How's the Economy Treating Small Business?
The 850 Economic Road Test From Havana to Pensacola, 850 hits the road in Northwest Florida to test the economic waters of small business By Lilly Rockwell with Zandra Wolfgram and Tony Bridges Originally published in the June/July 2010 issue of 850 Magazine
As the recession continues to grip the state, 850 Magazine sent a team of writers to travel some of the coastal roads and two-lane highways that thread through the heart of Northwest Florida. Their mission: to check in with some of the region’s small businesses and see how well they have weathered the economic storm.
Some businesses are particularly susceptible to economic changes. Wakulla County real estate broker Tim Jordan noticed home sales start to dip by mid-2006, before most people were even aware there was anything amiss. Other businesses said it wasn’t until 2009 that they really began to see sales dip. Dale Julian, owner of an Apalachicola bookstore, said her slowdown coincided with the stock market meltdown that began in the fall of 2008.
Though small-business owners throughout the region are used to the kinds of temporary economic wallops that hurricanes leave behind, this Great Recession, as the current financial crisis has been dubbed, was an unexpected Category 10. Many are still picking up the pieces but say all indications point to sunnier days just around the corner.
The Wanderings, Havana
Founded: 1992Number of employees: 2
Revenue: Didn’t disclose
Terri Paul travels all over the world and shops. For a living.
Paul owns The Wanderings, a furniture and crafts store located in the antique district of Havana, a small town located just north of Tallahassee. For 18 years she has traveled to countries such as India, China and Indonesia and returned with furniture, crafts and jewelry to sell to her customers.
“Years ago it started with crafts and masks and ethnic stuff, and we found that you need to do bigger items, so I got into furniture,” Paul said. “I get a (shipping) container over there, and that was the advantage to buying furniture as opposed to small, crafty things. I can fill up one-third of a container, and it’s cheaper to ship the entire container than send it box by box.”
The economic recession hit The Wanderings hard beginning in 2007.
“The bigger-ticket items started to go down, and instead of coming in and buying a table or chair, (customers) would either put them on layaway, or instead of buying a whole bedroom set it was just a bed,” Paul said.
Her sales slowdown only worsened in 2009, a year in which she sold very little furniture. “It was a big difference for us, and that’s why we started building up the jewelry and smaller gift items,” she said. The Wanderings grew its jewelry section from two cases to 16 cases.
“It’s much easier to buy a necklace and a pair of earrings for $100 than it is to buy a table and chair set for $1,000,” Paul said. She also had to look for ways to cut expenditures, starting with herself. She took three months of unpaid leave over the summer to stay home with her kids.
“The economy has hit me, too,” Paul said. “I didn’t get paid from the store, so it was a win-win — I got to spend more time with my kids.”
Pat’s Market, Tallahassee
Number of employees: 8
Revenue: Didn’t disclose
Rohit Patel owns the Tallahassee convenience store Pat’s Market, located a few blocks away from the hulking football stadium at Florida State University, with his sister, Sumitra Amin.
Patel used to be a mechanical engineer and worked for large companies such as IBM and Johnson & Johnson. After he and his wife were laid off on the same day from different jobs in New Jersey, Patel decided to try his hand at running convenience stores. He operated a small one in the Gadsden County town of Chattahoochee before joining his sister in Tallahassee.
“I love working here. I have no boss, and I don’t have to worry about getting fired,” Patel said. “Sometimes you have to change the way you look at life.”
But Patel hasn’t been immune from the economic recession. His sales began to slow in June of 2007. “When people have less income, they try to pay their bills first and then spend the rest of their money,” Patel said. “It’s been up and down since then.” Patel’s business also fluctuates depending on gas prices. “People think when gas prices go up, we make more money. That isn’t true. The higher the gas price, the less money we make,” Patel said.
To cope with the sales slowdown, Patel has taken on more hours. “I work 50 hours a week. I used to work 35 hours a week,” he said. “We haven’t laid anybody off. I have eight employees here, and some have been here more than 15 years. They have a family to support, too.”
He’s also developing lots next door to his store into houses. “Business is slow, and we wanted to diversify the income. And both of us are getting old, so five years from now we’ll have this income plus other income. When you’re a small business, you can’t afford a retirement plan.”
