It’s the ultimate million-dollar question: how do local businesses survive —and even thrive —during a severe economic downturn? According to Ian Yankwitt of Tortoise Investment Management in White Plains, it’s all about not making the same mistakes seen throughout the business world—even if it means defying conventional corporate wisdom.
Yankwitt knows a thing or two about growing a business by following an unconventional path. His firm, which he founded seven years ago, now provides portfolio management and financial advice to roughly 200 clients, and manages about $270 million in total assets. Most of his clients who were with the firm since the fall of 2007, when the market peaked, have actually seen positive returns over the period. And, unlike many firms in the financial management industry, his business is thriving. Most of that success and growth, according to Yankwitt, was the result of a conscious choice to do the opposite of what so many other businesses were doing after the market’s collapse.
One of the first mistakes many businesses made, he says, was to cut marketing budgets. “If you’re not spending money on marketing, you’re getting a smaller percentage of mindshare. If no one else is marketing, market!” Of course, not all companies depend on marketing budgets equally. Financial services firms such as Yankwitt’s rely on word-of-mouth marketing, so major spending is unnecessary. But that didn’t stop him from applying his “do the opposite” maxim after noticing what was happening with the giants in his industry.
The large financial services firms were in turmoil, and became focused on keeping their biggest producers happy. The top performing employees got bonuses, while many other portfolio managers were either laid off or grew very disgruntled.
“There were a lot of talented people out there looking for jobs,” says Yankwitt. “We said, ‘Let’s really ramp up our hiring.’ That way, we might be able to attract people who never seriously considered working for a small firm, or considered working in White Plains.” The strategy has worked well. His firm had three full-time employees at the time of the Lehman Brothers collapse in 2008, and is now close to hiring its tenth.
Another common pitfall occurs when business owners elect to purchase their own office space to avoid paying out rent. But real estate investment is more volatile than people think. “If you’re not in the real estate business,” he advises, “rent.”
Yankwitt’s advice to business owners just starting out is to always keep your workforce in mind. “There will be good times and bad times,” he says. “Treating your employees right makes it much better for you and everyone in the long run.”