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.

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.

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.