The Silver Lining of the Recession
Tuesday, June 16, 2009SUSIE GHARIB: No one welcomes a recession, but downturns can also create opportunities. Some small firms are taking advantage of the soft economy to steal business from larger rivals. Erika Miller introduces us to a Manhattan software firm taking on some of the industry's titans.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you think recessions are bad for business, software firm Passlogix says, think again. CEO Marc Boroditsky says sales have never been stronger.
MARC BORODITSKY, PRES. & CEO, PASSLOGIX: Do I welcome the down economy? No. But am I benefiting from the down economy? Yes.
MILLER: His 100-person firm designs password security software, competing with similar products from IBM, CA and Novell. Passlogix says it has been beating out those companies to win customers, nearly doubling revenues in the past two years. So, why would a company prefer to do business with Passlogix over one of the big industry players? Passlogix says a big reason is better customer service. One example, clients can call Boroditsky directly when they need help.
BORODITSKY: The thing about small companies that's different than big companies is that you can't hide. So, the bottom line is the problems become very visible very quickly. If you are prepared to deal with them, it's possible for you to be a lot more successful than big companies.
MILLER: There's another reason big companies may be at a disadvantage nowadays. Management consultant Peter Bregman says the failures of iconic American companies like General Motors and Lehman Brothers are undermining trust in large firms.
PETER BREGMAN, CEO, BREGMAN PARTNERS: The credibility of large companies is in many ways, lost. They are laying off people. People who work within the large companies oftentimes aren't secure in their job. They don't know whether they're going to have a job or not. They don't trust the leadership.
MILLER: Of course, it's important to keep perspective. Small firms still face plenty of hurdles in a recession. Bill Dunkelberg of the National Federation for Independent Business says two key ones are soft sales and access to credit.
BILL DUNKELBERG, CHIEF ECONOMIST, NFIB: They're usually not as deep on the capital side. And they don't have access to the bank lines that the big firms do. So when something hits hard, like the recession that we had starting heavily last fall, it's probably easier for the big firm to make it through than the small one.
MILLER: For his part, Marc Boroditsky has some tips for small firms that are struggling.
BORODITSKY: I think small companies have to be a lot more nimble, have to be smarter, have to be quicker and that actually becomes an advantage for a small company in a tough environment. MILLER: Erika Miller, NIGHTLY BUSINESS REPORT, New York.
