Deal with Surprise, Business Leader Advises
Accounting firm Bober Markey Fedorovich says everyone feels effects of down economy, but chance to grow remains
Published in The Akron Beacon Journal
By Jim Mackinnon
February 17, 2009
Photo by Mike Cardew of the Beacon Journal
As many in the nation discuss the merits, and await the outcome, of trillions of dollars in economic stimulus plans, a longtime Akron-area accounting firm is seeing firsthand how the global financial crisis is hurting large and small local businesses.
It also has suggestions on steps people can take now to get them through until better times return.
Bober Markey Fedorovich, celebrating the 50th anniversary this year of its founding, says most of its clients, of all sizes and in a wide variety of industries, had a decent 2008.
But others, said Rick Fedorovich, the accounting and business advisory firm's chief executive officer and managing partner, didn't fare so well. That proved true especially the last three months of the year, when credit markets froze and sent the then-recessionary economy collapsing, he said.
''It was like somebody flipped a light switch and suddenly it went dark,'' he said.
Fedorovich touched on numerous topics in a wide-ranging interview that covered the current state of the economy, what he thinks everyone can expect through this year and suggestions on how to cope.
No one is bulletproof in a down economy, Fedorovich said.
Declining economies manifest themselves in ways that a lot of people don't realize, he said.
When the economic times are bad, then people begin backpedaling to other areas that aren't their traditional expertise, but they need it to keep them busy, he said.
For instance, large construction companies that in good times never would have thought about bidding on small projects end up doing just that, he said. Medical specialists begin generalizing, while medical generalists might begin to offer more specialized services, he said.
''There's a lot of real subtleties to a down economy that people don't really appreciate,'' he said. ''You have people competing on jobs they never would compete on under normal circumstances. . . . That's why it gets very, very difficult in the marketplace.''
Businesses aren't just worried about the customers they sell to but also the vendors they buy from, Fedorovich said. That is especially true for businesses whose vendors have strong financial ties to the domestic automobile industry, he said.
''The issue with regard to stability of vendors has become much more of a significant issue for many of our clients than customers,'' Fedorovich said.
The Detroit automakers tend to be terrible to do business with on price and payment and can hurt a vendor that a client company depends on, he said.
''As a result, I have a great concern over whether this vendor will be in existence, to be able to supply me with this product, because they do 75 percent of their business with the Big Three [automakers],'' Fedorovich said.
To help clients cope, Bober Markey Fedorovich created a presentation with a basic message urging businesses to clean up their balance sheets — and also to look for opportunities to grow.
That's something the accounting firm practices itself, Fedorovich said.
''For us, 2008 was a good year,'' he said. ''We've tried to follow the same advice we give our clients in terms of how you run a business: Keep your balance sheet clean. We're a big believer in no debt. . . . We're headed into our 50th year and that's served us pretty well.''
About two years ago, when times were relatively good, the firm created affiliate BMF Advisors LLC to focus on bankruptcies, restructurings and related corporate finances.
At that time, bankruptcies were near an all-time low, Fedorovich said.
''Now we look like geniuses, right, because of what is going on with the economy,'' Fedorovich said. ''We're getting very busy in that space. . . . The switchboard is lighting up a little bit more now than it did before.''
Meanwhile, business has faded in the mergers and acquisitions that played a significant role in the accounting firm's growth the last five years.
One lesson is — no matter the economic circumstances — there are always opportunities, Fedorovich said.
And there's no reason to panic over tough times, he said.
''We don't consider that to be a strategy,'' he said. ''There is reason to be concerned.''
Fedorovich said he personally doubts the economy has hit bottom.
''I don't think we're there,'' Fedorovich said. ''I don't consider myself a clairvoyant on this, but personally I think 2009 is going to be a rough ride. . . . Hopefully, as we get to the end of the year, we'll start to see things shake back up again.''