The 'new normal' changes business rules

Yesterdays co-owner Duncan MacRae finds himself everywhere these days inside his Five Points landmark restaurant.

"We're meeting people at the door. We're tending bar. We're helping cook," MacRae said. "We're not just guys who own a restaurant. We're working. We are hostessing and cashiering.

"That saves us $50,000 a year."

This is MacRae's "new normal."

The catchphrase describes how life has changed during the Great Recession. While the phrase has been around since Roger McNamee's 2004 book, "The New Normal: Great Opportunities in a Time of Great Risk," it has taken off during the downturn of the past two years.

For businesses across the country, including the Midlands, the new normal means fewer workers and less spending, and calls for being creative to make up for the losses.

"The halcyon days are over when the money was flowing," MacRae said. "And I don't know if we'll see it again in our lifetime."

Still, the new normal hasn't stopped every business from expanding.

Nelson Mullins, Columbia's largest law firm, has added two offices this year - in Tallahassee, Fla., and Huntington, W. Va.

"We haven't given up our ambition in growing our practice, but we're doing it with a low-cost structure," said Jim Gray, Nelson Mullins' administrative partner.

That means a new normal of having fewer administrative staff. Where once there were two lawyers for each staffer, now there are three, Gray said. Some of that cut in staffing has come from new technology that makes gathering information easier.

The firm also is bringing in fewer summer associates - a dozen instead of 20 to 25 - while hiring more veteran lawyers, who have found themselves out of work. "There's a lot of good talent that's available that has good experience," Gray said.

Meanwhile, clients are seeking - and getting - discounts for higher volume of work as well as flat fees versus the traditional hourly billing.

Clients also are being more selective, asking for bids for work from several firms or even asking to use lawyers from multiple firms to take advantage of expertise, Gray said.

"Clients are creating their own law firm," he said.

At another large Columbia law firm, Nexsen Pruet, the new normal means video conferences are replacing out-of-town retreats that gathered lawyers from eight different offices in the Carolinas, board chairman Leighton Lord said.

The firm also has cut meals and gifts for some clients, replacing them with face-to-face visits. "The client doesn't need a fancy gift or fancy meal; they want good service," Lord said. "Go and sit with them and ask, 'How are they doing?'"

Nexsen Pruet no longer is adding five to seven attorneys a year. "I was spending my time interviewing and hiring. I felt like I was a talent scout," Lord said. Now, "I'm more of a coach. We need to keep the ones we got doing a good job."

THE GRAIL: 'SIMILAR RESULT FOR LESS COST'

The new normal has seen employment fall off at the region's largest private employers.

There are fewer people for BlueCross BlueShield of South Carolina to insure as many companies have shaved staff - or in some cases closed. As a result, BlueCross, the region's No. 2 employer, now has about 11,000 workers versus about 13,000 about five years ago, spokeswoman Elizabeth Hammond said.

And more jobs are getting filled from within the insurer. Where BlueCross used to have about 50 jobs at a time available to outside applicants, it now has about a dozen, she said.

The state's biggest insurer also has worked to save costs, such as with energy conservation. Another example: It recently started sending explanation-of-benefits statements at the end of the month rather than after every doctor's visit.

Palmetto Health, the region's largest employer, has about 1,000 fewer workers than before the recession, according to annual data collected by The State.

The hospital system also has cut some discretionary spending with outside consultants, training and travel and education, chief financial officer Paul Duane said.

"In every case, we tried to determine if there were ways - like webinars and video conferences - to get a similar result for less cost," Duane said. "We will continue to be very discerning in our choices."

Sometimes business operators have little choice in their new normal.

Some small-business owners, for example, find themselves doing more day-to-day work.

For example, Don McCallister, owner of Five Points' self-proclaimed Hippie Shop, Loose Lucys, did not replace a departed manager.

After taking a break to write novels, "now I find myself back here more often. I had depended on that manager for a lot of things."

DEVELOPERS ADAPT

Other firms are having to adapt as well.

With banks tightening credit, real estate developers have to find a new angle to persuade banks to lend them money for construction, said Wade Caughman, developer of the City Club and Congaree Park residential communities.

"You have to build on a much smaller scale. The projects should be unique and calculated," he said. "You don't want to build anything big because you couldn't fill it."

Caughman said he has been looking at renovations instead of new developments. "If you can find a good building that's empty and turn it into something unique, that's definitely the way to go."

Richard Burts, a developer who owns about 75 commercial and residential units in the Columbia area, including 701 Whaley, said now is a perfect time to renovate properties.

He's upgrading an eight-unit office building he owns on Forest Drive with new flooring, doors, landscaping and signs. He recently lost two tenants there, one loss - a stock/insurance broker - directly related to the economy.

"Even though your cash flow is being cut into, my rational is to spend more money on things that you have," he said. "People are hungry for work right now, so you get more bang for your buck."

'PEOPLE WANT TO ... LOOK'

But people still expect some normalcy even in a new normal.

Brian Curran, owner of Outspokin' Bicycles in Columbia, said he has reduced his inventory of lower-selling, high-end bikes, those priced at $2,000.

"But we have to keep some in the store," he said. "It's what people want to come in and look at.

"They're eye candy."