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NEW YORK (CNNMoney.com) — Small companies shed another 25,000 jobs in December, marking the 23rd consecutive month of cuts, according to a report released Wednesday by payroll-processing firm Automatic Data Processing.

The silver lining is that December’s pink slip count was the lowest since July 2008 for small firms, those with 50 or fewer workers. In one sector, the job pool actually grew: Service-oriented small businesses hired a net 11,000 workers in December.

«If recent trends continue, private employment will begin rising within the next few months,» said Joel Prakken, chairman of Macroeconomic Advisers, in a written statement. ADP’s (ADP, Fortune 500) monthly data is seasonally adjusted, meaning that the pop in hiring at small services businesses was not limited to extra Santa Clauses.

Still, the nation’s smallest companies cut 1.8 million jobs last year — almost 40% of the 4.7 million positions lost, by ADP’s estimates. In a speech days after the jobs forum he convened at the White House last month, President Obama emphasized the key role small companies play in spurring economic recovery.

«Our work is far from done,» Obama said. «Even though we’ve reduced the deluge of job losses to a relative trickle, we are not yet creating jobs at a pace to help all those families who’ve been swept up in the flood.»

There are hurdles making it hard for even the most ambitious small business owners to start hiring again. Alicia Lingenfelser co-owns a Dallas construction business with three partners. They want to expand, a move they estimate would create work for more than 100 people. But they’re struggling to find a bank willing to gamble on lending them the money.

The obstacles: Lingenfelser was a witness at a Senate hearing last month on the grim lending conditions facing small businesses. She and her partners own 4D Equipment & Services LLC, a concrete truck leasing firm. They want to expand the business to include a gravel and sand supply pit.

«If funded, work would begin immediately, and the mine could be opened in six months,» Lingenfelser told the Senate committee. An estimated 104 workers would be needed for the construction — electricians, welders, plumbers, heavy-equipment operators, factory technicians, and manufacturers. Afterward, the new plant would require a full-time staff of at least 14 new employees, Lingenfelser said.

The four entrepreneurs, all women, need $3.3 million in financing. Chase (JPM, Fortune 500) provided the startup loan that initially launched 4D, in 2006, but this time around, the bank refused to even meet with the partners. Another lender, Frost Bank of Texas, killed their application early because it views the entire construction industry as too risky to finance right now.

Two banks — Wells Fargo (WFC, Fortune 500) and BBVA Compass Bank — are still in talks with 4D’s owners. As of this week, however, 4D still had not obtained the financing it needs.

Lingenfelser wants Washington’s policymakers to stop brainstorming about solutions and start taking action.

In October, President Obama proposed lifting the current cap on the size of loans that can be backed by the Small Business Administration, which currently stands at $2 million. Lifting that cap to $5 million, as Obama and several members of Congress have suggested, would help 4D with its expansion.

«Both Compass and Wells Fargo seem very interested in working with us and helping us, but we all know that cap is a problem for us,» said Dena Bartnicki, another of 4D’s founders. The proposal to raise the SBA loan limits is currently stalled in Congress.

Co-owner Lingenfelser said that she knows the problem is not limited to just her and her firm.

«We keep hearing from Congress and the President, we have to get small business back in line, back to work. You keep hearing it, but what you don’t see is that you don’t see them doing anything about it — yet,» she said. «It is not enough to sit back in a chair and say ‘here is a problem.’ You have to do something about the problem.»

(CNNMoney.com) — In 2001, Matt Chasen’s mother wanted to send an antique dresser from Ohio to Texas, but was staggered when she received a $1,000 shipping quote — far more than the dresser was worth. Unable to find a cheaper option, she never sent it.

One year later, Chasen reserved a nine-foot truck to move from Seattle to Austin. When he arrived at the rental center, the only one left was a 20-footer, so he took it. Standing in the back of the cavernous vehicle, he thought of his mother.

«I thought, ‘Wow I wish I could have gotten in touch with people with half-empty trucks to move my mom’s dresser,’» he recalls.

The idea: Inspiration hit Chasen, 34, like a Mack truck. Why not create a sort of eBay (EBAY, Fortune 500) for shipping, a Web site that would make the process cheaper and more efficient by taking advantage of all the empty trucks on the road?

Chasen’s wife told him it was the dumbest idea in the world. Undeterred, he brought the concept to McCombs Business School at The University of Texas, where two of his classmates — Jay Manickam and Mickey Millsap — later joined him as co-founders of uShip. In 2004, they launched the site, which solicits shipping requests from the public and lets freight companies with extra space bid for jobs. UShip earns a 10% transaction fee for each delivery.

