Local businesses can grow and prosper here despite Pittsburgh's tough economy and declining population, say local experts.

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That's true despite some pretty sobering economic and population snapshots. For instance, from 2001 to 2002, the population of Allegheny County dropped from 1,274,064 to 1,269,000. The city dropped from 676,806 in 1950 to 327,898 today. Moreover, the number of workers who can support and sustain economic growth in the region is still dropping. The region continued to lose jobs in 2003, with the six-county area losing more than 12,000 jobs each of the past two years.

Despite that, "I really think it's all a frame of mind," said John Roseman, director of the Roseman Institute and until recently a chair professor at Carnegie Mellon Graduate School of Industrial Administration. "A true entrepreneur clearly looks not at the local economic climate, not whether the city is declaring bankruptcy, but what the potential is for his business on a larger scale. This truly is a global village. And if you talk about the global village, things are looking pretty good."

Perhaps the most important thing to bear in mind is that exporting goods and services -- selling them outside the Pittsburgh region itself -- is one of the most effective ways for local businesses to grow despite what may or may not be happening here.

"In terms of local businesses, many don't sell to Pittsburgh, but to the U.S. and the world, so the local population and business activity here isn't crucial to them. Their markets are world-wide," said John R. (Jack) Thorne, emeritus professor at Carnegie Mellon University and founder of CMU's Donald H. Jones Center for Entrepreneurship .

In fact, that's exactly how most businesses here have managed to prosper despite the region's current profile, experts say. That's particularly true for the high technology and similar industries based here.

In banking and finance, for instance, it matters little what happens here because "much of what is involved is selling services to people outside of this area. I saw a note which indicated that only a fraction of the total finance industry here caters to those who live here. A large chunk of it goes outside the area," Thorne said. "Thus, we will likely continue to see growth in this field in this area."

Some fields may even prosper because of the region's population profile, economy and demographics, Thorne said.

Take health care and related fields, for instance, he added.

"First, our population is aging and thus it will require more health care. There are rapid improvements in techniques, doctor training and medicine, and even in a stable population situation, that makes for growth in the health care field and related industries. Thus, with people getting older and the amount of technology used to make people well still increasing, that's a growth business. There's lots of potential there."

That's equally true for those engaged in the business of manufacturing medical related equipment or technology. "Look at the products that are developed here," Thorne added. "It doesn't make any difference that we are a slow population growth, slow economy area because it's easy for the local companies making those products to be tested here and sold elsewhere. They will sell 90 percent of their stuff outside Pittsburgh anyway."

There are other things that can help businesses here, particularly small to medium sized ones, grow and prosper in a time of slow growth and a tough economy.

One of the most important things to do in conditions that face Pittsburgh is networking with other businesses, particularly those in your own field of endeavor.

"It's especially important for small and mid-sized businesses to get involved with their trade and professional organizations," said Court Gould, executive director of Sustainable Pittsburgh. "It's a source of free or cheaper technical help. They have peer networks where you have access to other practitioners who can be helpful with a number of issues such as human resources, marketing, fiscal issues, etc."

It's also important for businesses to keep their financial houses in order during better times in the region so that when things slow down again, they'll be in good shape to borrow if necessary to meet their business needs, Gould said.

"In tight times, companies need access to capital, and if they have poor credit, they can shortchange themselves. Before things get too tight, running up a good borrowing track record with lending organizations is important. So small and medium-sized businesses should be in the practice of borrowing and paying off money expeditiously so that they can create relationships and improve credit ratings," he said.

There's even a way to contain health care costs for businesses that are hard pressed to grow in regions like Pittsburgh, Gould added.

"Small and medium sized businesses can put their benefit packages up to bid and work with employers to come up with creative ways to shave health care costs," he added. "Pittsburgh Technology Council offers package benefits to member companies. If you are a member, you can participate in their pooled insurance programs."

The advantage to that, he said, "is more clout in negotiating with health care providers. They have lots of clients behind them as opposed to a situation in which one little company is trying to negotiate health care coverage on its own."

Another way to save money is bartering, Gould said.

