Entrepreneurs see upside in downturn

Marketplace Staff Jul 17, 2009

Entrepreneurs see upside in downturn

Marketplace Staff Jul 17, 2009


TESS VIGELAND: With so much of the country all down-in-the-mouth about the economy, how ’bout a bright spot? Some small business owners are using the recession to bolster their chances of survival.

Marketplace’s Mitchell Hartman went in search of some folks who are betting on the future despite the current odds. He reports from the Entrepreneurship Desk at Oregon Public Broadcasting.

Mitchell Hartman: The economy’s slowed to a crawl. Banks and businesses don’t want to take any risks these days. So it’s refreshing to meet a man like Tarran Pitschka. He’s obsessed with speed. And he’s not daunted by the sharp twists and turns in the economy. Risk — in business, anyway — doesn’t seem to scare him one bit.

Pitschka fires up a pedal-to-the-metal marketing video in his small Portland studio. He’s showing me the latest designs from his start-up clothing brand, Wicked Quick. He came up with the idea when he was working for Ford’s racing team. He remembers standing between two dragsters as they went from zero to 300 in four seconds flat.

Tarran Pitschka: And I seriously thought my teeth were going to fall out of my head. I thought, at that moment, there’s got to be a way to create a cool clothing brand around this fascination of speed.

The result fills his studio: piles of trim-cut designer T-shirts with eye-popping graphics in jet black, blood red, and aqua.

Pitschka: It’s called “Samurai Ride.” It mixes unique print treatments such as foils, discharge prints.

These designer tees go for up to 75 bucks apiece. And Wicked Quick is about to introduce more designs for women.

That kind of drive to expand doesn’t surprise Debra D’Agostino of the Economist Intelligence Unit. She’s just put out a survey of small- and mid-sized business owners.

Debra D’Agostino: What we found is that they’re actually very optimistic about the future. They certainly feel that they will be in a good position when the economy recovers.

Eighty-three percent are optimistic about their companies’ prospects. Well over half think their market share and revenues will have increased by the end of the recession.

D’Agostino: It appears from the survey results that they’re taking an offensive rather than a defensive approach. They’re actually trying to be more aggressive.

That’s a good description of another entrepreneur I met in Portland, Marie Richie, founder of the Sellwood Garden Club.

Marie Richie: Well, this yard is a bit challenging in regards to the light situation.

Richie is checking out my backyard for its growth potential, which appears to be minimal.

Richie: We’d be kind of restricted to a few of the oddball shade crops, like garlic chives.

Uh, no thanks. Still, Richie’s found plenty of other backyards to plant veggies in. She sells them to local restaurants. In exchange for a weekly food basket, homeowners let her use their land and water — for free.

Richie says she and a partner launched on sheer faith, before they’d signed up any homeowners.

Richie: I had no idea how many to expect. I put up an ad on Craigslist in January, when we decided to make this our full-time venture, and heard from about seven or eight people. And from those seven or eight people, it was all word-of-mouth.

Now, there are 21 garden plots. Plus, they’ve started a guerrilla farmers market.

Customer: What is that?

Richie: That is a rainbow lakionado kale.

It’s just a scrappy Sunday gathering of small local vendors. Sales have been up every week.

The Economist’s Debra D’Agostino says the most successful businesses are paying intense attention to what their customers want in this recession. So for Marie Richie, that’s cheap, locally grown organic food.

For the guys at Wicked Quick, it’s something cool to wear. Chief operating officer Eric Happel says his “fashion-forward” consumers don’t mind laying out 300 bucks for jeans and a T-shirt. They care more about their image than their bank account.

Eric Happel: Well, they certainly don’t have the 401(k) sort of built up that took the biggest hit. So for that 18-to-28-year-old, a lot of the investment they’re doing is still in themselves and in today.

Wicked Quick’s sales are still doubling every year since they launched in 2005. They’re on track to double again this year, in spite of the recession. Founder Tarran Pitschka says he’s run this race carefully.

Pitschka: You can’t imagine trying to raise money in the middle of this. So we decided to really play it safe, play it close, really bootstrap it, keep everything small, focus on design, watch every nickel and penny. Now we have survived and retail looks like it’s starting to come around, it’s looking a lot more positive. We think the future looks really bright.

Looking at recent retail trends, Pitschka might seem like he’s out to lunch. But, Debra D’Agostino says, it’s in the nature of entrepreneurs to be optimistic — whatever the economic data might be saying.

D’Agostino: It’s entirely possible that this optimism is a bit overblown and that companies are in the long run not going to be as successful as they hope to be. I think many business leaders when they’re asked to talk about the future of their business tend to be bullish, no matter what is happening in the economy.

D’Agostino says most of the business owners in her survey expect a quick and strong rebound once the recession’s over. She’s not so optimistic. But then, she’s not an entrepreneur.

I’m Mitchell Hartman for Marketplace Money.

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