That spark of an idea has gone on to save thousands of dollars for people like Jerry Eldred. The 52-year-old stumbled upon uShip during an online search after he received $7,000 quotes from big moving companies to move his two cars and his household possessions from Fremont, N.H., to Austin, where he got a new job. Eldred found uShip and then found a New Hampshire driver with an empty truck who moved everything for $3,800.

«You have to do the homework yourself but it makes it much easier to find a deal,» says Eldred.

The risk: Not everyone wants to help people like Eldred or Chasen’s mother. Many drivers simply aren’t interested in the hassle of picking up and moving a bunch of random stuff, whether it’s a broken-down bulldozer or grandma’s piano, suggests Tim Barton, CEO of Freightquote.com, an 800-employee Kansas City company that also offers competitive bidding and brings in $400 million in annual revenues.

And uShip faces another quandary: in a weak economy, Chasen can expect plenty of excess truck capacity, but fewer people who want to ship, while good times will bring the reverse, explains Kevin Sterling, a transportation analyst at BB&T Capital Markets. «They’ve got to manage that,» he says.

The reward: While bigger players like Freightquote.com and CH Robinson Worldwide may be ideal for the shipping needs of large companies like Wal-Mart (WMT, Fortune 500), uShip may be a good fit for small businesses and individuals who are unfamiliar with the trucking industry, suggests Sterling.

«The need is there,» he says. «Small businesses may not have access to a large truck broker, and uShip is probably a cheaper alternative.»

Although Chasen initially thought uShip would be used to mainly ship household items like his mother’s dresser, the listed items have ranged from a warehouse full of a million baseball cards to military tanks, boats and airplanes. The 50-employee uShip has grabbed investment dollars from Benchmark Capital — the venture firm that took a $5 million gamble on eBay back in 1997 — and estimates that it doubled its annual revenues in 2009, to approximately $6 million.

Since uShip launched six years ago, shippers have paid more than $125 million for services brokered by the company. Nearly 900,000 listings have been posted to the Web site, attracting bids from tens of thousands of transport companies.

NEW YORK CITY (Fortune Small Business) — Coco Chanel once described fashion as a «fickle business.» In today’s recession the statement rings especially true. With more than 20 years’ experience, including senior design posts at Gucci and Ralph Lauren, Icelandic women’s wear designer Steinunn Sigurd understands the rag trade’s capricious nature.

In 2000, while working as European design director at La Perla in Bologna, Italy, Sigurd withdrew $10,000 from her savings account and returned to her hometown of Reykjavík to launch her own collection, Steinunn. Nine years later Steinunn generates more than $1 million in annual revenues, selling from the brand’s flagship store in Reykjavík and in 24 high-end, multidesigner boutiques around the world, including Takashimaya in New York City and Stil in Boston. The look is simple and edgy, in shades of mostly black and gray, inspired by the Icelandic landscape; pieces in the line range from $85 scarves to $900 dresses.

Sigurd, now 46, is a leader in Reykjavík’s vibrant arts community. She has dressed the first lady of Iceland and won several Scandinavian design awards. But outside Europe her recognition is low. She says she has always had trouble persuading boutique owners to buy more than just a few items per season and fears that her company has nowhere to go without wider brand exposure and a major expansion in the American market.

Sigurd would like to open Steinunn stores internationally in the next five years — ultimately branching into men’s and children’s clothing, as well as into handbags and home accessories — but she lacks the capital and the industry clout to achieve that goal.

To help Sigurd assess her options, Fortune Small Business recruited three experts to meet with the designer one-on-one in her Manhattan showroom. Alana Varel, chief operating officer of international public relations firm Starworks, based in New York City, represents such indie fashion brands as Agent Provocateur and Temperley London and promotes «celebrity product placement,» code for getting stars to wear certain designer labels to events.

«Celebrity is the current trading commodity,» says Varel, 37. «We live in a who-wore-what-obsessed age.»

In the past five years, she says, such celebrity-focused magazines as People (published, like FSB, by Time Inc.) and Us Weekly have surpassed Vogue and other fashion bibles in shaping consumer spending and demand.

«When designer items appear in those weeklies, they sell out,» she says. «Immediately people want to know: Who made that? Where can I buy it?»

