Up and Running:

I got this list from the Kaufmann Foundation. These are all companies that started up during a recession or down stock market.  They’re in alphabetical order.

Interesting post by Ryan Healy on Employee Evolution, A Bad Economy Is the Perfect Time to Start Over. Things were exciting during the barest startup days, he says, then got too easy after his company got financed.

But once you get funded, the headaches just begin, and it starts to feel like a “real job.” It’s easy to get comfortable, to forget about all the hard work you put in before there was cash in the bank. And strangely enough, you end up wishing you could go back to the beginning or sell your company and start a new one.

Ryan is one of the co-founders of Brazen Careerist, a Generation Y-oriented career site that, I gather from this post, has had its ups and downs. I’m aware of that blog because my daughter Megan posts on it occasionally, too.

Apparently Ryan’s too-much-success problem went away very quickly when the crash hit.

Then, before we even realized what was happening, the market crashed, investors pulled back, and we didn’t have salaries anymore. The whole company had gotten too comfortable; we weren’t prepared to handle the downturn.

But oddly enough, three months later, things are going really well. We made a decision to switch up our business model and bring in revenue any way possible. Every dollar we make is treated like gold, we’ve managed to cut our burn rate by nearly 50 percent without losing any productivity, and we’ve realized just how many ways there are to make money without begging someone for a multimillion-dollar investment.

He comes to a well-written and well-thought-out conclusion, which I’m happy to pass on. It seems particularly appropriate to the world of startups during tough economic times:

I’ve learned a lot from this whole experience, both personally and professionally. Difficult situations are the best learning opportunities; when things are good it’s very difficult to see how you can improve. But when times are tough, you have the opportunity to make difficult, life-altering decisions. Great businesses and great leaders embrace difficult situations and thrive when times are tough.

Well said.

Examples are around if you look for them. Even with all the economic indicators looking bad, businesses that do something people need done still work.

Brent Bower of The New York Times had a nice piece along those lines over the weekend. He called it Business Opportunities Abound, Even in Bad Times. He features three specific small businesses that are growing right now. One focuses on medical discounts for low-income people, one on data security, and one is looking to invest in new business in a down market.

And it isn’t just needs driving business, either. There’s also some obvious growth in cool technology. Things that change the game. Specifically, another piece of news this weekend is a new $35 million investment in Twitter. That’s along with a series of commentaries and analyses on how Twitter can, someday, eventually, make money.

What Twitter has, in the meantime, is a huge growth in buzz and users. And it’s free. So it makes no money now, but its investors figure it will make money eventually.

Joel Spolsky, founder of Fog Creek Software, posted Is the Tech Recession Over? yesterday on his Joel on Software blog. He wrote:

OK, it’s just one data point. All I know is sales of FogBugz and Copilot. But what I’m seeing is this: October-December 2008 were terrible—sales were 20% lower than usual—but starting January 5th, we saw a significant bounce back to the same level of sales as we had before this recession started, and it’s continued to this day.

As my favorite programmer-sage Mike Trigoboff would say: “from your lips to God’s ears.”

In his post Joel links over to comments on his companion site Business of Software, which are also very interesting. And somewhat hopeful too. Several software people added comments on their own sales, and most of those comments are encouraging.

Joel’s blog is always a good read, and good to follow if you’re living and working or even thinking of living and working in the software industry. He’s not just a software entrepreneur, he’s also a blogger, an industry leader, and a good writer.

Meanwhile, as they say, back at the ranch, let’s find out together how badly the credit crunch is affecting small business in the United States.

If you own a business please click here to take the survey. I originally posted this survey yesterday on the Huffington Post. It’s short and easy.

Thanks!

A good reminder: TechCrunch says Twitter’s getting more investment money, and at a $250 Million Valuation to boot. And Twitter doesn’t make money. It just keeps getting more use, and from more users.

What’s this mean?

1. Big winners can still get more money.
2. Some of those big winners are still on the investment musical chairs track. Get investment money, spend it, then get more money at a higher valuation. Without ever getting money from customers (users, advertisers, sponsors or whatever) as normal revenue. Twitter’s a great example.
3. But caution: This is more money, which is not the same as the first money. Twitter’s already there, and some people with money think it’s worth a lot of money. One way to get more investment is to already have investment. That gives investors a vested interest in keeping you going.

The lack of a revenue model tempts me to post about bubbles and such. I’ve been fooled before by the idea that traffic is worth money. Even so, I still think that at some of these very big winners, such as Twitter and Facebook, traffic is worth money.

I’m keeping my fingers crossed. I’d like to see Twitter make it. I like to use it.

Today I want to add my congratulations to Barack Obama, his new presidential administration and to all of us in the United States as he is inaugurated. I’m sure that we couldn’t have elected a better person for the job and that he couldn’t have taken it on at a tougher time.

We have two botched wars, an economic meltdown and an ecological crisis all at the same time.

Great presidents and very hard times are related. Cause and effect? Probably not. At least now we have somebody most of us believe in.

After the celebration, though, let’s try to be patient. We’re in a mess that can’t be solved quickly. Not by anybody. Not even by the president of the United States. I do believe that he’ll do extremely well, and I hope the rest of us will be able to say the same.

But I think it’s going to take time.

Honestly, I wasn’t paying much attention to these ADP reports until the downturn really went sour last September. I posted on them a couple of times when small business employment grew, slightly, in the midst of bad news almost everywhere else. And now it seems like cheating if I don’t keep up with it, as the bad news rolls in.

Small businesses lost 281,000 jobs in December. That was 80,000 in manufacturing and 201,000 in services. By the way, ADP defines small business as having fewer than 50 employees. That works for me.

