Plans for capital raising and expenditures in 2023 were mixed for respondents in the 2023 Springfield Business Journal Economic Growth Survey, which asked business leaders this spring to give a glimpse of their thoughts and plans for their companies.
In financial news, some experts have been forecasting an immediate, extreme recession for a couple of years or more, but if the sky is falling, it’s taking its own sweet time to land. Others have predicted a mild recession – more like a fog over the landscape – and still others have rejected the recession scenario altogether, envisioning sunny skies ahead.
When comparing ideas about businesses raising capital, competing pictures emerge from the data.
Joselyn Baldner, president and CEO of Central Bank of the Ozarks, reads those findings with optimism in her Economic Growth Series sponsor letter in this issue. The fact that a quarter of survey respondents plan to raise capital is evidence of their positive outlook, she writes, noting these leaders have the confidence to move forward.
Baldner’s glass-half-full mindset may not have occurred to everyone analyzing the results. After all, the remaining three-quarters have no capital injection plans, perhaps adopting a wait-and-see attitude toward growth amid recession fears. But in a July 24 news conference, Federal Reserve Chair Jerome Powell pulled the threat of recession from the table.
“The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” he said.
It may be hard for businesses to know how to feel in an environment of yo-yoing forecasts.
Growth takes partners
Jeven Russell, president of Verizon retailer Russell Cellular Inc., found some of the 2023 Economic Growth Survey data difficult to parse – particularly the finding that 52% of businesses have sufficient cash on hand to last them “indefinitely.”
“That makes me question what types of industries they’re from,” Russell says.
Nonprofit, construction, and banking and finance were the top industries reported by survey respondents.
As a retail company, Russell says Russell Cellular is cash-flow heavy, which naturally carries some risk.
“We try to be risk averse,” he says. “To keep our security, we watch the balance sheet a little bit stronger than before.”
In weighing capital decisions, Russell says vendors are always top of mind, and the reality is that they are seeing challenges.
“We know how tight operations are for them,” he says. “Credit lines for handset purchases and things like that are tightening up.”
But the company remains in a growth mode, with 2022 revenue reported at $989 million and three-year revenue growth at 49%.
“I don’t know if we’ve ever left being in a growth mode,” he says. “It’s just about the right market opportunities.”
The company has made some acquisitions even this year, he says, but it was first necessary to secure additional loans and financing.
“The landscape is certainly more challenging right now,” he says, citing operating costs, expenses and struggles faced by key partners.
One key to dealing with the uncertainty is maintaining strong relationships with banking partners, Russell says.
“That’s allowed us to stay consistent in some of our growth,” he says.
Russell Cellular is investing heavily in technology, which Russell says will help with long-term commitments.
“We’re making sure we’re putting our investments in the right areas of business,” he says. “It’s hard to sign a five-year agreement on something right now.”
Operating costs put a lot of pressure on the business, Russell says.
“We try to assess and be very mindful of expenses,” he says. “We’re cautious of long-term investments and agreements as we try to balance those with innovation and evolution.”
Going it alone
Mark Steiner, co-founder and CEO of GigSalad LLC, a platform for booking entertainers, understood the shift toward a self-serve, gig economy years in advance of the company’s official launch in January 2007 – one year before Airbnb was founded and four years before Uber.
“For us, we were too ignorant to even know raising capital was a thing back when we started,” he says.
Steiner says he was busy trying to be an artist – specifically an actor – in New York City when he founded the booking platform with co-founder Steve Tetrault.
“When we started working on GigSalad, we had this idea and said, ‘Let’s throw a little startup capital at it,’” he says. “When I say a little, it was very little – some seed money to get it going. At the most it was a couple thousand each.”
But the pair were scrappy enough – in Steiner’s words – to find people to get an online platform going.
“From that point on, it became self-sufficient as it generated income,” he says.
The founders each had their own income, Steiner from a conventional talent booking agency and Tetrault as a graphic designer.
“We didn’t need that income – we had separate businesses, so we put all our income back into the business,” Steiner says. “We grew and we grew. Steve and I didn’t start drawing from the company until 2011.”
The company, which had $25.3 million in revenue in 2022, representing 185% growth over a three-year period, has maintained its pay-as-you-go strategy since day one, according to Steiner. That didn’t keep venture capitalists from calling on a weekly basis, nearly from day one.
“We just kept ignoring the invitations to talk,” Steiner says. “I didn’t feel equipped enough to have those conversations. They were going to ask me a lot of questions about financials. I knew our numbers, but I didn’t feel competent to be across the table from someone like that and have them see my naivete, maybe try to take advantage of me.”
The venture capitalists continue to call, and Steiner continues to let those calls go to voicemail. The pay-as-you-go approach to growth is working.
“We always have run profitable, and we’ve never had any debt,” he says, noting he and Tetrault folded their separate companies into GigSalad in 2011.
“Over the years, we saw companies come and go; we saw companies try to compete with us,” he says. “We’re still standing.”
The only condition under which Steiner and his current partner, Locke Bircher, would consider acquiring capital is if the company were to flounder, he says.
He said his goal has been to lead with kindness and generosity, creating an environment where people wanted to come to work on Monday and felt a little disappointed when Friday came around.
“That’s a hard thing to maintain when you bring in people from outside if it’s all about profit and bottom line,” he says. “That’s not where we’re at, and it’s still not where we want to be.”
Make no mistake, Steiner says – the folks at GigSalad still want to be wildly successful.
“Growth is fine and good, but it’s not first and foremost,” he says. “We’re just enjoying our autonomy, and for us, it’s enough.”
General aviation terminal expansion is set to wrap by August.