Appealing to actors and musicians is also a fairly easy (and cheap) way to build buzz. Varel urges Sigurd to begin exploring relationships with celebrities — in the U.S. and Iceland — either through their publicists or stylists or by hiring a public relations firm that can facilitate contact. When choosing a public relations firm, «you don’t want to be the smallest brand at the biggest firm,» Varel advises. «And require any PR firm you work with to create a yearly plan broken down into three-month increments.» You should be able to see significant, quantifiable progress at the end of each quarter. If not, move on.

«Do you ever work with Icelandic personalities?» Varel asks, pointing to the alternative rock band Sugarcubes and to actress Anita Briem, until recently on Showtime’s The Tudors, whose success has spread beyond their homeland.

Sigurd replies that because those celebrities are friends, she feels awkward asking them to promote her products. Varel reminds Sigurd that the deal would be mutually beneficial: Outfit Briem for her next six public appearances and the actress will have six beautiful new ensembles. Steinunn, meanwhile, gets great publicity. Varel also suggests that Sigurd open a Los Angeles showroom, increasing her U.S. visibility while reaching an entirely different cast of people, including VIPs’ personal stylists.

Alissa Emerson, co-owner of New York boutique Edit, is up next with advice on securing good retail placement. Emerson, 38, has 20 years’ experience as a buyer, and her Upper East Side shop sells about 70 brands, from up-and-comers like Martin Grant to mainstays like Michael Kors. She says she receives 20 to 40 solicitations daily from labels looking to sell in her store.

Emerson admits that new or lesser-known designers pose risks, even for well-established boutiques. «Customers must be educated to understand the value of what they’re paying for, or else they won’t go for it,» she says. Media attention can help, as can celebrity fans.

But a designer can also increase credibility on her own, without spending a ton of cash. She urges Sigurd to begin holding one-day trunk shows and clinics at the stores that carry her line. Many of the designers that Edit stocks do this to educate salespeople about their brands and the best way to sell them. Better sales, of course, will encourage a store owner to buy more pieces next season. Trunk shows will also help familiarize Sigurd with her individual markets and enable her to choose fabrics and cuts that will appeal to customers outside Iceland. Emerson’s patrons, for example, shy away from heavy fabrics. But in chilly Reykjavík, Sigurd’s clients embrace them.

Sigurd has avoided apparel industry trade shows, which are expensive and time-consuming, but Emerson encourages her to reconsider. «Even though they’re exhausting, after a few seasons people start to recognize and trust you,» she says. Emerson regularly attends shows in New York, Paris and Milan, and adds that a majority of buyers from the better American stores do as well.

Emerson advises Sigurd to narrow her design focus — at least until she’s more established. «Most multibrand stores will buy for one specific demographic, so it might be worth considering a capsule collection: just knitwear, just dresses or just for stores in the American Northeast,» she says. A collection in lighter fabrics, for example, would allow Sigurd to maintain her aesthetic while appealing to women in warmer climates.

Ketty Maisonrouge, a professor of marketing at Columbia University and a communications consultant for luxury companies planning U.S. expansion, including Hermès and Lalique, suggests that Sigurd could most effectively weather the recession by expanding her own stores.

«A luxury brand is all about building consumer trust,» says Maisonrouge, 53. «During this recession, that trust is being questioned.» By opening new branches mostly through her own boutiques, Sigurd’s brand might not grow as fast as if she were to seek placement in big department stores, says Maisonrouge, but she will be better able to control her image.

But Sigurd is worried about money — and time. As the head of a four-person company, she does everything from design garments to ship packages. «The bottom line is that in order to expand you need a CEO,» Maisonrouge says, «and for that you need more capital.»

She encourages Sigurd to seek out investors immediately. Despite the economic climate, «there will always be investors for designers with proven talent who simply lack the capital to get to the next step,» Maisonrouge says.

Sigurd admits that she feels the management void but has been reluctant to cede control. «As a designer, doing everything yourself is impossible,» she says. «But emotionally it can be easier.»

In the meantime Maisonrouge advises Sigurd to try retail expansion by establishing pop-up stores: short-term boutiques in vacant retail spaces (which have grown more common during the recession). «A pop-up requires a relatively small investment and can teach you a lot about your target markets,» Maisonrouge says.

She adds that Sigurd could approach other Icelandic artists, chefs or furnituremakers who might want to showcase their offerings alongside Steinunn’s. «You could create a lifestyle around the brands while also giving the media a reason to talk about you,» she says.

