Phil & Teds’ sales have increased by 50% over the past year and 20% in the last quarter. Consumers always want innovative products, says Gower, and in recessions a lot of people tend to trade up to brands they can trust. “People generally leave the middle market and go south because it’s cheap or north because they want to be confident about what they’re buying.”

SLI Systems chief executive Shaun Ryan is equally upbeat, capitalising on the growing trend among retail operators to reduce their bricks and mortar costs by moving into the online space. SLI’s software, which helps online customers find the goods they are looking for, is also sold as a service. “The software service model is much more appealing during these hard times because it’s much easier to get a budget for a few thousand dollars a month rather than a $100,000-plus purchase. So our model gives us an advantage over our competitors who are selling software.”

Ryan says some of SLI’s competitors are also being more selective about their marketing spend. “But because we’ve got ongoing revenues, our marketing budget hasn’t changed, so that gives us the opportunity to be seen more than our competitors.” Trade shows are particularly good at the moment, says Ryan. Overall attendance numbers are down, but it’s a lot less cluttered with competitors and those potential customers that do go tend to be there because they can afford to be. “By that self-selecting criterion, they end up being good prospects.”

Norman Evans, CEO of Dunedin incubator Upstart, says recessions are traditionally a time for entrepreneurial companies to do well. History is awash with big names which got their breaks during a recession: Nokia in 1992, when it made the decision to concentrate on its fledgling mobile phone business; United Technologies Corp in 1929, when the aerospace company began life as a holding company for airlines during the Great Depression, which also happened to coincide with aviation’s Golden Age; and General Electric in 1879, when Thomas Edison produced the first light bulb during the last year of the Long Depression and set up the Edison General Electric Company.

Recessions provide opportunities in all sorts of ways for companies and individuals who are flexible and entrepreneurial enough to take them, says Evans. “It’s a time of change, when a lot of things that people were doing aren’t working so well any more.”
It also weeds out the poorer companies, letting those with better solutions step up to take their place, he says. But companies have to be “very, very focused” on where their sales are going to come from, because there are fewer fish in the sea.

There are only three reasons people buy anything, says Evans – greed, fear and compliance. Compliance is a special case, so greed and fear tend to drive sales tactics. “Right now we’re in a time of fear, so if you sell to people’s fears about costs blowing out or fear of not surviving the recession, then you’ll do well. But if you keep trying to sell to their greed, I think you’ll be in big trouble right now.”

Martin Aircraft Company, the Christchurch-based developer of the jet pack, is a fledgling company which isn’t worried about sales and is still appealing to greed. Founder Glenn Martin says the company has hired two engineers since Christmas and may take on more staff to complete the jet pack’s final test phase. Chief executive Richard Lauder, another recent addition, says there will always be people can afford a jet pack, no matter what. Other interest tend to come from government organisations, he says, and government spending is usually fairly stable in times of recession. “So personally I’m not concerned about orders. But I am concerned about finding the finance to deliver these orders.”

Greg Cross, a serial entrepreneur and chair of Auckland incubator the Icehouse, says there’s always money around for good companies, with good teams and a strong vision for the future. One of his protégés, PowerbyProxi, recently secured $1.5 million to help it expand its presence in the US. Though the wireless power company’s technology is cutting edge, the industrial application marketplace it’s focusing on isn’t that sexy, says Cross, but companies within that marketplace have a real need. Tractor and machinery manufacturer John Deere, for example, is plagued by the problem of transmitting power across rotating machine arms. Traditionally, this has been achieved by mechanical means, but that system was prone to failure, leading to significant downtime costs, says Cross. PowerbyProxi was developed to overcome those problems.

For any company to succeed and thrive in today’s market, it has to have a strong value proposition, says Cross. “Customers are either looking to solve immediate pain points or looking at designing new products and solutions which they see as being part of their recovery.”

Brendan Gray, Professor of Entrepreneurship at Otago University, says entrepreneurial companies typically tend to be nimble and prepared to try things others (many with a lot more to lose) won’t. It’s often those entrepreneurs that tend to come out of recession with a winning formula, says Evans, making recessions paradoxically a good time to invest in startups.

“We can’t argue the exchange rate; it is what it is. We can’t argue the economic cycle. All we can focus on is having a business which is tuned to whatever a market is doing at a particular time,” says Gower. “But people will always want new, innovative products, which engage them and excite them in some way, and in a recession possibly even more so.”