911 Direct, Tallahassee
Founded: 2001Number of employees: 5
After working for a manufacturer of 911 emergency phone systems, Tallahassee resident Robert Pough decided to open his own company, providing the systems to local governments.
Pough said phone companies were offering the service at a high cost, and he knew how to do it in a less expensive way, thus saving local governments money.
He opened the business in 2001 and found that “people liked what I was preaching, and the counties were good about letting us participate.”
Pough also helps design 911 phone banks and has worked with clients across Florida. He also recently installed the 911 phone system for the Atlanta Police Department.
Though he doesn’t sell to the public, Pough hasn’t escaped the wrath of the Great Recession.
“At the end of 2007, it was really slow,” Pough said. “What really saved us was getting that project in Atlanta, which floated us until 2009. A lot of counties were worried about property taxes, and a lot of the funding that went into law enforcement was cut.”
Pough decided to cut his staff to keep his business afloat.
“Between 2007 and 2008, we went to a skeleton crew. It was me and two other people, an administrator and a technician. We bring people on for projects,” Pough said. “I’ve gone through so many ups and downs in this business so far; it’s something they don’t teach you in school.”
Purple Martin Nursery, Crawfordville
Founded: 2000Number of employees: 10 (some are seasonal)
Revenue: Didn’t disclose
Purple Martin Nursery has been in the Wakulla County town of Crawfordville for 10 years, and its location along U.S. Highway 319 makes it an ideal spot for travelers from Tallahassee to stop by on their way to beach houses along small coastal communities such as Panacea.
“We have a lot of customers who have houses in Tallahassee and at the beach,” said store manager Michelle Roberts. “They are constantly stopping by on their way to the beach with their cars full of Sam’s Choice soda and water to grab what they need.”
The nursery employs 10 people in its busy season. >>
“We are very known for our huge selection of succulents and perennials for butterflies and hummingbirds,” Roberts said.
This small operation felt the financial seasons change in the winter of 2008. “There seemed to be a lot of doom and gloom and not understanding what it was going to be like with the economy,” Roberts said. “This winter, things were tight and business was slow. Coming out of this winter and into the spring, my feeling is things are much more optimistic.”
The weather also impacted the business. To save money, the nursery closes during very cold days. “We closed the nursery more times this past winter than ever before,” Roberts said. “If we had three days of 28-degree weather, we didn’t open. We tried to always open on the weekends.”
Purple Martin also cut its workers’ hours and cut back on inventory. “We certainly were conservative on our orders through Christmas and through the winter. The nursery is small enough that in the winter one person can run it, and that one person is me,” Roberts said.
Ochlockonee Bay Realty, Crawfordville
Founded: 1985Number of employees: 20
Revenue: $8 to $10 million
For 25 years, real estate broker Tim Jordan has owned Ochlockonee Bay Realty along with co-owner Marsha Tucker. They employ a staff of 20 real estate agents.
Jordan has seen home values swing up and down along with the nation’s economic fortunes since the 1980s. But he has never experienced a downturn quite like the current recession, with property values plummeting as much as 50 percent near the coast.
“Past recessions never got to the point where everybody is losing their jobs, homes and investments,” he said.
Realtors noticed the beginnings of the economic recession before anyone else. Ochlockonee Bay Realty was no exception. Jordan said home sales started to slow in June of 2006.
“We had a strange run-up in value that was artificial, and we knew that was going to crash sometime — it couldn’t sustain itself,” Jordan said. “We expected the market to taper off, but it didn’t taper off, it crashed.” Property values on the coast dropped 50 percent and in residential areas like Crawfordville and Tallahassee values dropped between 15 and 20 percent.
“Our sales were at $60 million in the best of times, and now we’re lucky to do $8 million to $10 million. If you can keep your doors open, you’re doing well,” Jordan said.
He coped by cutting back on staff. “Not our agents, but the ladies who work in our office. We had to let one lady go, and the other two voluntarily cut back on their hours.”
His company also had to learn more about short sales and foreclosures. “Of course, the lending institutions are going through the same learning curve we are. It’s been an education for all of us.” His firm has also cut back on advertising. “The biggest problem is a lot of investors don’t have the confidence that we have hit bottom. We just hang on and hope it changes.”