Last, Maisonrouge wants to discuss the Steinunn Web site. «It doesn’t say enough about you as a person,» she says. «Let people know who you are and what your passions are. And most important, provide a list of stores where they can buy your clothing.»

Maisonrouge advises doing this sooner rather than later. «In the U.S., e-commerce is gaining market share, even in the recession,» she says. «It’s not too risky or expensive. You only need a good Web designer and enough items to sell.»

A few weeks later Sigurd is tackling many of the experts’ suggestions. She has met with a few graphic designers about revamping her site and has spoken with Manhattan real estate agents about possible pop-up locations for the fall.

«I’m hopeful,» she says. «Before the Makeover I had no idea whether to expand the business or keep it small and intimate. I think I’m ready to take it to a grander level, and for the first time I understand the components needed to do that.»

FSB will follow Sigurd’s saga and tell you how she fares.

RICHMOND (Fortune Small Business) — Outside a brick building in a drab industrial neighborhood at the edge of town, a kaleidoscope of color flashes in the early sun. It’s the lineup of scooters that marks the location of Scoot Richmond. Inside, owner Chelsea Lahmers bounds around the store’s large, open loft space answering questions and adjusting displays. Her short red hair is tousled from her scooter ride to work.

Before opening Scoot Richmond in mid-2007, Lahmers, 32, ran a mail-order business that specialized in vintage scooter parts. «It was nearly impossible to make a profit in mail order,» she says. «All my money went into inventory.»

She phased out that business when she opened Scoot Richmond. Today the retail store sells two brands of new scooters, Genuine Scooter and SYM Scooters, as well as stylish scooter accessories and vintage scooters dating from the 1960s through the 1980s. The company’s repair shop handles mostly new scooter maintenance, although each year it makes use of Lahmers’s remaining vintage parts inventory to perform about five time-consuming restorations of engines and bodies on old scooters.

In 2007 Lahmers sold 50 scooters at an average price of $3,400 (customers typically spend an additional $200 to $1,000 per scooter on accessories). Last year she sold 378 scooters, thanks largely to rising gas prices.

«We had people coming from Rhode Island to buy them,» she marvels. Sales reached $1.1 million in 2008, up from $279,000 in Lahmers’s first six months of business in 2007.

But she also hit some serious bumps.

For starters, Lahmers says, a former employee embezzled at least $50,000 last year (a criminal investigation is pending). In the wake of that setback, she isn’t sure how best to restructure the books or track financial operations.

Understandably, she also worries about hiring. She needs help establishing a reliable interview and evaluation process that will let her spot issues that could cause trouble down the road.

In addition, Lahmers wants to expand her customer base. She currently draws a funky urban clientele. She would like to add suburbanites to the mix, but she doesn’t «know who these people are or how to reach them.»

Ready to confront these issues, Fortune Small Business’s experts assemble at the shop before opening time on a recent Tuesday. After a tour of the retail floor and the repair facility, everyone gathers in the back room around a table surrounded by shelves stacked with cardboard boxes full of spare parts. Lahmers’s mother, Jean West, who owns 5% of the company and is working to clean up the books, is also present.

Lahmers starts by telling the group she has spent the past year trying to untangle the financial mess resulting from the alleged embezzlement. The experience undermined her confidence, Lahmers says. To add to her frustration, no arrest has yet been made, though a warrant has been issued in the case.

Expert No. 1 is David Wilson, a laid-back entrepreneur who owns BikeBeat, a chain of four bicycle shops in Williamsburg, Va. Speaking of fraud, Wilson mentions that he’s had customers who wrote bad checks.

«This is a felony, so be aggressive,» he says. «Go to the police department and make a friend in the white-collar crime department.»

Lahmers also wonders whether she’s managing her current employees effectively. She sometimes hangs out with them at store-organized rides and other events. Is that kosher, she wonders?

Wilson, 56, replies that it’s okay to socialize with employees occasionally, but he warns Lahmers that she should always act like the boss. During job interviews, for example, she needs to stress that she’s running a company, not a playground. «Your business and mine are similar in that there are slots where eccentric employees can fit in,» he says. «But those aren’t the personalities to build your business around.»

Wilson suggests interviewing each candidate several times, to make sure they’re punctual and answer questions consistently. He urges Lahmers to be all-business during those meetings.

«It’s better to overstate your values and standards prior to hiring,» he says. «Folks who aren’t business-minded might be scared away — and you don’t need them.»

