as Vale.
   
   As a very astute strategist, Slifer doesn’t easily panic. She identified her core businesses and worked on those that didn’t depend on high-end real estate sales.
   
   “Our strategy has had to change,” reports Slifer. “Our performance standards are more rigorous than in the 90's and our productivity has improved. Our efforts to expand geographically have led us to increase focus on Hospitality (which is paying off). Our need to improve ROI had caused us to increase margins in Retail by efficiencies as well as by price increases of +/- 10.0%. Also we are exerting more effort to expand our sales to general public which has worked. We will continue to offer goods to our luxury buyers for better prices than most retailers. Rather than making more deals to get a residential job, we are making fewer. We don't feel as free to make exceptions. Consequently we have ratcheted up our customer service and are shifting our marketing to past and present customer and referral relationships. Hard times have necessitated that we be more efficient, cost conscious, productive and aggressive.”
   
   In a recession as well as in good times, if we are following a strategy that once worked, but isn’t working now, we tend to want to work on the old strategy by working harder and faster. In times like this we should take a page out of Beth Slifer’s strategy book, step back, and develop a new strategy.
   
   
6. Develop some Perspective on Recessions—they come and go. Austin trainer and creativity guru, Anne Robinson, is still professionally active at 90 years old.
   
   “At 90, having been through quite a number of downturns and upturns and being in a business that observes and rewards creativity, I find that the emphasis on the creative way of doing things increases in the challenging times. When you have to do more with less, you truly seek more creative approaches. I am doing some train-the-trainer workshops on the subject of CREA|TEAMS. These are the skills that help us in any situations.