Lights Amid the Gloom


By Karen E. Klein Uncertainty about the future descended thickly in the days following Sept. 11. Will there be a war? Where? For how long? How safe are we here at home? Opinion polls show that increasing numbers of Americans now believe the economy, already slipping, is sliding toward full-blown recession. Small-business owners, insecure and scared, are not sure what their next move should be.

Not everyone sees doom on the horizon, however. In fact, there are optimists among us who believe that entrepreneurial opportunities will abound, even at a time when the cost of doing business may rise. When corporations merge and downsize, they say, small and medium-sized companies provide the perfect solution: outsourcing. In the spirit of bolstering the entrepreneurial outlook, this column discusses a few of the sectors where tragic circumstances have provided new possibilities.

Security systems for buildings, personnel, school campuses, and corporations are going to become serious priorities, experts say. Before Sept. 11, Matthew Simmons, owner of security identification badge company OneCard, averaged 200 unique visitors per day to his Web site. The day after the terrorist attacks, the site logged more than 350 unique visitors, and he has averaged more than 300 per day since. "Security is transforming identification badges from a luxury to a requirement. Companies are calling up with a sense of urgency," Simmons says. "I got a call from a Jewish community center that used OneCard for their membership identification cards, and now the police strongly urged them to have employee badges made up, too."

Videoconferencing is quickly becoming an appealing alternative to in-person business meetings, and technological advances that once seemed too much hassle to master are now looking more appealing. Martin Shum, CEO of engineering software firm Aprisa, hosted two online trade shows last year for his industry niche. While exhibitor participation and traffic to the sites were good, the company put the virtual shows on hold after they realized that hosting them cost more than the company could recoup in fees. Now, all that may change. "Given today's environment, we may go back to that idea and make it a profit center rather than a cost exercise," Shum says.

CHEAPER AND SAFER. Information technology is going to grow in importance all around, experts say. "This portends great things for technology as it displaces traditional transportation," says Rob Frankel, a branding and new-media expert. "In my own case, I likely will not be able to speak at a conference scheduled for later this month in the Persian Gulf. However, there's a good chance that that venue will continue by videoconference." The use of technology to bring people in scattered locations together will grow exponentially over the next year, Frankel predicts. "A year from now, they'll ask for videoconferencing first, before they ask for personal appearances, but they won't mention the security aspect. It will be perceived as a cost efficiency."

Obtaining more services over the wire, rather than in person, will appeal to large corporations, as well. Establishing workers in telecommuting positions will be only natural for companies worried about the vulnerability of placing all their employees, projects, and records in one huge headquarters location. And outsourcing some of their operations to small companies will make both safety and dollar sense. "Why have someone sitting in an office crunching numbers or doing billing all day, when a company can hire a small outsourcer who works at home and can transmit all the figures and forms online, and also has the time to get other business contracts?" asks Barry Allen, whose International Fieldworks management consulting firm urges its clients to rely on telecommuting and outsourcing.

The defense industry, with infusions of government spending after many years of smaller budgets and base closures, will surely make plans for security investments in the coming months. As a result, Mary Ann Mitchell is gearing up for increased business -- by perhaps as much as 25% -- at her Culver City, Calif.-based company, CC-OPS, which works for military and defense contractors and expects to net $25 million this year. Though Mitchell, like all the entrepreneurs interviewed for this column, is loath to contemplate profits in the wake of tragedy, she anticipates that her systems automation and integration firm will be hired for new projects.

Mitchell says that she is gearing up her employees for an expected increase in the need for computer security. "I'm thinking about the value we can add to secure our country. The fact that we have relationships in place with the [Dept. of Defense] and many of the contractors, and we have had security clearances for many years, will make it likely that we can help, I'm sure," she says. If more small companies are contracted by the military, they will wind up forming strategic alliances with larger corporations like Raytheon and Northrup, she says, giving them additional benefits down the line.

"It's to [the government's] advantage...using smaller companies, because we can offer more competitive prices and more specialization," adds Mitchell. "They don't have to go out and hire 60 people -- they can outsource much more efficiently." Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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