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Small Business Report
Women and Business
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Business New Haven
3/31/2003
By: Karen Singer
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In these uncertain times, Connecticut businesses with five to 30 employees are not only surviving. Some are even thriving.
And, there are slightly more of them than there were a decade ago, according to state Labor Economist John Tirinzonie.
Last year 320,248 workers in companies with at least five but no more than 30 employees accounted for 22.3 percent of the
total employment of 1,435,403 in Connecticut's private sector. In 1992, 290,954 employees in the same group of companies represented 22 percent of the 1,320,889 workers.
While not exactly earthshaking, the gains are especially impressive, notes Tirinzonie, because 1992 was a "terrible year.
"They've consistently grown," he says of small firms, "and now represent almost a quarter of the workforce."
Overall, the number of employees in companies with fewer than 100 employees also has increased over the last decade. Those in companies with no more than four employees, for example, grew from 84,956, or 6.4 percent of the entire workforce in 1992, to 94,864, or 6.6 percent last year.
Other positive data concern female business owners, who have made substantial progress in Connecticut in recent years.
Leila A. Fecho, president of the Connecticut chapter of the National Association of Women Business Owners (NAWBO), cites a study from the Center for Women's Business Research indicating the number of female-owned firms in the state grew eight percent between 1997 and 2002. Using U.S. Bureau of the Census data, the report estimates there were 78,366 majority-owned, privately held women-owned firms in Connecticut in 2002, accounting for 27 percent of all privately held firms. Those companies employ nearly 76,000 people and generate more $8.2 billion in sales.
Though these statistics may seem cheery, the reality often is not.
In fact, many small companies are struggling mightily to stay afloat. Over the last decade, the numbers of workers in some sectors of companies with five to 30 employees grew, but their percentage of the total declined, Tirinzonie says. In 2002, for instance, construction workers numbered 31,152, or 45.5 percent of the workforce, compared to 23,298, or 47.3 percent, in 1992. Likewise, the number of jobs in the service sector grew to 118,627 in 2002 from 97,575, but last year's total percent of the workforce was 22.8 percent last year, compared to 24.3 in 1992.
Even for manufacturing companies with five to 30 employees, which lost a nominal number of jobs over the decade [30,088 last year compared to 31,658 in 1992] but showed the largest gain in percentage of employees [13 percent in 2002, up front 10.2 percent in 1992], survival strategies are on the front burner.
"We're still in business, but we're leaner and meaner than ever," says Jamison Scott, manager of Air Handling Systems, a Woodbridge company manufacturing sheet-metal ductwork for industrial ventilation. The company has a Web site and does most of its business out of state.
Although sales have dropped between ten and 15 percent over the last several years because of increasing steel costs, foreign competition and rising health care premiums, according to Scott, the number of employees has remained steady at 15.
"We just raised prices for the first time this year years, but we have not laid anybody off," he says.
Nonetheless, he does his best to remain upbeat. "Other people are much further down, and our only hope is the economic slump is almost over and we'll get back to growth."
Meanwhile, manufacturing leaders are among those asserting most emphatically that two new state business taxes are unlikely to help matters. One imposes a $250 tax on all types of businesses, rather than just those that are incorporated. The other tariff gives cities and towns the option to collect property taxes on capital equipment and machinery, fees formerly reimbursed by the state.
"Manufacturing produces about 20 percent of [commercial tax] revenue in Connecticut, and now the state is squeezing us harder," says Jerry Clupper, executive director of the New Haven County Manufacturers Association.
Frank Johnson, president of the Manufacturers Alliance of Connecticut, hopes other municipalities will follow the lead of New Haven Mayor John DeStefano, who has declared the city won't be collecting the new equipment tax.
Johnson characterizes state manufacturers as a "very tenacious and innovative" lot.
"When they're experiencing difficulties in their primary market, they seek out new markets, which often requires a lot of pain and refocusing, but enables them to keep going."
The same might be said for small employers in other sectors.
"I have to go out and look for opportunities," says Ramesh Wadhwani, owner of SAI International in Shelton, an information technology company designing custom application software. Wadhwani has seen sales plummet over the last two years from such clients as Goldman Sachs, J.P. Morgan, Verizon and other Fortune 500 clients. He has downsized from nearly 60 employees to 26.
As a result of the slump, Wadhwani is pursuing clients in other industries, such as health care and homeland security, and focusing more on Connecticut-based businesses. He's also offering "creative financial arrangements," such as an equity stake in a company in lieu of cash. And, he's looking for wider distribution for a new Internet-based telephone product offering long distance service at substantial savings to frequent users.
Wadhwani says his biggest challenge is "being too small," an obstacle he is trying to overcome by participating in programs aimed at helping small business and minority-owned firms (see accompanying story). Membership in the Connecticut Minority Supplier Development Council, for instance, has facilitated meetings with heads of large corporations and work with a mentor who is helping him fine-tune his business and marketing strategies.
Marquis Car Service also has been refocusing its marketing efforts. Decline in corporate travel after the terrorist attack on September 11 put a major dent in the New-Haven based limousine service run by four sisters. The company has 20 employees, half of them full-time.
