Making Sales

Executive recruitment firm owners have responded to shifting economy by shaking up their client base

The national economy was far different when Sales Executives owners Cindy Houston Hazen and Janet Meek founded their professional recruitment firm in late 1999.

The changing landscape, including a nearly 2 percent rise in unemployment and the telecom industry's fall-out, could have caused Sales Executives to fail within its first few years of business. But the business women attribute their company's survival to seeking new revenue markets, securing credit before needed it and outsourcing some administrative operations. Having weathered the storm, Sales Executives is cautiously forecasting a bright 2003.

A lot was at stake in the beginning. Meek and Hazen had taken second mortgages on their homes to finance the start-up costs for the firm that would specialize in recruiting business-to-business sales and sales management professionals. Sales Executives generated $150,000 in revenue in its first year and was on track with the entrepreneurs' expectations.

Six months later, in June 2001, the unemployment rate had increased more than half a percent to 4.6 percent from 4.0 percent during fourth quarter 2000. That was when Hazen says the economy fell out from under Sales Executive's business and expansion plans.

Before then, recruiting passively-looking employees away from employers was easier and the information technology and telecommunication industries represented up to 30 percent of revenue. For the past 18 months, those two industries have represented none of Sales Executives' revenue.

To survive, Hazen and Meek sought new markets, such as the transportation industry, which has picked up a lot of the slack, along with manufacturing. Sales Executives also sought clients looking for employees in business services, medical pharmaceuticals and printing.

"The past two years, it's been whatever industry that has a need," says Meek. "We have not focused on any particular industry. It's just sales in general."

The financing factor

Besides looking for new revenue streams, Meek and Hazen looked to secure lines of credit after mentor Don Gallent recommended to do so before the company needed it.

"Until that point, we didn't have a true banking relationship," says Meek.

The credit line was used sporadically between August 2001 and the first quarter of 2002. Without the line of credit, Meek and Hazen say the company likely either wouldn't be in business or would have a significant debt load. Sales Executives finished 2001 with about $150,000 in revenue for the second consecutive year.

"That was a good way to overcome. Executives in business should use (lines of credit)," says Hazen.

That's a tale often heard to those familiar with small business financing.

"The question of whether a business needs a line of credit or doesn't isn't usually answered until after the fact," says David Tiller, spokesman for the Small Business Administration's Middle Tennessee office. "It's always good to begin when the business qualifies to assess credit line needs. In most cases, a small business will need a substantial line of credit."

The SBA offers small businesses a variety of loan programs including 7(a) loan guarantee, SBA LowDoc, SBA Express and others. Hazen and Meek, however, opted to seek their own financing rather than use one of the SBA programs.

Another cost-saving strategy involved outsourcing many operational aspects of the business. For one, Sales Executives is located in an executive center in Brentwood where other businesses share the costs of operating the facility. Hazen and Meek have also outsourced administrative services, accounting and even use a research company to help generate leads for recruiting.

The employees' job market of the late 1990s is beginning to swing to an employers' market. Sales Executives reported a strong fourth quarter and expects revenue to be between $175,000 and $200,000 for 2002. If the trend continues, Meek and Hazen are hoping Sales Executives will catch up to revenue expectations for 2003.

"What's interesting is you notice that the strong have survived," says Meek.

Brian Forrester, Nashville Business Journal
© 2003 American City Business Journals Inc.