Recession takes toll on local businesses
Ned Harper: Invest in marketing and identify opportunities for new revenue
September 2, 2009
Hungry patrons approaching Lovece's Italian Restaurant in Ormond Beach these days are greeted by a locked door and a simple, hand-lettered sign that reads "Closed."
At Phoenix Gym on Daytona Beach's Seabreeze Boulevard, owner Manny Sotirin posted a lengthy message announcing the gym's closing after 15 years and directing them to local competitors willing to honor the defunct club's memberships.
And the Partridge Printing Co. in Daytona Beach shuts its doors for good after 35 years of Holmes family ownership, shifting their accounts to Wright Printery Inc.
As the recession bites deeper into the nation's pocketbooks, small businesses are absorbing punishing body shots and some are suffering knockout blows.
Lovece's, founded in 1979, Partridge and Phoenix are but three among many shuttered businesses in Volusia and Flagler counties. Attempts to reach the owners for comment proved unsuccessful.
Senators Mary Landrieu, D-La., and Olympia Snowe, R-Maine, of the Senate Small Business and Entrepreneurship Committee, said small businesses were hit with 80 percent of job losses since November.
In an opinion piece posted on RollCall.com, the senators said, "Many Americans can no longer afford to shop in Main Street boutiques or eat at local restaurants. Instead, they are pinching pennies to pay the bills, leaving small-business owners scrambling to pay their own.
"At the same time, entrepreneurs are being turned away from all sources of capital financing, including loans and credit cards. Even business owners with the best credit histories are having trouble obtaining the funds they need to stay open."
Grant Thornton LLP, a Chicago consulting firm that assists struggling businesses, estimates that as many as 10,000 retail stores may close by the end of the year.
And a survey by the Small Business Research Board and IPA North America consultants shows 58 percent of small business owners and managers believe the worst of the economic crisis lies ahead.
Ned Harper, executive director of the Small Business Development Center at Daytona State College, said the businesses that survive are those that keep a tight rein on their finances, invest in marketing and identify opportunities for new revenue.
"If revenue drops, you have to drop expenses and double your marketing," Harper said. And that advice is not self-contradictory.
"Marketing is not an expense; it is an investment," he said.
When the economy contracts, business weaknesses are amplified, Harper said.
"You have to be a lot smarter," he said. "You have been automatically moved into the big leagues. You are playing at a higher level, even though you didn't choose to. So, what are you doing to make your business better?"
Scott Davis, principal at Grant Thornton's Corporate Advisory and Restructuring Services group, agreed with Harper's assessment.
"Although there's high risk in the retail industry, now is the time for companies to fine-tune their business and take advantage of new opportunities," Davis said. "The winners will be the disciplined companies investing the time, effort and resources to reexamine their strategies and position themselves for growth."
Harper said business owners and managers need to look around and copy success.
"Some restaurants are dying, while others have lines of people waiting for service. Why?" asked Harper. "How can every employee in your company be more skilled, smarter and more empowered?"
Grant Thornton experts offered some tips for survival and growth:
· Think clicks over bricks. Online sales suffered less than store sales. Businesses are using social networking sites, such as Facebook and Twitter, to expand their reach. And they should be integrating in-store and online resources.
· Go green. Environmental issues influence consumer behavior. Reviewing product lineups and production processes to make them more eco-friendly can boost sales.
· Instill loyalty. Loyalty programs product long-term benefits. Get creative with incentives. Besides discounts, offer generous return policies and guarantees. Pick incentives that attract the best customers. Tailor products to local markets.
· Improve processes. Efficiency in production, inventory management, sales and delivery reduces costs and increases customer service and satisfaction.
Beyond those tips, Harper offers this advice: "Right now, look at how you can make your company better, and then put all your effort into that."
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