Upbeat in downturn

You'd think a recession, frozen lending markets and a 30 percent drop in the nation's stock markets would be enough to furrow the brows of even the most optimistic folks.

To be sure, many who answered the latest annual Review-Journal business poll say they're sweating the clash between dropping revenue and higher costs of expenses such as health care. But the number of local business owners and executives expecting a good or excellent year has changed little compared with survey results a year ago. Just under half of respondents -- 49.3 percent -- expect an excellent or good year in 2009. That's off only slightly compared with the 51.8 percent who anticipated a good or great year in the Review-Journal's 2008 survey, though results in both years look weak weighed against the 94 percent of local professionals forecasting good or great times in 2006 and 2007.

Attitudes among business managers and entrepreneurs are important for their predictive powers. Expectations for the year ahead can drive business decisions in areas ranging from staffing and expansion to marketing and purchasing. Pessimism among business leaders could mean slower economic expansion, as tentative execs hold back on capital investments and new hires.

For locals looking forward to a good or excellent year, multiple reasons for optimism reign.

Some companies, such as homeowners' dues collection business Nevada Association Services, run counter to economic trends, so lean times for everyone else can pad their bottom lines.

Others remain undeterred by economic torpor, launching sales and distribution initiatives to capture up-for-grabs market share as competitors fail. That's the case for Polar Shades Sun Control, a Henderson manufacturer of retractable awnings and screen doors.

Steve Mevius, owner and president of Polar Shades, said he plans a 50 percent to 60 percent increase in sales in 2009 as a result of several new deals with nationwide distributors. He added at least one client who should order more than $1 million in window coverings, and expanded warehouse space will enable the company to deliver orders more than 50 percent faster than previous fulfillment operations allowed.

But many of the positive entrepreneurs who answered the Review-Journal's survey credit their upbeat outlook to that they have already made tough decisions about staffing and expenses. With operations pared and processes streamlined, they say they can weather much of whatever is left of the year-old recession.

"It's not going to be a great year for business, not at all, but we're thoroughly looking forward to having another successful year from the standard of profitability, and from the standard of overhead and operating costs being under control," said Frank Martin, president and chief executive officer of Martin-Harris Construction, one of the Las Vegas Valley's biggest general contractors.

Martin said he expects a good year at Martin-Harris despite projections that revenue will fall from $355 million in 2008 to $225 million in 2009.

To brace for the lower volume, the company laid off 35 percent of its staff in late 2008, dropping to around 350 employees between Martin-Harris and its subsidiaries (though Martin implemented a "first-for-rehire" list to help maintain morale). The contractor also froze wages for 2009, and senior managers rolled their pay back to the salaries they were netting on Jan. 1, 2007. Martin-Harris is now slightly understaffed, so the company is ready if the construction sector slackens more in 2009. It's diversified into markets in Arizona, New Mexico and Texas, and it has virtually no debt, Martin said.

Executives at real estate brokerage Prudential Americana Group, Realtors began preparing for today's hard times well before the economy tipped into recession.

The brokerage's founder, Mark Stark said he foresees a good 2009 thanks in part to cost-cutting and reorganization measures taken as long as two years ago.

Prudential Americana built its systems to alter course if marketwide sales dipped a certain amount, and the valley hit that critical threshold in 2006. A flurry of adjustments followed: Divisions disappeared, departments merged, administration thinned. The brokerage even filed for Chapter 11 bankruptcy in late 2007.

Prudential Americana emerged reorganized in July, and today enjoys a "very good cash position," Stark said.

Those operational modifications have placed Prudential Americana on solid footing for 2009.

"We have fought our battles," Stark said.

The 1,000-agent brokerage won't have to rely solely on changes in its business model to thrive, Stark added.

Prudential Americana benefits from its position as the largest local brokerage in sales volume, a status that Stark said makes it a safe haven for brokers abandoning sinking, smaller agencies. It absorbed the 23-agent O'Keefe & Casto brokerage in the summer, for example.

Prudential Americana's number of closings should be relatively strong in 2009, as home buyers snap up thousands of foreclosure bargains and short sales, Stark said. The company closed more than 700 sales in December -- not too far off the 900 or so units brokers were selling monthly at the market's peak a few years ago. The challenge now is that home prices declined substantially, so the company's annual sales volume fell from $4.5 billion in 2005 to a little more than $2 billion in 2008. Stark said he expects 2009's volume to look like 2008's total.

So Stark continues to hunt for efficiencies, as well as new profit centers particular to today's real estate climate.

"You have to create a company that can exist even if the environment never changes," he said. "The big mistake companies make is to say, 'We'll be OK as long as the market does this.' Instead, we look at how everything is tracking, and we ask where we'll be if it keeps tracking that way. We position ourselves to deal with the worst-case scenario."

The potential for a worst-case scenario dimmed expectations among some local business owners.

The number of business owners and managers expecting a fair year stayed about the same year over year, coming in at 33.8 percent this year and 33.3 percent in 2008. The share of businesspeople forecasting a poor year more than doubled, from 7.4 percent a year ago to 16.9 percent today.

Leslie Parraguirre, owner of local interior design business Colours Inc., said this is the worst recession she's seen in her 20 years in business here. She said she and other interior design companies will be lucky to break even in 2009.

"We are definitely what I call a fluff item, and fluff items can start to hurt" when the economy heads south, Parraguirre said. She plans to post a fair year at Colours.

Parraguirre said she hopes Colours' diverse client base will help the company make it through the year without adjustments. Among the company's clients are new-home model communities, offices, taverns, hospitals and luxury homes. Colours even handles exterior-colorization schemes in the residential and commercial sectors. That variety of business streams means one or two areas should prop up revenue when other divisions flag. Today, "massive" remodels of existing homes make up the strongest share of Colours' business, Parraguirre said.

Parraguirre is diversifying into other markets such as Tucson, Ariz., to bolster Colours. She also makes an effort to work with local vendors and suppliers in an attempt to boost the area's economy. Her main goal: Keep all eight of her workers employed. She's never had to lay off workers, and she doesn't want to start now.

"I have single moms who work for me. I have one employee whose husband already lost his job," she said. "Layoffs are the last thing we want. We want to take good care of our people so they can take care of themselves."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.