Coastal Restaurant, Panacea
Founded: Bought in 2002Number of employees: 13–15
Revenue: Didn’t disclose
Rita Sadler bought the Coastal Restaurant from her aunt in 2002. The no-frills restaurant on U.S. Highway 98 in Wakulla County isn’t far from the beach and is known for its low-cost, fresh, all-you-can eat seafood meals. Thirteen bucks buys you all the shrimp you can eat. A customer paying her bill confided, “It’s the best food in the area, by far. I come here every chance I get.”
Sadler said she began to see fewer customers in 2008. “In the past couple of years, people weren’t getting out. And because we are on the coast, it’s tourists we depend on, so the weather affects it, gas prices affect it,” Sadler said. “It seemed like we had a killer summer and the winter we could make it without struggling, but in the past few years we’ve struggled.”
Sadler eliminated some of her expenses by laying off some employees or cutting hours.
“We used to have more than 20 employees. Now it’s around 13 to 15. I try not to let anyone go. And I keep saying, ‘If we can make it through the winter then we’ll be OK.’ ”
Carrabelle Marina, Carrabelle
Founded: Bought in 1977Number of employees: 3
Revenue: Didn’t disclose
Bruce Schaffer has owned Franklin County’s Carrabelle Marina for 33 years, and it was established in 1969. The marina has a large forklift and warehouse to “dry store” boats and wet slips to park them. The marina also repairs boats and sells new and used boats. Carrabelle Marina’s customers come from Alabama, Georgia and nearby cities such as Tallahassee.
Schaffer says his business is fragile, with hurricanes, federal fishing regulations and fuel prices all affecting his revenue, not to mention the poor health of the overall economy. But his longevity in the marina industry may help. Schaffer said he has watched other marinas and boat dealers close shop over the past two years while he’s still standing.
“We’re still here, and some of our competitors haven’t been so lucky,” he said.
Still, his business started to slow in 2006. “The year before, 2005, was a great year, and 2006 was not so great. And then 2007 until today has just been awful,” Schaffer said. “The people who used to buy new boats, a lot of them can’t afford it, plus we have lost customers, like storage customers, because you can’t keep very many fish anymore.”
Like so many other small business owners, Schaffer was faced with a tough choice: keep losing money or reign in expenditures. He decided to cut his staff. “In 2006 we had six full-time employees, and now we have three. I don’t anticipate bringing these jobs back.”
Downtown Books and Purl, Apalachicola
Founded: Bought in 2007Number of employees: 2
Revenue: Didn’t disclose
Alongside upscale restaurants, quaint boutique stores and antique shops in Apalachicola’s historic town center is Downtown Books. The small store brims with titles catering to the easygoing lifestyle of Florida’s coastal towns, with books on Southern cooking and gardening as well as travel and Florida history.
Owner Dale Julian says that because she likes knitting, she transformed a room toward the back of the store into a yarn shop, with a rainbow of colored yarn decorating the walls.
“We have a lot of local knitters,” she said.
Julian says she has been able to keep a steady supply of customers for her books and yarn between snowbirds, spring breakers, summer vacation renters and holiday shoppers.
“We’re busy all year,” she said. She noticed her sales dip “when the entire economy went down the tubes,” in September of 2008. “All of last year we were busy, but it was distinctly off,” Julian said. “I saw people who had put down hefty deposits the year before on their vacation rentals come in who were not going to forgo that deposit, but they might be cooking at the cottage instead of going out to dinner every night.”
Still, Julian says her wares are “small pleasures,” that most people can afford, recession or not.
“I was able to weather the storm. I was careful. I might have ordered a bit less inventory, but the book business … allows you to return books for credit if they don’t sell,” Julian said.
She also picked an unusual strategy for cutting costs: changing her light bulbs. “We replaced all of our lights with the curly compact fluorescents,” she said. “Our electric bill went down by two-thirds! Our electrician goes around town telling everybody.”
The Country Creamery, Blountstown
Founded: 2009Number of employees: 2
Revenue: Didn’t disclose
Just off State Road 20 in Blountstown, the county seat of Calhoun County, is Country Creamery and Gifts. The quaint coffee and ice cream shop offers plenty to tempt diners’ taste buds, including lemon tarts and massive tubs of ice cream in unusual flavors such as “Double Fudge Brownie” and “Malibu Coconut and Rum.” The shop also has pressed panini sandwiches with ingredients such as artichoke, provolone cheese and smoked turkey.
