Small, midsized businesses new core of economy
Gary Craig
Staff writer
(February 25, 2007) — At one time, Tammy Marino says, Eastman Kodak, Xerox and Bausch & Lomb were all small businesses.
It's hard to imagine that corporate behemoths that once were the heart of the local economy — before laying off thousands — started with little more than a few dollars and a lot of dreams. And, of course, a handful of employees.
But they did. The lesson? While, granted, it's rare for small businesses to swell into major corporations, the opportunity for growth should not be underestimated.
"Small firms tend to be the growth engine of local employment," said Marino, the state Labor Department's labor market analyst for the Rochester/Finger Lakes region.
The region has turned to small business for jobs and entrepreneurship as the corporate giants have shrunk.
"The statistics are remarkable," said lawyer Anthony Cotroneo, president of the Small Business Council of the Rochester Business Alliance. "We haven't really lost that much employment population with all the downsizing."
According to the Labor Department, 75 percent of the regional nine-county work force works for companies with fewer than 500 people.
The smallest of businesses make up a sizable share of the employment numbers: 40 percent of the region's work force is employed by businesses with fewer than 50 workers.
Still, the smaller employers have also seen job loss in the region's stagnant economy, but not like their larger brethren. According to the Labor Department, between 2001 and 2006 employers with 500 or more workers experienced a declining job rate more than twice that of smaller businesses — a 5.1 percent overall decline compared to a 2.5 percent drop.
The conversations within the membership of Rochester's Black Business Association are indicative of the evolution toward small business. According to association President Tim McCauley, the focus a decade ago was often on the opportunities for African Americans to work at or with the major manufacturers.
Now, he said, the talk is more about how to build a small business while navigating regulatory and tax minefields.
"I still see opportunities," McCauley said. "Is it the same opportunities as it was 10 years ago? No. But the opportunity is still there."
Consider, for instance, the evolution of two local businesses — Optimation Technology Inc. of Rush and Butler/Till Media Services of Brighton.
While some small businesses grow gradually, Optimation Technology took a gigantic step last year with the acquisition of Kodak's capital engineering, capitalized maintenance and construction units.
The acquisition is allowing Optimation to add construction to its suite of automation, systems integration, engineering and design services — as well as 155 people to the company's work force. Optimation employs 310, three-fourths of whom work in greater Rochester.
The addition of construction talent means that Optimation can now build some of the machines it designs, rather than finding a subcontractor.
"We can build, design and maintain essentially any manufacturing facility. It opens a lot of opportunities we didn't have before," said William Pollock, the company's president.
Some small businesses, such as Butler/Till, are oriented toward helping others grow. Butler/Till is a Cmarketing services company, helping clients select the right publications or other media for placement of advertising, then negotiating rates and auditing results.
The company, now at 40 people, expects to grow to 45 at least by the end of the year.
One area that's keeping the company increasingly busy is new technology, such as digital video recorders that allow viewers to skip commercials. Clients are looking to Butler/Till to explain how they can alter their advertising methods to stay abreast of technology, said Peter Platt, vice president of online media.
"If you want to advertise, that's where we jump in," said Tracy Till, partner at Butler/Till.
Inherent in an economy built upon small businesses are both a certain volatility and stability, experts say. For job seekers, the road can be tougher and require more patience than in eras past.
And an employee's standard of living — if judged by wages and benefits packages — can vary tremendously from one small business to another. Of course, fewer people now expect to stay at the same job for a lifetime, said Matt Hurlbutt, executive director of RochesterWorks, an agency that matches people with employers.
As for stability, the economy, when spread across a base of thousands of small and midsized businesses, won't be as susceptible to roller coaster changes, some experts say.
"The good news is you're not going to have huge downturns," said Bruce Zicari, an accountant who is the Bonadio Group's partner-in-charge of the small business advisory group. "The bad news is you're not going to have the huge upswings, either."
Also, the probability of business leadership assuming the role of community leader is less likely than in the day of George Eastman and other corporate chieftains, said Kent Gardner, president and chief economist of the Center for Governmental Research.
Whatever the result of an economy balanced upon small and midsized businesses, there is one consensus among experts and businesspeople: This will likely be the reality for a long time to come.
"By all means, we're much less dependent on the larger firms," said the state Labor Department's Marino.
