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Businesses need to be patient and persistent

David Neilson makes furniture to last, assembling pieces of wood in a way that guards against wear.

If only the economy were so solid.

Neilson's 49-year-old company, Stuart's Fine Furniture in Ceres, is one of many longtime businesses that are enduring the Great Recession.

"Last year was a real scary year," said Neilson, who has trimmed his work force from about 75 to 40 since 2008 and taken other steps to hang on. "Business is pretty much holding. We hope to be a little bit better."

Neilson and other experienced business owners advise patience to people who wonder if good times will ever return. Companies can trim expenses, update their business plans and look for new ways to serve customers.

"I think the success of small business is being nimble in this economy, responding to needs in this economy," said Kurtis Clark, director of Alliance Small Business

Development Center in Modesto.

The national recession is easing. Not so the downturn in the Northern San Joaquin Valley, where a plunge in home prices starting in 2006 brought widespread job losses. They started in construction and real estate, then spread to retail, restaurants, government and other sectors.

One in five of the region's workers is unemployed. One in seven homes has been lost to foreclosure since 2006.

Not the best of conditions for a company such as Stuart's, founded as Stuart's Cabinet Shop in 1961 by Stuart Neilson, David's father.

The company aims for the "upper middle" of the market, customers who are willing to pay extra for furniture that lasts a long time, David Neilson said. It is made with lumber and plywood from the hardwood forests of the eastern United States, a U.S.-made product in an industry flooded with cheaper imports.

"That's probably our biggest strength -- people see the value, the longevity of it," Neilson said.

Volume down, not quality

During the hard times, he said, the company has relied more than ever on its "just-in-time" process for filling orders, which reduces the cost of carrying inventory.

Volume is down at the plant, he said, but not the attention to quality. Amid the whir of machinery and the scent of sawdust and paint, workers turn oak, cherry and other wood into tables, desks, beds, buffets and more.

Neilson said he learned about survival in the recessions of the early 1980s and early 1990s. "My advice for those not familiar with them is that they end," he said.

Clark, at the small-business center, advises owners to not assume that they can rebound quickly to the conditions of 2005, when the region's jobless rate was mostly in the single digits.

"As big as the hole is, it's going to take awhile to fill it in," he said.

Clark suggests that companies revamp what they offer. He cited a center client that supplies tents for special events. Customers wanted smaller tents, he said, and the company responded.

Clark said businesses can ask for leeway on rent payments to landlords or on payments to suppliers. It helps to show these people a plan for how the business eventually will come out ahead, he said.

Give customers a break

Clark suggests that businesses offer discounts for prompt payment, which reduces the income somewhat but guards against customers never paying.

SCORE, formerly the Serv-ice Corps of Retired Executives, also advises businesses on how to beat the recession. This includes creating or updating business plans, which spell out a company's expected market, income, expenses and other details.

"If you are operating your business without a business plan, you are steering your ship without a rudder," said Phillip Coffman, chairman of the SCORE chapter serving Stanislaus, Merced and Mariposa counties.

Coffman, who was an executive with Lockheed Aeronautical Systems Co., said struggling businesses should contact old customers with new offers.

"The customers who know you are your best prospects for new business," he said.

Companies should be careful when considering discounts to spur sales, he said, because customers might not be pleased when the prices go back up. He said businesses should trim hours for employees before resorting to layoffs.

Employees matter

"The difficulty with that is the employees you lose are probably not going to be there when things start to get better," Coffman said.

Neilson said his longtime employees are essential to turning out well-made furniture.

"Our main emphasis is on maintaining the high level of quality that we do," he said, "and not letting this slowdown affect our mission, which is to continue to make a really nice product."

Bee staff writer John Holland can be reached at 578-2385 or jholland@modbee.com.

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