Owners struggle to stay afloat

Expert: Small businesses in York Co. must learn to adapt in recession

By Jason Foster - jfoster@heraldonline.com

Another week, another small business closing its doors.

That seems to have been the case in York County in recent months, as several locally owned restaurants, stores and other businesses have closed amid tough economic times.

While the economy usually was the prime reason, or at least partly to blame, experts said other factors have developed that make it hard for small businesses to stay competitive, much less thrive. And for those that remain, experts said, staying viable is likely to remain a challenge.

“They are existing in a saturated market. They have to figure out something that differentiates their business from all their other competitors out there. That's the biggest thing,” said Larry Stevens, regional director at the Small Business Development Center at Winthrop University, which offers seminars and other services for small business owners.

Sometimes, Stevens said, people go into business for themselves without thoroughly researching the market. That includes studying competitors large and small — from a national retailer such as Walmart to another small business that offers the same product or service. Stevens always encourages would-be business owners to do that homework.

“Some of the businesses we see failing right now … the customer base is just not big enough to sustain their expenses,” Stevens said.

Other times, he said, people start a business and get in “over their head” because they don't realize how much time and money is required to keep a business successful.

A related factor is that many small businesses simply don't have the shelf space to offer the variety of products that larger companies can, said Dave Crockett, a business professor at the University of South Carolina.

“Now you go into a lot of small stores, and there just isn't much on the shelves to choose from,” he said. “You can't even get what you need from a lot of mom-and-pop stores now.”

What really set small businesses apart in the past was their ability to cater to local tastes, Crockett said. If a store was embedded in a neighborhood, its owners knew customers well enough to meet their product needs.

But over time, that one-on-one relationship has become less important to customers as larger chains with lower prices have cropped up in nearly every town.

Today, Crockett said, nearly every major grocery store carries the same products, usually offering many brands. And because the stores have deep enough pockets to buy in large bulk quantities, the prices are usually well below what a small business can afford to charge.

For example, a large grocery store might carry 15 different brands of laundry detergent. A smaller store might only offer five brands — and in smaller boxes.

“By volume, you're going to be paying a lot more in that store,” Crockett said.

Prices aside, most small businesses just don't have the financial resources to handle a prolonged national economic turmoil, said Dennis Partlow, who recently decided to close his Slo' Smokin' barbecue catering business after 11 years.

Partlow found his niche catering events for large companies. But when the recession started, he said, business dropped off as the corporate world felt the effects.

“All of a sudden, industry gets hit, and who's the first person to go? You're going to cut out one of those perks,” Partlow said.

For Partlow, that meant a $5,000 job became a $500 job. And sometimes, a business might take as long as 60 days to pay for his services, which hurts cash flow. Partlow also had to deal with road construction in front of his S.C. 901 business that severely reduced traffic in the area and, therefore, hurt business.

“A small business just can't afford to do that,” Partlow said. “I don't think it matters whether you've got five employees or 100 employees. … You don't necessarily control your own fate. It's just a tough situation.”