The source document is at www.ADPemploymentreport.com.

I downloaded some statistics as an Excel file available from that site. It turns out that goods-producing small businesses have lost more than half a million jobs since the high point of January of 2007, when they employed 8.1 million people. Service sector small businesses have lost more than half a million jobs since their high point of just last April 2008, when they employed 43 million people.

What’s surprising to me, also, is that this new data isn’t surprising. I’m not sure I’m going to continue to post these monthly results. I don’t want to be predictable.

Yesterday, during our weekly meeting at Palo Alto Software, sales guru David Shear, recently recruited out of a finance business sales spot, said he’d met with friends in the mortgage business over the holidays and “there’s a boom going on.”

“I heard it over and over. Swamped with refinance applications, money is flowing, all of that. One of them said he’d been working Saturdays just to keep up.”

So I say great, here’s a spot that’s jumping now, a sign of some segment responding to government bailouts and all. It’s not necessarily universal; these are Oregon and Washington people, and just a circle of friends. Still, let’s take the good news where we can find it.

Direct quote today, for Thanksgiving, from  Bob Sutton: “The Silver Lining: Selfishness and Greed are Not Cool These Days”:

The lost jobs, economic suffering, and fear are terrible things and my heart goes out to all those who are hurt and will be hurt by this mess. In the Thanksgiving spirit, however, I do see something to be thankful for these days: Being greedy and selfish–doing things for me, me, me and ignoring or exploiting others in the process–is out of fashion. The current crop of Stanford students [is] the most socially conscious I have ever encountered during my 25 years here–things like stopping global warming, improving K-12 education and reducing poverty are seen as what the coolest students do. And–despite how hard it is to get a job–recruiters will tell you that, to get the best students, they need to demonstrate serious commitment to these and related issues.

Have a happy, safe Thanksgiving holiday.

Wow, the ideas just keep rolling in. Look at this opening for a press release. Start with the problem, and tag the problems of the day:

Palo Alto, Ca, November 25, 2008 — With unemployment rising, stress due to job and financial insecurity in the U.S. has skyrocketed in the last eight months. 57 million people in the U.S. today are suffering from emotional pain, stress and depression. Job stress costs the U.S. industry over $300 billion annually in productivity and compensation.

And then show how you’re solving it, plugging your business. In this case, right after the problem posed above, we get the solution:

To help local companies to cope with rising stress, Silicon Valley based Emotional Fitness Clinic, Luminific.com, is hosting on-the-job group relaxation trainings and individual one-on-one relaxation sessions for business executives.

Let me make this clear: I don’t know this company, I don’t recommend it, I’ve never used it; I just received the press release over e-mail. Still, it does get your attention, doesn’t it? I’m posting it because it’s a useful example. I wouldn’t include the link, but that would be mean, since I’m liking the angle.

Turning a bad business climate into a business opportunity. The old lemon and lemonade trick still works. Here’s the next paragraph:

As life become less and less predictable, we experience more emotional stress. “Stress is the result of unexpected crisis,” says Dr. Robert Sapolsky, professor of neuroscience at Stanford University.

Hmmm. Endorsed by Dr. Sapolsky sounds really good, because he’s a real expert. My daughter took his class and loved it, and she really liked him, and I posted his Why Zebras Don’t Get Ulcers lecture on my other blog. And while I’m sure he said what the release says he said, I really doubt that he intended to endorse this business. Look at the way the company uses him in context, making his statement seem like an endorsement. Good stuff, no?

Yesterday I posted about how the maker of the prosperity candle has a booming business. Now today it’s one-on-one relaxation sessions for business executives. See? New business opportunities are all over this dark and depressed economy. You just have to look in the right places.

(Note: I posted this earlier on Small Business Trends. I’m reposting here for the convenience of my readers at Entrepreneur.com. Tim)

A couple of weeks ago a well-known local restaurant with 40-some employees closed its doors on a Monday morning without telling anybody in advance. Employees arrived Monday to a sign saying the business had closed.

Last week a printing company with 85 employees did the same thing. The people arrived Monday morning to read signs that the company had closed.

That’s what everybody fears these days. Is it going to happen to me?

Nobody wants to be told not to worry when things are bad. If you are in charge, they want you to share your worry with them, treating them like adults.  If you do, they’re likely to feel part of the team, and pitch in and help.

And if you don’t, you have anger and resentment to deal with, as well as disappointment and worry. People who lose their job from one day to the next, without any advance notice, are very angry.

I learned this the only way there is to learn this, running a company during a recession. I laid off five of 33 people in one day in 2001. Our sales fell hard when the dotcom bubble burst. We were slow to react. When we finally did react, our people were relieved to see us taking steps. Everybody pitched in.

And it also seemed easier to lay off five people the same day than that hardest of all things an owner does, fire somebody who’s been trying but failing. At least when it’s five at once, which was about 15 percent of our work force back then, people understand that it’s a larger cause, not a personal failure.

This whatever-it-is (recession, depression or whatever) is a lot worse than 2001, but the principle still applies. If you’re running a company right now, your people want to know how you’re doing. Don’t tell them not to worry their pretty heads. They want to be part of the solution. It’s normal human nature: People naturally want to be included in things. When times are tough, they want to know.

I’ll bet every one of the 40-some employees in that closed-down restaurant situation wishes the eatery had seen the problem coming, cut costs, maybe laid off some employees but stayed in business. And I’ll bet every one of the 85 employees in the printing business wishes it had cut it to 60 or 50 or 40 employees but stayed in business.

And I’ll bet they are all angry at the surprise. Several were quoted in the newspaper. “Why weren’t we told?” they asked.

If you’re an owner, don’t think you’re doing anybody a favor by not sharing your worries.