Small companies start to see new sales bloom

Maybe it’s time for the economy to wake up and smell the flowers.

That would be Brenda’s House of Flowers, a Woodstock florist where recession has done some damage, forced some layoffs, compelled some other cost-cutting — and still not shaken confidence.

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Phil Skinner/pskinner@ajc.com

Charlene Armellino works on floral arraignments at Brenda’s House of Flowers in downtown Woodstock.

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Phil Skinner/pskinner@ajc.com

Skip Shipman, co-owner of Brenda’s House of Flowers, predicts $2 million in sales this year. Here, he talks to customers Brittany Thaler (left) and Sierra Holt.

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“We’ll do $2 million in sales this year,” said co-owner H.C. “Skip” Shipman. “This downturn is not going to be a problem for us. We know who our customers are.”

The modest 14-person operation is emblematic of the troubled, but still titanic $14 trillion-a-year U.S. economy. The service sector represents most of the economy, and consumer spending drives it. Moreover, roughly 90 percent of American businesses are smaller than 20 employees.

The economy has shed more than 5 million jobs since recession began at the end of 2007, and small service businesses have been badly hurt. The economy cannot grow until it has stopped shrinking — and the contraction seems to have slowed.

New orders from service companies surged in April, jumping faster than in any month since 1997, according to a monthly report issued Tuesday by the Institute for Supply Management. The overall index for service companies also rose, to its highest level since October.

The ISM index in September 2008 was at 50.0, a level indicating the economy was holding steady. It fell to 37.8 in November before starting to rebound.

The index rose to 43.7 in April, up from 40.8 the month before.

That index is important because it is tied to retail sales and consumer spending, said Adrian Cronje, Atlanta-based chief investment strategist for Wilmington Trust Investment Management.

“We are still in recession territory but at least it’s not getting worse,” he said.

The worst fears of the fall have not panned out, although a rebound is likely a number of months away, he said.

“The economy was in cardiac arrest in October. At least, we’ve been able to stabilize the patient. There is still a lot to do to get the patient up and walking,” he said. As companies cope, they often add to the downturn’s velocity by slashing their own spending and laying off workers. But as they hit a bottom and start to grow, the economy benefits.

At Brenda’s House of Flowers, a few jobs were cut and the florist “re-bid” every contract, from insurance to telephones, Shipman said. The company bought more efficient vans to replace their gas-guzzlers. And they have adopted Shipman’s techniques for targeted marketing — homing in on people who have been customers.

Shipman is confident the business can survive the downturn, but he is less optimistic than some experts about how soon a true recovery will start.

“I guarantee you, it is going to get worse before it gets better,” he said. “I don’t see things turning around until the fall of 2010.”

In the meantime, he is getting ready for the biggest single sales event of the year for florists: Mother’s Day.