Wilson mentions that he asks all job candidates to assemble a bike because it shows him how they handle a challenge. Lahmers likes the idea, but she isn’t sure how it could translate to scooters, which are mechanically more complex than bikes. «Maybe we could have them do an oil change or something,» she says.

Next up is Deb Angstadt of the Richmond management consulting firm Warren Whitney & Sherwood. When Angstadt, 49, asks which segments of the business are most lucrative, Lahmers looks to her mother. It turns out neither Lahmers nor West is sure where the highest profit margins lie.

Angstadt then asks whether the company’s restoration projects are profitable. Although Lahmers thinks they are, she doesn’t track the hours her employees spend on them. Angstadt pushes, «So, are they a profit center or a marketing expense?» Definitely the latter, Lahmers says after a while.

The only way to learn which business segment is most profitable, Angstadt says, is to create two sets of books — one for repairs and another for retail sales. She recommends that Lahmers start by separating the two revenue streams using her QuickBooks software. She should then go through all line-item expenses to see which ones belong in sales and which in service. For example, Lahmers might need two inventory categories for oil entries — one for retail sales and another for oil used in repair jobs.

«If a shop employee runs into the store to grab a quart of oil when the shop’s supply is used up, you ’sell’ it to him at cost,» Angstadt explains.

To determine how profitable Scoot Richmond’s repair jobs are, Lahmers must track not only the cost of the parts used to make the repair, but also the time that each worker spends on every job. Although Lahmers likes the suggestion, she laments that her repair-shop employees aren’t meticulous about noting their hours (or their oil use).

Both Angstadt and Wilson suggest she offer the head technician a bonus to encourage good performance and precise recordkeeping. How? Let him know that he’ll get a bonus if his department performs a certain number of repairs within a specified time frame or if he ensures that employees file time sheets promptly.

Once Lahmers identifies where her company is spending its money, she has to figure out how to boost revenues. Caley Cantrell, a marketing professor at Virginia Commonwealth University’s Brandcenter in Richmond, is ready with advice. Cantrell, 47, is pleased that Lahmers uses Twitter and Facebook to promote shop events (Lahmers says she has personally sold four scooters through Twitter) and that she works her customer database by making phone calls to suggest services. But she could be doing much more.

Cantrell points out that Scoot Richmond has a potential market of 25,000 students at Virginia Commonwealth University. She advises Lahmers to target them with a flyer that lists «five scooter selling points to discuss with your parents.» Lahmers could also park a scooter next to a table at course registration.

To reel in suburbanites, Cantrell recommends buying ads in newsletters that target community and recreation centers. The ads could point out that scooters are a great way for a 17-year-old to get to the pool or tennis practice.

Lahmers could also consider donating a scooter — or selling one at cost — to be auctioned to benefit two area private schools, both of which hold popular fund-raising events in Richmond’s suburban west end.

«Make a list of what you’d want in return,» Cantrell says. For example, Scoot Richmond might request that its logo appear in the program or that all attendees receive promotional flyers in their goodie bags. Lahmers should also ask for free tickets so she can attend the events with staff or key customers.

«Tweet that you’ll be at the fund-raiser, then make friends with the event photographer and get your picture on the benefit Website or in the local paper,» Cantrell suggests.

Two weeks later Lahmers reports that she has already made a new hire. «I’m more serious when it comes to disciplining him,» she says, noting that when the new guy showed up late for work one day, she sent him home without pay. Lahmers has also made a list of organizations to contact for charity auctions and has begun recording both parts and employee time used for warranty repair jobs so she can better track costs.

We will check back to see how the rest of her plans unfold.

NEW YORK (CNNMoney.com) — Restaurateurs who defy the odds and launch an eatery that survives its first few years face a new challenge: How do you keep an aging business feeling fresh?

That’s the issue Terry Carr-Hall is confronting at Provence Breads & Cafe in Nashville, which recently celebrated its 13th birthday. The high-end French bakery in a trendy, high-traffic section of the city is weathering the recession fairly well: Carr-Hall expects only a small dip this year in his typical annual sales of $3.5 million.

But he can’t help the nagging feeling that his business could be doing more — a lot more. «I’m really hoping to recapture the business,» he says. «It’s lost some of its charm.»

Provence Breads is starting to show its age, Carr-Hall feels. The entire place could use a physical makeover, from curtains to cafe chairs.

Then there were the business decisions that didn’t turn out exactly as expected. The major one was a decision to move the bakery’s oven off-site to accommodate better, large equipment and growing volume. It’s something Carr-Hall laments to this day — even though it made for a higher-quality product.