"This is a sustainable economic approach," he said. "You look for creative ways to exchange services, understanding what you have to trade for something that you need."

Another almost sure-fire way for growing in a tough setting is to offer top notch service to customers, said Roseman.

"I went to a department store to have a suit custom made. I disagreed with the measurements. It came back terrible. If you ask me if I would go back to that store, I'd say 'Hell, no.'"

He added, "People aren't necessarily interested in the best price. I know when I bring my Lexus in for service, I might pay a few dollars more. Do I mind? No. Because I get good service. When I pay my Chubb insurance bill, it might cost a bit more. Do I mind? No. Because I get service and value. For service and value, I'll pay a few dollars more."

Speaking of dollars, the continuing financial struggles of the city bring special survival issues for Downtown small businesses.

Here's where an intangible commodity -- vision -- comes to play. If a small Downtown business can zero in like a laser beam on a creative idea or an unfilled niche in the market, the next step is taking a gamble-and jumping in with both feet.

Being willing to pursue this two-step process can make a big difference in determining whether the operation will grow and prosper -- or merely stagnate.

That's the view of Mariann Geyer, executive director of the Pittsburgh Downtown Partnership.

"One place like that which comes to mind is the tonic bar and grill. Denise Gaynor is an owner who saw an opportunity, was willing to take a risk and it paid off. It was a corner of town that many people didn't have a vision for," Geyer said.

"Now she has an eclectic place with an interesting, trendy menu, and it's a style that has captured our convention audience as well as Downtown residents who have been looking for a place to eat out at the end of a business day or stop by with friends after work."

Another important thing for Downtown businesses is to keep track of conventions that are coming to town -- and being ready to immediately serve any special needs that may arise.

"When a sight-impaired convention was in town several months ago, we recognized this would be a convention needing particular services," Geyer said. "We had a variety of retailers who made sure they had Braille and large print menus, and a lot of restaurants took advantage of this so they could meet those needs."

But aside from worrying about how their small businesses can succeed here, some owners and not a few civic leaders worry about how being a slow economy and population losing region affects Pittsburgh's image.

But experts here say they needn't worry.

"We in Pittsburgh-- greater Pittsburgh-- feel that we are second rate citizens with an inferiority complex and low self-esteem," Roseman said. "How come people in Silicon Valley, California with 14 percent unemployment stayed where they were and the real estate kept its value? If we had 14 percent unemployment here it would be a major catastrophe. Regardless --and I'm speaking strictly of technology entrepreneurs and not retail or some other field-- there are always opportunities out there."

" I really don't think the slow growth, population loss issue has much effect," Thorne said. "I was in charge of a venture capital fund here for a number of years, and I don't think people think about that or worry about that."

Thorne added, "They don't want to go into a dead area, of course, and if Pittsburgh was rotting at the seams, it would be tough. But as long as there's good people and products here, and the local situation is good enough that people are willing to move here, stay here and buy here, I don't think we have much to worry about."

The region also should not worry that its population losses and difficulties will hurt its ability to attract and keep entrepreneurs here, the experts said.

"It would be hard for an entrepreneur to look at Pittsburgh from a distance and say, 'Gee, Pittsburgh is a great place and I'll move there.' It just doesn't happen," Thorne said. "It's really better to grow your own. Real entrepreneurs who build companies don't want to move here unless they grew up here or went to school here. They build companies where they are located and they will want to start out where they live. The same is true for Pittsburgh."

But there's one issue that should be a source of concern: how the Pittsburgh region coordinates economic development planning, Roseman said. That can affect the health and growth prospects of small businesses here in good times and bad.

"I had lunch with somebody yesterday who told me that there are several hundred entities involved with economic development in western Pennsylvania. Wouldn't we accomplish a lot more if we streamlined this issue?" Roseman asked.

"My concern is that with many of these people, you wouldn't be able to streamline them because it's a job for them. We're not thinking of the region. We're thinking, 'I need a job and I have one now. You want to combine me with four or five entities doing the same thing? Well, I'm going to come up with some arguments why that isn't a good thing because I need to save my rear.'"

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