The economy is brutal, but their business booms

Amid the worst economic conditions in 70 years, sales of sweet, fluffy pastries made by James Skinner Baking of Omaha are hot, hot, hot.

Family-owned Skinner Baking saw its 2008 sales revenue rise 18% from 2007's. In December, sales jumped a record 25%. The firm, founded in 1911, bakes coffeecakes, fruit-filled Danish, cinnamon buns and other time-honored goodies sold at supermarkets nationwide. Skinner's ovens are working six days a week and the firm is hiring to keep up with demand.

"This is comfort food," says Audie Keaton, Skinner's vice president. "Instead of going out to breakfast, I think families are staying home and eating Danish."

Skinner is among several types of businesses that are bucking the economy's downward spiral: flourishing not just in spite of the recession, but because of it.

Even as the nation's automakers, big banks, retailers and others are laying off hundreds of thousands of workers and fighting for survival, some companies large and small quietly are setting sales records and even expanding because they provide products or services that worried, cost-obsessed consumers are willing to pay for.

A few of the recession's beneficiaries are big public companies with household names: Wal-Mart, wmt McDonald's, mcd Family Dollar. fdo

They earned profits last year, and their stock prices soared because they kept doing what they do well: selling stuff that everyone needs, cheaply.

But many businesses that are thriving during the recession are not big or famous.

"They are small or midsize companies with few levels of management that can make changes quickly," says Mark Perry, an economics professor at the University of Michigan-Flint.

"The role of entrepreneurs might be even more important during a recession," he says. "Their ability to be nimble and innovative and adapt to change become key advantages."

History seems to bear that out: Many long-standing businesses and jobs have been created during and right after a downturn.

Monopoly, which owner Hasbro has says is the world's most popular board game, was patented during the Great Depression. Microsoft, msft which made co-founder Bill Gates the world's richest man, was launched in 1975, after the 1970s recession.

Losses and gains

During the last recession, in 2001-02, the U.S. economy lost nearly 2.7 million jobs overall, the Small Business Administration (SBA) reports. But new and existing businesses with fewer than 20 employees gained 853,074 jobs during that period.

Hard times also seem to spawn many one-person businesses, more so than good times.

SBA figures indicate that about 269,000 more individuals started their own businesses in 1998 than 1997, a 1.7% increase during the height of the 1990s economic boom.

But as the United States began to emerge from a downturn early this decade, 1 million more people launched businesses in 2003 than in 2002, a 5.7% rise.

"The bulk of those are home-based businesses, such as consultants, people selling on eBay, independent contractors," says Brian Headd, economist for the SBA's Office of Advocacy.

Such businesses can be born out of necessity by men and women who lose their jobs or just need to boost their household income.

Even amid all the gloom and doom today, business success stories are popping up, often reflecting Americans' growing frugality.

Among them:

Making the old new

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