Babs Cheuvront opened the shop with her mother, Barbara Wilson, in October 2009.
“Blountstown needed something,” Cheuvront said. “We did it for us, but we also did it for the town.” Wilson previously owned a St. Petersburg-area restaurant that she sold in 2005.
Cheuvront said it’s difficult to know if her business has seen an impact from the recession because it’s been open less than a year. “We’ve gotten comments from townspeople who say, ‘Oh, we’re so glad an ice cream shop is here.’ ”
She laments that so many drivers take Interstate 10 to Panama City, bypassing Blountstown.
“If they took Highway 20 they could go through the little towns, stop, have something to eat besides Burger King and McDonald’s,” she said. “(The fast food chains) have meals for a dollar! That really upsets me. It’s hard to compete with a dollar.”
Instead of cutting back, Wilson said they decided to “pump it up” by using more expensive cheese and offering free delivery within the city.
“We’re not making the profit we could be, but you have to tap into people’s minds, what would make them choose your sandwich versus the others,” Wilson said. “Cutting back leaves a bad taste in my mouth.”
Blountstown Drugs, Blountstown
Founded: 1997Number of employees: 12
Revenue: Didn’t disclose
It’s an ordinary weekday morning, and the parking lot of Blountstown Drugs is packed with cars, pickup trucks and SUVs. Perhaps this is a recession-proof industry.
Owner and pharmacist Jon Plummer is behind the counter, filling prescriptions, answering phones and juggling questions. He started the business in 1997 and competes against a nearby pharmacy and a Wal-Mart Super Center 20 miles away.
Plummer says his business hasn’t seen much of an impact from the recession. “I have seen a drop in my front-end sales — that’s the gift cards and small items — but the back end (drugs) is doing well. I’ve hired two people, even. People always need health care,” he said.
He notes that people are trying to spend less on drugs and are opting for generic brands.
“People are spending less, but my volume is the same. You do better on making money on generics, because they are cheaper to stock. That’s why everybody is pushing for generics. It’s cheaper for the customer and better for the pharmacy,” Plummer said.
It helps that Plummer is on a first-name basis with his customers. “I can name 90 percent of them,” Plummer said. “Not only do I know their name, but I can spit out their medications off the top of my head.”
Wilson Brothers Barber Shop, Panama City
Founded: 1946Number of employees: 3 contractors
Wilson Brothers Barber Shop is a community institution.
Jonathan Wilson’s late brothers opened the shop in 1946 and he joined them a few years later. He’s been giving simple, inexpensive haircuts inside the small stone-front building at the corner of East Ninth Court and North MacArthur Avenue ever since.
Prices haven’t changed in at least a decade. It’s still $10 for adults, $8 for children. What has changed is the economy. “About a year-and-a-half ago, when the economy took a downturn, our business took a little downturn also,” Wilson said. “We lost a lot of customers, but we still have a pretty good share of business. We’re keeping our heads afloat.”
Wilson said he tries to keep doing good work and has advertised more to bring in new clients.
“But we’re an old business so everybody knows that we’re here,” Wilson said. “It’s just one of those things that happen, like everywhere else in town.”
Bay Breeze Bait & Tackle, Panama City Beach
Founded: 2009Number of employees: 0
Need a fishing license, bait to reel in a mullet and a beach umbrella to keep the sun off your head? Bay Breeze Bait and Tackle and its adjoining store, Beach Things, has every item you’ll need for a day of angling on the sand. You can even rent boats to ride around Lake Powell.
The shops on Back Beach Road, near Le Grand Drive, are owned and operated by Joe and Georgia Cline, a retired couple from the Peach State. They opened their business in March 2009 after several years of visiting the Panama City Beach area. Joe runs the bait shop, while his wife handles the beach store.
“We knew going in that there was a recession … but we felt like with the location, the lack of tackle shops in this area, we would go ahead and (open the business),” Joe Cline said. “Tourism was off last year, but still, we had a pretty good response. We did see significant pick-up this year with tourism.”
Cline said they didn’t have to make many adjustments. “Once people knew we were here, there are enough locals, there is enough tourism that we would be fine.”
Pretty Please, Miramar Beach
Founded: 2004Number of employees: 4
Pretty Please is an upscale children’s boutique and design center located in Grand Boulevard at Sandestin in Miramar Beach near Destin. The company has been in business since 2004 and has four employees.
