The boss' management strategy. (The Briefing).

WHEN Perry Solomon started Alera Technologies Inc. three years ago, he knew keeping costs low would ultimately determine whether his company would succeed or fail.

Consequently, Solomon 's company out-sourced his credit and collections duties because high cost of maintaining his own department would have given the company little room to maneuver if business suddenly dropped off.

The Van Nuys company manufactures DVD and CD recording equipment for the consumer market as well as storage equipment for commercial firms.

When the tech market hit the skids in mid-2000 after a year in business, Solomon's decision to keep his overhead low became invaluable. As it was, Alera had to cut half his staff of 50 people.

Today, as Alera improves its bottom line and heads toward profitability, Solomon spoke to Business Journal reporter Carlos Martinez about how his company managed to survive.

"We knew in the beginning that we needed to keep costs at a minimum. So we decided that everything that wasn't part of our core competencies of development design of optical storage and recording equipment would be outsourced.

"We budgeted for a credit and collections department, but we set that money aside initially. It gave us cash that we could use if we could get a deal with one of the largest distributors (of computer equipment). For that, you have to have the capability to produce and deliver in high volume.

"When we finally agreed to a deal with Ingram Micro, one of the largest distributors in the world, we looked at our cash reserves and there it was. We could do it. We had enough cash to hire more staff and ramp up production. We just wouldn't have had the resources to do the deal if we had to do the receivables on our own.

"By making enough cuts and keeping our costs low, we were able to respond to Ingram Micro's needs by being able to ramp up production quickly and deliver finished products without delay.

"We were able to add more clients since then, but it's been a matter of steady growth due to our conservative approach to business."

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