Entrepreneurs start companies in a recession

While much of the business world struggled with cutbacks and layoffs during 2009, many people saw opportunity. Undaunted by the recession, they started their own companies.

Entrepreneurs are by and large an optimistic lot, with faith in their ideas and their ability to execute them. So it’s understandable that they would find reasons why it made sense to start a business in a sickly economy. Among them: It’s easier to rent commercial space at a discount when landlords are hungry for tenants.

Still, many had some scary moments as customers stayed away or money ran low. A look at how four new business owners fared last year:

WAITING FOR THE CONSUMER TO SPEND

Mike Sweeney had what he thought was a great idea for a new product: Clipa, a hook that people use to hang pocketbooks and other bags from restaurant bars or counters.

The recession didn’t faze him. “I thought it was actually a good time,” said Sweeney, who saw advantages in starting a company during a recession. Rental space was cheaper, suppliers were hungry for business and there was a pool of good job candidates.

But when the Irvine, Calif.-based entrepreneur began selling Clipa in April, he discovered how hard the retail business had become. Some consumers were willing to spend the $20 for his product, “but not in the volume we expected.”

“We went to some trade shows and the response was less than we expected,” Sweeney said. By August and September, he was feeling uneasy because “we were burning through money,” the personal funds he raised to start the company.

Since then, business has gotten better as consumers have started feeling better about spending. “It’s been growing every month. We’re getting up to where we expected to be initially,” Sweeney said. He’s selling Clipa online and his sales reps are getting it into stores. And he’s feeling optimistic enough to start selling another product later this year.

WORKING THROUGH THE BAD TIMES

After more than 27 years co-owning a public relations firm, Henry Feintuch and his partners went their separate ways as 2008 ended. On Jan. 2, 2009, his new firm, Feintuch Communications, opened for business.

“It was very scary,” Feintuch said, recalling that at first, he didn’t know which of the old firm’s clients would migrate to his new venture.

“We lost money consistently for the first half-year, as you’d expect in a new business.”

There were several times when “we literally did not have funds to make payroll,” Feintuch said. So he and his new partner dipped into their own funds, and their employees never knew there was a problem.

He also had encouraging signs: “Each month would show more billings than the month before.” But, Feintuch added, “we never knew if we were going to grow into the black.”

Feintuch said he and his current partner helped the New York-based company grow by partnering with companies on projects and accounts rather than expanding the current staff of four people.

In June, “we literally broke into the black,” Feintuch said. This month, the company expects to hire two more people.

“It looks like we weathered the worst of it.”