Inspired by her own two children, ages 8 and 5, owner Keely Fell incorporates color, unique artwork and striking signature pieces into her designs to create whimsical spaces for kids. Her approach is to find one statement piece, such as a chandelier or work of art, and design around it with input from the parents and the child. Fell also offers customized personal shopping services for clients who live outside of the Destin area.
Fell noticed her sales drop right after Thanksgiving in 2008, when it should have been her busiest time. “It was like going off of a cliff,” Fell said. “There was both a reduction in traffic and consistency. Customers still came in, but there was a huge difference in what they were spending.”
Her customers shared their stories of financial heartbreak. “They have been sharing what they’re going through — losing jobs, cutting back. But this wasn’t just my shop, I know from talking with other owners, too. These are unprecedented times,” Fell said.
To cope, Fell said she is focusing more on customer service and developed a website and e-mail services to attract customers who come to the area while on vacation.
“When they leave my shop, I want them to keep Pretty Please on their minds. I need to keep the relationship going until they come back to town next year. I am offering even better-priced items than I had last year,” Fell said.
Telly’s Auto Repair, Fort Walton Beach
Founded: 1995Number of employees: 3
Revenue: Didn’t disclose
Keith and Sandra Telemacque opened their business in June 1995 after moving to Fort Walton Beach from Italy, where Sandra was stationed in the Navy. Telly’s Auto Repair offers major auto service repairs and R&R, or removal and replacement of either new or used parts. The Telemacques have three employees.
The Telemacques noticed four years ago that fewer customers were coming to do repair work. “I could tell when people stopped repairing their cars,” Keith Telemacque said. “They put off repairs for a period of time, and often things would get worse and then they wouldn’t be able to afford to fix the car. That is money out of our hands and a car out of theirs.”
To survive, the Telemacques had to make tough choices on inventory. “I used to be able to order 55 gallons of oil for about $200,” Keith Telemacque said. “Today I don’t buy it as often, because it’s $480 for the same amount.” The couple also changed its strategy on diagnosing cars.
“We used to spend more time diagnosing,” Keith Telemacque said. “We bought more expensive tools to give us an edge in diagnosing quicker in order to get the customers in and out more quickly.”
Davis Travel, Niceville
Founded: Bought in 1996Number of employees: 2
Revenue: $2 million
Donna and Keith Reyher bought Davis Travel in 1996 after Keith retired from the Air Force. Donna Reyher got the travel bug after living all over the world because of her husband’s military career. In Japan, she was selected to organize tours for the officers’ wives.
“I found I loved it so much, when I moved back here I went to work for another travel agency,” Donna Reyher said. After her children were in college, she told her husband she didn’t want to just work at a travel agency anymore. She wanted to buy one.
As luck would have it, there was one across the street from their house that was for sale.
Donna Reyher works with clients from all over the world, although 90 percent of them are located in Okaloosa County, she says. Most of her work focuses on booking international trips, and she recently helped a local high school book a trip to Egypt, a country she had visited.
“It was a few dollars more than what they found online, but when they came home they said, ‘Everything was grand. Everything was just fabulous,’” Reyher said.
Though this economic recession has hit Davis Travel hard, the agency has been coping with a steady decline in the travel business ever since Sept. 11, 2001. After the terrorist attacks, 75 percent of the travel agencies in Okaloosa County went out of business, Donna Reyher said. “I said we would not so we had to borrow money to stay in business. We still have not paid it off.”
Donna Reyher said the combination of Sept. 11, the growth of online travel booking and the economic recession has been damaging to her business. “Fewer people are traveling; they don’t have as many extra dollars to do frivolous things because they are spending it on house payments or food.”
Besides taking out the loan, the Reyhers have slowly cut back on employees. “When we came in here, we had four employees plus the two of us,” Donna Reyher said. “Now it’s just the two of us. We can’t afford it.”
Flowerama, Gulf Breeze
Founded: 2006Number of employees: 6
Revenue: Didn’t disclose
Opposite a Starbucks on bustling U.S. Highway 98 near the scenic Pensacola Bay Bridge is Flowerama, a flower and gift shop. Inside are lavish displays of rose bouquets and trinkets that scream, “I was at the beach!”
