Holly founded ExitPromise.com as well as StartupPromise.com and so far has answered more than 3,000 questions asked by business owners about starting, growing and selling a business.
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This three part series tells how one entrepreneur took a chance on an emerging market, weathered an economic storm, and exited a business with a bright future. Read part one here.
‘Dire Straits’
Success doesn’t come without its obstacles.
Just ask Richard Hagerty, a 40 year business veteran and successful entrepreneur. After seeing years of rapid growth at IMPAQT, the search-marketing agency he created in 1999 at the height of the dot-com boom, things began to get a little rocky around 2008 as the U.S. economy took a nosedive.
What initially seemed like a short-term, manageable downturn quickly spun out of control.
“We lost 46 percent of our business in nine months,” Hagerty said.
With prospects seemingly bleak and news reports of massive layoffs circulating around the country, Hagerty knew he had to take control of the situation at his company and make some tough decisions.
While so many other companies at the time had turned to layoffs to help balance their budgets, Hagerty refused to even consider it. There would be cuts, sure, but no one was going to be let go, he decided.
He chose to be upfront with the company’s 80 or so employees and laid out his strategy.
“I sort of drew a line in the sand,” Hagerty said. “I’m not letting anyone go. We’re going to make this work and here’s what I need you to do.”
First, there were temporary pay cuts across the board, 10 percent for the non-management staff for six months, and 25 percent for managers for nine months. Bonuses, too, were eliminated for roughly a year.
Then came the coffee. Well, not just the coffee. After placing the company’s budget through rigorous scrutiny, Hagerty was able to extract $1.1 million in costs altogether.
“It was sort of dire straits,” he said.
Then it was time to get proactive. Instead of waiting for the recession to pass IMPAQT by, Hagerty got creative and began offering consulting services. While client numbers were low, the extra work proved beneficial, he said.
And like the coffee and the bonuses, clients, too, made their way back to IMPAQT. He recalls a major player in the banking industry as being one of the first to come aboard following the recession and believes that had he laid off workers, there’s a good possibility the new business would never have come IMPAQT’s way.
Throughout the economic storm and admittedly for Hagerty, “very, very tough times,” only one employee out of the nearly 80 on staff left the company. And it was by the employee’s choice. Today, he considers this one of his greatest accomplishments.
“We kept everybody and when you look back on it, I think it was the right decision,” Hagerty said.
Now just before the recession began, Hagerty said he began to think about his eventual exit from IMPAQT. He had courted some mild interest but hadn’t started to seriously consider his strategy.
But after a successfully weathering the economic storm, combined with the ensuing peace of mind that IMPAQT wasn’t going away anytime soon, Hagerty decided to get serious about his options.