"Big business accounts have gone down by 50 percent," says co-owner Paula Maher. "We're now targeting different areas."
Marquis has managed to drive more wedding traffic in its direction by taking a novel approach. Limousine companies typically attend bridal shows, but Marquis is advertising its wedding service in local papers, buying lists of brides-to-be and inviting them to an "open (limo) house" with free refreshments.
The strategy is paying off in additional reservations. "We just had our best year in wedding business since 911," Maher says.
Personal travel also has been up this winter, she adds, because many people overcame their fear of flying to flee to warmer climes.
The sisters currently are mulling what to do about soaring gas prices.
Finding new outlets for his products is a priority for Lloyd Parchment, owner of Jamaican Gourmet Coffee Company. Since 1981, he has expanded from a one-room operation selling roasted beans to a large building in North Haven housing a roasting and packaging business as well as a retail outlet selling baked goods, gift baskets and coffee paraphernalia. Some Shop Rites and Stop & Shops in Connecticut and New Jersey carry his brand.
Parchment currently has 21 employees, including new vice president Heidi Hamilton, a lawyer who is working on state and federal certification.
"We're targeting Bradley Airport," Hamilton says. She's also is constantly searching such Web sites as transfairusa.org and fairtradecertified.org for information on how "to stay abreast of market trends."
Parchment says his biggest challenge is "raising capital to go to the next level." On his wish list are building improvements, including an outdoor café, a drive-through window and a Web site for e-commerce.
The state's Department of Economic & Community Development (DECD) recently helped the company hook up with the Connecticut Community Investment Corp., which works with the New Haven Development Corp. As a result, a loan application is under consideration.
For Donna Curran, a private dining room is helping to boost profits at Zinc, a four-year old downtown New Haven restaurant serving "modern American" cuisine.
"We're up ten percent over last year," says co-owner Curran, who previously ran the restaurant and catering business at Hartford's Wadsworth Athenaeum. She now manages Zinc's staff of two dozen employees, ten of them full-time.
Zinc serves dinner daily and lunch every day but Sunday. There's an online reservation system, which occasionally offers incentives.
Although the restaurant has a handful of corporate accounts, including some local law firms, a staffer is assigned to make corporate contacts aimed at filling the private dining room for mid-week luncheon meetings. Curran says several pharmaceutical companies have rented the room, which seats up to 40 people.
Curran also is considering opening a new restaurant featuring local produce.
NAWBO-CT president Fecho notes that female business owners "have always encountered a glass ceiling," but they've "come a long way over the past few years."
Ronald McMullen, director of the entrepreneurial studies program at Quinnipiac University, agrees. "Lingering stereotypes are changing," he says, adding that women business owners face the same problems as "anybody else in a down economy." Access to capital for expansion and improvements and more difficulty maintaining a customer base are typical woes.
What does seem to set women business owners apart from others is a greater commitment to assisting their community.
"A highly developed sense of responsibility for society is pretty common with entrepreneurs, but especially for women," McMullen says.
Community outreach has helped Jamaican-born Karaine Holness, owner of Hair's Kay Beauty & Barber Salon in New Haven, retain customers, primarily African-American women, at a time when they're booking monthly rather than weekly. The barber side of the business is doing better, and caters to a more diverse male clientele.
"The biggest challenge is customer relationships," Holness says. "We go out to dinner with our clients sometimes, and to christenings, wedding and funerals."
Several years ago, inspired by a client who had breast cancer, Holness began participating in the Connecticut Breast & Cervical Cancer Early Detection Program, a community awareness effort sponsored by the Susan G. Komen Breast Cancer Foundation. Twice each year, Yale-New Haven Hospital's mobile mammogram parks in the shop parking lot and Holness devotes the day to getting out the message. She also advises participants in a Community Action Agency work readiness program on how to look their best for job interviews.
In 1992, Holness won the Spirit of Noel Award, given annually by Modern Salon magazine's "Mirror Image" program to a salon professional demonstrating leadership and a commitment to the fight against breast cancer.
Holness has seven employees, but may be hiring more in a couple of years, when she hopes to open a day spa specializing in "sacred pampering principles for women."
Community service also is one area fueling the success of Four Corners Advertising LLC, a two-year-old minority woman-owned agency with six employees in Hartford.
"In spite of the economy, we tripled our income in 2002 to $1.5 million," says president Wanda Dawkins.
In addition to corporate work with clients such as General Electric and Northeast Utilities, Four Corners develops campaigns on a variety of health issues for the state health department, including a new bio-terrorism Web site. They've also worked with a well-known Hartford personal injury lawyer on a program providing incentives for inner city children to stay in school.
Both Dawkins and vice president Robin Fowler have extensive ad agency experience, and say their connections enabled them to sign up some big clients.
"We also do a lot of cold-calling," Dawkins says. "Success is defined by hard work, and you have to seek and find what's out there."
Their biggest challenge at the moment, says Fowler is "finding employees who have initiative."
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