«The business changed,» he says. «People used to look through the glass and see us pulling out the bread.»

To help Provence, CNNMoney.com called on three experts, each with deep experience in the issues Carr-Hall wants to tackle most: entrepreneurship, marketing and corporate social consciousness.

First up is Lawrence Gelburd, a lecturer at the Wharton School’s Entrepreneurial Management Program at the University of Pennsylvania.

Revamping a physical space can be done on the cheap — and it can double as a marketing move. Local design students may jump at the chance to showcase their work. Hold focus groups with customers and designers to get fresh ideas, luring them with free bread and pastries, Gelburd suggests. With a fun angle, Provence could easily pique the interest of the local press and garner publicity.

«I think it’s a huge opportunity,» Gelburd says.

It’s all too easy for a more mature company, especially one that is doing well, to lose its startup energy. Owners need to weave innovation into their day-to-day operation, he says. Hold weekly brainstorming meetings with senior management, and ask everyone to come up with goals for the company and strategies for executing on them.

Gelburd bubbled with ideas during just one quick, off-the-cuff brainstorming session:

– Sell related, high-margin products you don’t already carry, and involve the community in the process. «You could have a designer come in and work with wine and cheese,» he suggests.

– Incorporate live video into the Web site showing the bakers at work. «Like the changing of the guards at Buckingham Palace,» Gelburd says. «The changing of the loaves.»

– Partner with a bakery in Paris.

– Initiate food tours of Nashville. «I’m sure there are music tours,» Gelburd says. «Create a relationship.»

Above all, he says, «think outside the oven.»

Gelburd’s ideas resonated with Carr-Hall.

«More than ever this year, it became evident to us that the bread is what it’s all about,» Carr-Hall says. «We became heavy participants in everything local — we’re very involved in the Slow Food movement. We have a constant parade of farmers, with beat-up trucks, coming up to the back of the cafe.»

That «back-to-basics» realization is exactly the right path for Provence, says our second expert, marketing and branding consultant Lori Martinek, who was already familiar with the business from visits to Nashville.

«These people are exceptional bakers — they do it well,» she says. Provence breads or pastries are considered «the perfect thing to pick up on your way to a party.»

Martinek would like to see Provence capture more of its artisanal bread flair on its Web site. «Bread is an experience — focus on it,» she says. «You want to make their mouths water.»

Carr-Hall agrees, circling back to the issue of moving the oven off-site: «We need to bring it back to the village and recreate the whole theater and atmosphere of having bakers pull it out of the oven.» Our expects all agreed that would be a good move, and Carr-Hall resolved to find a way.

Martinek also wants Carr-Hall to delve deeper into his Web strategy. «If they are promoting online ordering, it’s absolutely essential» to have a stellar online reputation, she says. «They can blog, they can encourage happy customers to make comments. The Web site is good, but a little boring. I want them to tell me more about the bread. It’s all about the bread and the experience.»

Martinek’s next piece of advice illustrates how business owners sometimes have to sacrifice art for commerce. She zooms in on Provenance’s offering for its lunchtime rush crowd: Sandwiches that are wrapped in plastic and stockpiled in advance, rather than made to order. That goes against the shop’s artisan image. «Don’t over-corporate it,» she warns.

But Carr-Hall has already wrangled with that problem. «We tried [made to order],» he says. «We thought they wanted it their way, but the interesting thing is most customers just wanted it pretty quickly — they didn’t want to wait. So we ended up devolving into pre-made. We make it known that it was made no longer than four hours ago.»

As befits a shop that focuses on baking from scratch with sustainably grown ingredients, Provence has a socially conscious streak. The bakery regularly donates bread to the homeless and hungry and raises money for other causes, such as pediatric cancer. Carr-Hall credits part of Provence’s philanthropy to the passion of the university students that make up so much of the shop’s employee roster and customer base.

For companies that want to take their giving further, the key is to focus on a cause — something to rally employees and the community around, says Maggie Keenan, a strategic philanthropy advisor.

«Businesses always look at [philanthrophy] in terms of cash and hours,» she says. «But who has that these days?» Instead, focus your efforts: «You want to create an authentic and compelling message to the community to say ‘we are behind this social issue 100%.’»

The obvious cause for any bakery is hunger, but it could be anything of social value that resonates with the owner and staff. «Just brainstorm — and think ‘fun’ and think ‘engaging,’» she suggests. «Ten different businesses could come up with wildly different and fantastic things.» She suggests Provenance think about its customer community: How can they be drawn into the philanthropic effort?

