Editor’s note: this is the first of a two-part series which explores how businesses survived or even opened and thrived during the recession which began in 2008.

Survival has been a key concept during the recession, particularly for anyone running a business.

Many entrepreneurs in Covington, Maple Valley and Black Diamond have survived since the economy bottomed out in 2008. So have larger employers.

Businesses still open today found out how to survive, how to be recession proof.

Derek Matheson, city manager for Covington, observed a trend during a conversation with MultiCare administrator Hugh Kodama which could explain why businesses in this part of the region have survived, even thrived in some cases.

“It strikes me that there’s a theme here that even though there’s been a recession the amount of growth here, the services hadn’t caught up with the growth,” Matheson said. “Certainly discount retail, Costco and Walmart did well during the recession, some specialty that didn’t exist out in this area for example sporting goods such as Big 5 did well and healthcare, not just Multicare, Accent Audiology, the new dental clinic on Wax Road (are examples). It’s services that had yet to follow the population growth to this part of the county.”

Covington, which its dense retail core in its downtown area, has seen significant growth in terms of its businesses. The city’s Finance Director, Rob Hendrickson, explained the growth in larger context to the Reporter via email in April.

For example, January sales brought in more than $228,000 in sales tax, according to data the city provided. This was a 16.5 percent increase compared to January 2011.

Hendrickson looked back to 2007 when revenue was flowing in from downtown businesses to the city’s coffers. More money came in that year than the year before and in early 2008 things looked better. Then in 2009 construction dropped nearly 73 percent.

From 2008 to 2010, Hendrickson wrote in an email interview in April, said total collection from all revenue sources were relatively flat.

Then in early 2011 growth began again in a number of areas.

And as more new businesses opened up in downtown Covington with MultiCare completing its emergency department in April, things should continue to improve in the city.

MultiCare, Kodama explained, has survived the recession thus far because there will always be a need for the services his organization provides.

“All businesses will be affected by the economic climate,” Kodama said. “Everyone is going to need healthcare. The challenge for us is how do you make it affordable for everyone. That’s the focus we have, how do you deliver high quality service while still reducing your costs, and I think that’s the issue for every business.”

One way to help reduce costs to help the community strive toward healthier lifestyles. It’s something officials at MultiCare spend considerable time working on, Kodama said.

“People are going to be more and more focused on the cost of healthcare because it will focus on your business and your pocket book,” Kodama said. “It’s just getting the community to rally around that, we need to be more healthy, we need to focus on prevention. As a society, as a nation, we need to tackle that.”

And even though it was an expensive proposition to put a clinic in Maple Valley, when Powell Development began making progress on its Maple Valley Town Center project anchored by Fred Meyer, it made sense for MultiCare to see if there was someplace it could fit in there.

“We wanted a bigger presence out there,” Kodama said. “We really wanted to build a pediatric clinic out there because it’s such a young population … so that became available and we went for it.”

In September a 10,000 square-foot MultiCare facility will open up in Maple Valley.

Lauren Powell, director of leasing for Powell Development, said getting Maple Valley Town Center off the ground wasn’t easy.

Yet, in some ways, the fact the project took seven years from start to finish thanks to a number of factors which had nothing to do with the recession, turned out to be an advantage especially after the economy took a downturn.

“That was in the works for seven years but the benefit of that was we got to know a lot of people in the community, in the city,” Powell said. “That really helped spread awareness about it. It didn’t hurt that Maple Valley didn’t have a lot of retail, so, there was a lot of demand.”

Powell said that it hasn’t gotten easier to find tenants for a large development such as the one in Maple Valley because it depends on which market a project like that is in.

“It’s still hard to attract tenants because it’s a lot harder for tenants to get financing,” she said. “It makes it a lot tougher for them to expand or relocate to new locations.”

By the time Fred Meyer opened in late May, 90 percent of the project was leased, and the extra time to ramp up was helpful because it allowed Powell to work with tenants to find the financing, to get comfortable with the costs of opening up.

“People in the recession… are much more cautious,” she said. “They’re taking the time to understanding the financing, what are the demographics. There’s not a lot of room for error so they really do their due diligence.”

Not long before Powell Development staff began working on Maple Valley Town Square, Powell said, the company completed work on Lakewood Crossings in Marysville. It’s slightly larger than the project in Maple Valley with three major anchor businesses in Costco, Target and Best Buy, but it has been a success.

That is an example of a need in the market as well as the importance of a good location. Powell said being in a highly visible spot off of Interstate 5 in an area where there was a dearth of retail helped that development survive the recession.

Tenants are renewing their leases at Lakewood Crossings at quite a high rate, Powell said, and one thing the company has learned during the recession is to start talking to business owners a year away from the lease ending rather than a month.

“It comes down to working harder doing the same thing,” Powell said. “Peter (Powell, owner) said he’s worked harder the last two years than he has in the past 10 just maintaining what we currently have because the tenants are struggling in the current economy. It’s buckling down and really communicating with the team at our office and knowing what’s going to happen before it comes down the line, looking out one or two years away at what is coming up for renewal.”

