Struggling With Success

WANTED: REALLY COOL PEOPLE. There's more to life than a job. Experience the difference between loving work and living work, where your sense of humor and family life are truly valued as much as your abilities.

That isn't an ad for a 12-step program for workaholics. It's an act of employer desperation. Steve Loegering, president and CEO of Loegering Manufacturing, ran the pitch to attract workers to his firm in Casselton, N.D., 20 miles west of Fargo, in what Loegering jokingly labels the state's "tropical corner."

It's not that business is bad for Loegering, which makes over-the-tire tracks for front-end loaders like Bobcat vehicles. On the contrary, the firm has revenues of just under $25 million; 50 employees are working flat-out, and Loegering wants to hire 10 more in the next year. But in the Fargo area the unemployment rate is a teensy 1.4%, and finding good help is no small task. Last year Loegering's traditional newspaper ads drew only 15 to 20 resumes apiece, even for upper-management positions with competitive salaries. That's when Loegering decided to "step out of the box" to start getting noticed. The company's new ads, running in newspapers and on the Internet, get 450 to 500 responses each.

Loegering is not alone in having to look for new strategies to thrive in the turn-of-the-century economy. Business is booming across America, but small business is not doing--and cannot do--business as usual. Start with the search for workers. Unemployment has dropped nationally from 7.8% in June 1992 to its current 4.2%. Add to that the challenges of meeting tough demands from Big Business customers, avoiding the pitfalls of e-commerce and financing a fledgling firm without losing control, and you've got a climate for small businesses that is at least as challenging, and sometimes as fatal, as a sharp business downturn.

How they manage is important for the whole country. Small businesses (those with fewer than 500 employees) make up roughly 90% of all U.S. businesses and employ 55 million Americans. According to the Bureau of the Census, 99.9% of enterprises that are born and buried each year are small firms. And the challenges to a long life expectancy are growing. While the gross domestic product of the U.S. was up 3.8% in 1997, the U.S. Small Business Administration reports that business failures increased 15.9% that year, to 83,384--the highest level since 1993.

As Loegering's story illustrates, hiring and keeping employees is perhaps the biggest challenge to small businesses today. In a survey conducted last month by the National Association of Manufacturers, 83% of respondents said they found it extremely difficult to find and retain employees. The problem is as much quality as quantity. Says Giovanni Coratolo, director of small-business policy at the U.S. Chamber of Commerce: "The No. 1 challenge of small businesses in this marketplace is hiring those who have a certain amount of education."

The sister problem of hiring good employees is keeping them. Fattening employees' paychecks is not always enough to get them to stay. Says Arnold Sanow, a small-business strategist and author of Entrepreneur Boot Camp: "Money is important, but you can get a job anywhere today. Why stay where you're not appreciated?"

That's a sentiment Loegering understands well. "We want our employees to have fun," he says. Loegering has gone to great lengths to keep his employees in good spirits, by such measures as requiring teamwork training, installing lighting that mimics sunlight "so that mood is affected" and instituting a carefree company dress code (business casual every day; floor workers choose to wear uniforms). In addition, Loegering offers generous salaries and benefits that include full medical, dental and vision coverage. "Once we get them in the door, keeping them is not a problem. We walk the talk," he boasts.

Most small businesses are not so lucky when it comes to providing health care. Kathie Rothschild-Zuroweste, who with her husband owns the Colony House, a family-style restaurant that seats 68 in New Haven, Mo., says she lost one of her best employees last month because she could not afford to offer her health coverage. The employee took a job at a factory willing to provide her with a comprehensive benefits package. Rothschild-Zuroweste says she has shopped around to determine how much it would cost to cover her three adult employees (most of her help are part-time teenagers). The conversations were not promising. "We're having a really good year," she says. "But to add this money onto our payroll every month would blow us out of the water."

Help may be coming. Included in the Quality Care for the Uninsured Act, a Republican-sponsored bill that passed the House Oct. 6, is a provision that would allow small businesses to get better rates for care by latching onto plans that could be provided by existing groups like the National Restaurant Association or the Chamber of Commerce. Says Jim Talent, chairman of the House Small Business Committee and a co-sponsor of the bill: "There are 44 million uninsured Americans. About three-quarters of them either own a small business, work for a small business or have family who are employed by a small business. If FORTUNE 500 companies can do this, why can't small-business owners band together and do it too?" Conservatively, Talent claims, the association plans could reduce costs to small businesses 10% to 20%.