And whatever new projects or campaigns the business comes up with, measure them. «You want to know what is working and what is not,» she says. «It must be an integral part of what you do, not a side project.» 

POWELL, Ohio (Fortune Small Business) — Semper fidelis, the U.S. Marine Corps motto, means «always faithful» in Latin. As a young grunt serving at Camp Lejeune, N.C., Duane Draughon learned to remain loyal to the mission — «whatever the cost,» he says.

That mind-set has guided him since he left the Corps in 1997. «It’s probably the only reason I’ve survived in business,» says Draughon, who served as a police sergeant in the Marines and now owns a patio-paving company outside Columbus, Ohio. «I will never, ever give up.»

He’s been tested — almost to the breaking point.

In 2005, after a stint selling cars, he started PaverStone Design Group. Launched during a national home-improvement boom, PaverStone was an instant success, designing and building lavish patios for affluent suburban homeowners in Columbus. To keep costs low, Draughon initially used prison inmates in a work-release program as laborers; later he hired and trained his own crews, mostly made up of immigrants from Mexico (all of them documented, he says).

Revenues topped $500,000 in 2006. Draughon had a new business, a new house and a new car, plus a new baby — his third with his wife, Isabel.

Then came disaster.

Draughon’s partner abruptly left the company in 2006, depriving PaverStone of a talented salesperson and a capable crew chief. Draughon admits that in trying to juggle a busy operation and manage the finances of his fast-growing business, he let costs spiral out of control. Soon he was broke — and desperate. So the entrepreneur doubled down, betting everything he had on PaverStone.

Draughon began rebuilding the business one brick at a time. He worked out payment plans with creditors. In addition, he persuaded his wife to quit her $45,000-a-year job as a mortgage broker to take over PaverStone’s marketing and bookkeeping so that he could spend more time closing deals and supervising his crews.

But in the summer of 2008, the Great Recession hit Columbus. To keep the business afloat, the Draughons pared expenses and laid off all five of their employees (the couple now hire subcontractors as needed). Orders trickled in during the summer and fall of 2009 — enough to cover the utility bills and some other expenses — but most projects have been much smaller than those the company handled before the economic downturn.

«Customers used to dip into home equity to build huge patios with fireplaces, kitchens and special lighting for $30,000 or $40,000,» Draughon recalls, shaking his head in frustration. «Now all they want is a rectangle for $5,000.»

Despite a rocky five years in business, the Draughons, both 33, are determined to make PaverStone work. Duane says the business taps all of his talents, which include selling, designing and supervising complex construction projects. Isabel takes great pride in the company’s reputation as one of the top patio design firms in suburban Columbus. (PaverStone won a 2007 Consumers’ Choice Award in a citywide contest.)

The Draughons foresee a rebound in the local home-improvement market — perhaps in the spring of 2010 — and they want to be prepared to grow the business rapidly when it comes.

But the Draughons know their company needs a stronger foundation. The couple seek a marketing strategy that maximizes their network of loyal customers and a more conservative financial plan to help them weather the vagaries of the real estate market. They also have questions about basic business practices. How can they find trustworthy lawyers and accountants? How should they negotiate better terms with suppliers?

To assist them in mapping out a plan, Fortune Small Business brought three Makeover experts to the company’s spartan offices in an industrial park in Powell.

First up is Maureen Metcalf, 45, founder of management consultancy Metcalf & Associates in Columbus. Metcalf has found that thanks to aggressive search-engine optimization, PaverStone’s slick Web site is usually one of the first to pop up in a Google search for «patio design in Columbus.»

But it’s almost too slick, Metcalf says. The site is loaded with stock photos, including an image found on countless Web sites of a young woman wearing a telephone headset who appears to be a national call-center representative.

The Draughons explain that they wanted to appear well established and businesslike. But they agree that they may have gone overboard with the corporate look.

«Many customers think we’re part of a national franchise,» says Isabel. «They don’t understand that we’re a family business. That really hurts. We’ve put our heart and soul into this company.»

Metcalf’s prescription: Use the site to share PaverStone’s story. Tell potential customers about Duane’s childhood just a few blocks away from the city’s meanest streets, and how Duane’s father put him and his two brothers to work mowing lawns to keep them out of trouble. Add that Duane turned an after-school job into a $120,000-a-year landscaping business before joining the Marines. Later he returned home, married and established a patio-building business.