Susan Mitchell bought Flowerama in 2006. Since then, she has seen her business thrive and struggle. During her first two years of owning Flowerama, business was booming.
“We were consistently beating records, a 10-percent increase in sales per year,” Mitchell said. “And the last two years have been 10-percent decreases each year.”
Mitchell said it bothers her to read media reports that the economy might be getting better. “But it’s not getting better. I think we were a little slow on the slowdown.” Mitchell said her Orlando-based daughter noticed a change in the economy at least a year before she did.
To keep her business alive, Mitchell cut her staff in half, from 10 to 12 employees down to six.
“The hours we cut back a small amount, our mornings by an hour and our evenings by an hour,” Mitchell said. “We also aggressively sell our flowers at the best price. We have our roses at $14.99 a dozen.” During Valentine’s Day, Mitchell said she raised the price.
“That’s one of the times that helps us keep the year going,” Mitchell said.
Razor’s Edge Fitness, Pensacola
Founded: 2008Number of employees: 1
Seeking a way to stay fit yet unhappy with large, national fitness chains, National Guardsman Gil Petruska decided to open up his own gym.
Located in downtown Pensacola, Razor’s Edge Fitness is affiliated with CrossFit, an exercise philosophy that is especially popular with men and women in law enforcement and the military.
CrossFit focuses on exercises that target a broad range of muscles and overall aerobic fitness.
Petruska found that the CrossFit model was perfect for him and learned there wasn’t one in Pensacola yet. He had never started a business before and devoted 10 months to learning about personal training and figuring out business basics before opening his doors in November 2008.
It’s too soon to tell if the recession has impacted him, Petruska said. “I’m still in start up mode and focused on building my membership,” he said. He gains new customers through word-of-mouth. “I would say of the 10 people that walk through the door, we maybe retain three or four,” Petruksa said. “That’s a pretty high percentage.”
During a recession, people still have discretionary income, Petruska believes, but they are more selective about how they spend it. “I make sure my pricing system is a good value,” he said.
“You can pay $140 a month and come in as often as you want, or buy a pre-paid, 24-visit package for $240, so that’s $10 a visit,” he said. (He offers discounts as well). He likes to compare his business model to the large, national gyms that offer memberships as low as $13 a month. “Well, what happens when you want personalized coaching?” Petruska said. If you get a coach three times a week at $20 a session, that’s $230 a month.”
Razor’s Edge is also deliberately designed differently. “Many people who walk in, their first impression is the brick walls — very austere, no flat-screen TVs, no juice bar or tanning salon,” Petruska said. “This is an uncompromising, austere place where you come to get strong.”
Breaktime Café by Dawn, Pensacola
Founded: 2008Number of employees: 5
Dawn Ouwerkerk was ready for a change.
Most of her career was spent jumping from one city to the next, such as Atlanta and Los Angeles, designing command and control rooms for the military.
“But I always wanted to get back to the small town and away from the rat race, and I loved Pensacola because my husband did his pilot training here,” Ouwerkerk said.
Unfazed by the looming economic crisis, Ouwerkerk decided to open a café in downtown Pensacola in 2008 that served breakfast and lunch.
“It was challenging because I had to learn everything,” she said. “I took all the classes and read all the books, but then I had to figure out how to buy inventory, where you put it, everything.” She perfected it quickly, even mastering the complicated art of preparing a Cuban espresso, which involves making caramelized sugar on top of espresso.
Though her business is young, Ouwerkerk has seen an impact from the recession. “That first year, the offices downtown were populated,” she said. “The Hancock Building used to have five or six businesses that ate lunch here.” Other businesses like the Pensacola News Journal used to work downtown and have since moved some of their operations away, she said.
“It used to be packed,” she said. “We’ve seen a huge change. It’s been sad. A lot of people that watched us come in and rooted for us and hugged at the end of that first year are gone.”
To survive, Ouwerkerk has focused on tweaking her menu to offer the most popular items.
“I started out with muffins, and they didn’t sell well. It took me almost a year to figure out I wasn’t going to sell muffins,” Ouwerkerk said. “It’s an odd thing.”
What does sell? Bread. “We found that people are willing to pay for really good breads. I bring my breads in from New York, my wheat and marble rye,” Ouwerkerk said. “People come in and say, ‘I love your bread.’ We found that breads really make a difference.”