Across the street from Powell’s development of Maple Valley Town Center is Four Corner Square, owned by Indianapolis-based Kite Realty, and Johnson’s Home and Garden, one of the long-time tenants, has definitely seen its fair share of tough times during the recession.

Brad Johnson, one of the owners of the store, said there’s been considerable belt-tightening in the past three and a half years.

“Like everybody, we’ve had to really watch our expenses,” Johnson said. “We’ve trimmed back our work force through attrition primarily. We still have not laid anybody off but we didn’t re-hire positions. Primarily it’s just watching the checkbook to make sure what’s going out isn’t exceeding what’s coming in. As a hardware store it hasn’t been easy the past couple years.”

Johnson added that it’s been important for store employees to have a pretty diverse skills set within the business so that they can work anywhere within the business or even in another store owned by the Johnson’s on the same property, Quintessence.

Early on in the recession, there was an uptick in customers coming in looking to do home improvement projects because they couldn’t afford to sell their homes.

“When the housing market really went down and people are upside down in their homes and they’re losing them, then they’re not even repairing them,” Johnson said. “As more people get comfortable in their jobs being there next month and next year … those people might be more apt to repaint or do a small remodel in their homes. I still there’s probably enough people out there who are close enough to the edge that aren’t doing that.”

Throughout the recession, though, Johnson said one thing has consistently sold.

“This is just anecdotal, our bird seed, we’ve never had a bad month,” Johnson said. “So, the birds did good. It’s been a growing department.”

MORE LESSONS FROM THE RECESSION

Dace Anderson, founder of Dace’s Rock ‘n’ More in Maple Valley, said it was tough but they did everything they could at the music school to help students out.

“In 2008 and 2009, when the recession really hit, we didn’t have our 501c3 (non profit status),” Anderson said. “People were coming in and saying they had to quit because they’d lost their jobs. We just said, ‘Just keep taking lessons and don’t worry about it.’ At that time we weren’t doing the fundraising and getting the grants we can get now.”

Arielle Young, who like Anderson teaches music lessons as well as helps run the school which also has a location in Redmond, said there was one thing they did to help people continue taking lessons.

“Something that we did to retain students who couldn’t afford to take lessons is that we made it really clear to everyone that we could help them with tuition,” Young said. “What happened is those people stayed and now they’re paying full tuition again and their whole families are coming here, too.”

While that may have stalled the growth of their music school, Anderson said, they hope to rebound from the recession.

Even though it’s a non-profit, they have to keep an eye on their bottom line at Dace’s Rock ‘n’ More, something not all businesses do explained Jeanine Pfeiffer, an accountant from Maple Valley with 20 years of experience.

Pfeiffer offers a wide variety of accounting services ranging from setting up accounting records for business owners who have no clue how to do that to managing those records to basic bookkeeping to explaining how to use accounting software to business owners so they can manage their own records. She also does taxes and has worked for a wide variety of businesses.

“The most important, as far as helping businesses during the recession, helping them to understand really where they are at to make better decisions on their bottom line,” Pfeiffer said. “I’ve seen where (owners) have no idea what it means. Once they see those numbers are there … they go, ‘OK, now I can make better financial decisions. Now I can manage the business better.’ If you don’t do it, and you’re running blind, it’s difficult.”

Helping business owners understand how much they’re spending and how much cash is coming in so they can be aware of the bottom line is one area Pfeiffer helps entrepreneurs. She can also review their taxes and help owners find ways to save money there.

“There’s different little tools and tricks that I’ve done to see the full picture of their finances and to know where to go … to guide them in a better way,” she said. “You have to have it organized because that’s what makes thing more efficient.”

Pfeiffer recently put out a book called “Accounting Is Not a Foreign Language” to give entrepreneurs the basic tools they need.

“It teaches you how not to be afraid of accounting,” Pfeiffer said. “I have a specific kind of approach that it is in the book that talks about how everything relates together and builds on a foundation and without those things everything falls apart.”

Rather than hire an accountant, Pfeiffer said, the book helps readers gain confidence in the basics of accounting so they can do it themselves while saving money running their businesses.

Each chapter has a summary to help readers retain the information as well as plenty of visuals in the forms of charts and graphs.

In the long run, business owners can have a better bottom line, Pfeiffer said.

More information about Pfeiffer’s book can be found online at www.basicaccountingtranslated.com.

In the end, businesses that survived the recession whether they got help from someone like Pfeiffer or learned the hard way, found a way to offer services or products to customers at a price they could afford.

“If they can see they’re providing value for their family, then that can be recession proof for a business,” Kodama or MultiCare said.

Annette Cyr, who owns the Kid to Kid franchise in Covington, knows something about the importance of value.

“Kids don’t stop growing during a recession,” Cyr said. “If you pay attention to the quality of items that you’re buying and selling, people gain confidence in you and shop there for one or two or three kids … we become their main source.”

Cyr’s business is a prime example of what it means to be recession proof even when opening up in the middle of a recession.

More on that next week in the second part of Recession Proof Businesses.