«Finding reliable contractors is a nightmare for homeowners,» Metcalf says. «You’re a Marine veteran, a family man. You’re trustworthy. You get the job done, on time. It’s a compelling story.»

Metcalf also advises the couple to update the Web site with photos of themselves. Get rid of the stock images. Add testimonials from satisfied customers who have been photographed lounging or dining on their patios. Create a section that offers before-and-after shots of backyards transformed by PaverStone.

«You’re not just selling a paved patio,» Metcalf says. «You’re selling the idea of a beautiful place to relax with family and friends.»

FSB’s next expert tackles the thorny topic of corporate finance. Michael Jokerst, 52, is a financial expert from CFO Leadership, a consultancy in Columbus.

The Draughons tell him they were unprepared to manage the finances of their fast-growing company. Marketing and labor costs soared. Duane suspects that he underestimated his costs as he raced from one job to another to oversee construction, damaging the company’s bottom line. By the end of 2007, its busiest year to date, PaverStone owed $170,000 to suppliers. Bankruptcy loomed.

Although the Draughons have since worked out a repayment plan with the suppliers, they worry about their ability to withstand the boom-and-bust cycles of the real estate business.

«You’ve been using the ‘big bucket’ method of accounting,» Jokerst says bluntly. «That’s no way to run a business. You’re pouring the money into a big bucket, taking out enough to cover your costs and hoping there’s something left for you at the bottom of the bucket. That’s dangerous.»

Instead, the Draughons should determine their true cost of doing business, considering everything the company needs, from paper clips to paving stones. In the past, Duane calculated fixed costs of supplies for each job, then added a general fee for overhead — 42% in boom times, but currently as little as 10% — based on a formula that a consultant suggested last year.

«I suspect you aren’t calculating the cost of your time,» Jokerst says.

Duane nods in agreement. «Sometimes I’m up all night creating a design proposal for a homeowner — because I want that job,» Duane says. Jokerst explains that not all projects will be profitable, especially now, as competitors trim their margins.

«Calculate your costs to the penny,» he tells the couple. «Or you could be working for nothing.»

Jokerst offers more tips to boost the company’s bottom line. Negotiate better terms with suppliers, he urges. PaverStone has been paying cash for construction materials since its financial troubles in 2007. «After two years, you’ve proved your creditworthiness to suppliers,» Jokerst tells Duane. «You’ve earned the right to request better terms — 30 days, at least.»

Jokerst also recommends building a cash reserve during the busy spring and summer seasons to fund expenses during the slower winter months. Try to find a complementary business that would pull in needed revenue during the winter, he advises — interior tiling, perhaps — but be sure it’s one that allows enough time to gear up for bidding on new projects in the spring.

FSB’s third expert, Nick Williams, 30, is a project manager with Definity Partners, a business consultancy in Columbus. Williams praises the Draughons’ ability to survive a trial by fire during the past five years.

«One of the hardest things is having no guidance,» Duane confesses. «Lots of times I don’t know where to turn with business questions. Isabel and I have each other, but it gets lonely. We really need to find some mentors.»

Duane says he’s the one fielding calls from fledgling entrepreneurs within the African-American community in Columbus. Early on he sought help from a state-sponsored program for minority business owners, but «they treated me like a child,» he recalls. «It was insulting.»

Like most cities, Columbus offers dozens of networking groups for small business owners. «You’ve just got to make the rounds to find the right fit,» Williams says. Local chambers of commerce provide opportunities to meet other business folk, though the quality of the programs varies widely from town to town. And Isabel should join groups that cater to women’s business development and leadership. Don’t judge an organization after just one event; try to attend several, and then meet with the group’s leaders to discuss their mission and your goals.

Finding a mentor is a lot like dating, Williams says. «It could take a while to find that spark.» But building a network of experienced advisers is essential. For example, mentors can provide valuable recommendations when you need a professional such as a lawyer or an accountant.

Immediately after the Makeover, the Draughons began to implement some of our experts’ advice.

«The Makeover was a life-changing experience,» Duane says. «We intend to come out of this downturn stronger than ever.»

The Draughons are updating their Web site with bios and photos, including one of Duane as a Marine. Duane is assessing bids more carefully, trying to factor in the time he’ll spend designing and overseeing each project. Every Friday, the couple review a financial report to monitor cash flow. This fall, they plan to attend several events sponsored by local business groups in the hope of building relationships with other entrepreneurs