GROWTH AMID GLOOM

Joy Gendusa spins through the converted NAPA Auto Parts warehouse; Lulu, her white Maltese, scampers at her feet in a valiant effort to keep pace.

Over the din of ringing phones, she dishes updates about dozens of employees, many of them related. "And that's her stepmother over there," she gestures. "The girl next to her, her mother works here too."

PostcardMania, a direct-mail company that prints and ships postcard advertisements on behalf of businesses nationwide, is 10 years old with 160 employees and 31,000 customers. But it has that frenetic aura of a startup living on the edge - one where everyone knows one another and everyone is hungry to find new business.

As Gendusa can attest, these are dire times to be a small business. Consumers aren't spending like they used to and lenders certainly aren't lending. Business bankruptcies have nearly doubled in the bay area.

That leaves it up to companies like PostcardMania to chart their own financial path.

A few years ago, PostcardMania cracked Inc.'s 500-fastest-growing list. In 2007, it still made the Inc. 5000 (No. 3,130) as sales more than doubled. This year, with the recession taking root, sales are inching up a mere 4 percent to $19.5-million. Gendusa shrugs it off. Her prediction for '09: "I'd like to see 50 percent growth. I'm very ambitious."

All around, other direct marketing companies are going out of business. Or cutting back.

Gendusa doesn't like to cut back.

She's fighting the thought of layoffs. Reluctantly, she trimmed the annual Christmas party budget from $30,000 to $15,000. It won't be at the Don CeSar like last year, but the party will go on. "No way we can cancel it. Our staff worked too hard," she said. "We need it this year."

No backing down

Gendusa has flipped her marketing machine into overdrive. In mailing 120,000 self-promoting postcards to businesses every week, PostcardMania is its own biggest customer.

"You have to be even more aggressive on PR ... on buying ads," suggests business consultant David Gerwitz, author of The Flexible Enterprise. "Many of the businesses that succeed during a downturn are ones that put money into marketing as opposed to pulling out."

Gendusa became a marketing devotee during PostcardMania's early days. Orders were coming in, but for months the company was stuck at $20,000 a month in sales. Gendusa doubled mailings of marketing material and soon after sales doubled.

That formula hasn't been as smooth since then. PostcardMania used to count on the mortgage industry for 41 percent of its business; this year, that's plummeted to 3.4 percent, forcing it to dig deep into other types of customers. "We're scattered among so many different industries now" and targeting industries that do well in a recession, vice president of public relations Karla Jo Helms said.

Among the 350 industries it covers, it has a new No. 1: dental services.

The Hubbard influence

L. Ron Hubbard watches over Gendusa's office.

Actually, two photos of the Scientology founder hang on her walls amid marketing awards and splashy pastel artwork. Located in downtown Clearwater near Scientology's headquarters, PostcardMania was developed based in part on Hubbard's business strategems. Shelved behind Gendusa's desk is a multivolume set depicting Hubbard's business management technology.

PostcardMania is a member of WISE, the World Institute of Scientology Enterprises, and up to a third of its employees are Scientologists. However, Gendusa isn't counting on any Scientology business network to ride out the recession. Those contacts, she said, account for only a small fraction of revenues. To grow the business anywhere near her 50 percent goal, she's counting on other strategies.

Like sales discounts: Its Web site blares how the price of 5,000 full-color, glossy postcards has been slashed from $389 to $299.

And new target markets: The average PostcardMania order is about $1,300; a new executive hire is charged with drumming up big clients in the $50,000-and-up range.

Nothing, however, works like hard work. In the company's infancy, Gendusa said, she was putting in 12-hour days, working 6 or 61/2 days a week. "Ridiculous hours," as she puts it. Lately, that old schedule has been back.

Financial overseer

As sole owner, Gendusa has ample flexibility in choosing how her company spends its money. Helms said there has been no scrimping on salaries, with positions in various fields paying 20 percent above industry averages.

For now, there is no freeze on raises and no cuts in health care coverage. The penny-pinching is coming other ways. Under the old company policy, for instance, vice presidents had authority to approve expenditures up to $500; now every one-time or unusual purchase order has to cross Gendusa's desk. Managers aren't traveling as much.

If she had to do it over again, Gendusa muses that she might not have gone forward with building a new headquarters about five minutes away, despite the company's cramped setting inside the old warehouse.

As it is, she's looking for ways to keep expansion costs in check. At the start of 2008, Gendusa planned to set aside $100,000 a month - so by the time the building was ready in March of 2009, she would have $1.2-million to pay for extras like a gym or daycare room. Maybe a cafeteria.

Her savings plans lasted about a month before the early stages of the recession eliminated that cushion.

The cash reserve that PostcardMania enjoyed building up during its boom years "is definitely not what it used to be," Helms said, without being specific.

Morale boosters

One recent December afternoon, another typical day that the stock market was seesawing on job fears and automakers were back before Congress pleading for a bailout, Gendusa was chatting about plans to treat employees of the month to a free hotel night so they wouldn't have to drive home after the holiday party. She has no delusions about how steep the economic downturn could be, but she's not about to let morale slip.

"I feel like we'll be the last postcard marketing company standing," she said.

Joy Gendusa's tips for success

- Don't be a survivor; be a thriver. Invest in marketing as much as possible and pick up customers that your competitors will lose by cutting their marketing budgets.

- Use the database you already have. Marketing for new customers is expensive; marketing to existing customers has a higher rate of return.

- Make sure your core workers are on the bandwagon to beat the slump. Get the eternal slackers slacking somewhere else.

PostcardMania's gameplan

- Leverage government programs and incentives. With government mandates on some to do a certain percentage of business with minority- and women-owned vendors, Gendusa promotes her company among a network of women-owned companies. She used industrial revenue bonds at 4 percent interest to buy equipment and build a new headquarters.

- Be picky in taking on debt. As a rule, the company saves to have enough cash on hand before buying new furniture or adding amenities. The exception: taking out a $2.4-million industrial revenue bond for a printing plant and equipment that was later repackaged into a $5-million construction loan to finance new headquarters.

- Market heavily. One place spared the budget ax is marketing. Last month, the company gave away 250 Web site critiques, posting its recommendations for all to see online.

- Find new revenue sources. This week, PCM is announcing a partnership with billmelaterbusiness.com, a Web site that will let customers place an order and pay later without having to use a credit card. When mortgage industry mailings dried up, the company pushed harder into industries like dental, education and fitness.

- Keep morale up. Every week, employees gather to share kudos about fellow co-workers, with one compliment sparking another. No negative comments and no gossiping allowed