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Small businesses slumping

Some owners could be forced to sell their stores

Posted: June 9, 2008 2:22 a.m.
Updated: August 10, 2008 5:03 a.m.
 
Mike Anderson can pinpoint the time when his small business first saw a slowdown.

It was May 2006, right when gas began selling for $3 a gallon.

"I had a good first quarter," said the owner of Play it Again Sports at Granary Square in Valencia. "After that, we just couldn't sell any big ticket items," he said, referring to the treadmills and elliptical machines that the sports equipment chain is known for.

Anderson believes fitness equipment became luxury items in people's lives.

"Before, people would take their spare rooms and fill them with fitness equipment," he said while sitting in his store. "They're not doing that anymore."

Over the last two years, business at Play It Again Sports has remained slow, especially in light of the current housing crunch and record-setting gas prices.

On top of that, Anderson said in late April, Granary Square tenants received notice of an increase in their property taxes, making it that much harder to stay in business.

"It just seems brutal at this juncture of the economy," he said, later adding that tenants received no prior notification of the increased taxes until they got their bills.

Katy Noel, senior director of real estate at Kimco Realty Corporation, which bought Granary Square in October 2006, said anytime a property sells, the taxes will go up.

She said Granary Square tenants were notified about an increase when the property sale was made.

But situations like Anderson's are becoming much more common among small businesses during a slow economy.

The struggle

Anderson, who has owned Play it Again Sports for five years, feels the pinch of the economy as more than just a business owner.

"We feel it as a consumer," he said. "Then we feel it on the other end as a shop owner understanding why consumers are cutting back."

Before opening his first small business in 2003, Anderson served as an area vice president for an acquisitions company, which gives him a different perspective on owning a small business.

"When you work for a big company, it's different," he said. "You have your goals and objectives, but you're still playing with somebody else's money, so to speak. Here, it's your money."

Another Granary Square small business owner, Don Pascone, is also struggling to get through the stale economy with his business, The Pet Depot.

The increase in property taxes on top of an already slow economy is affecting his pet supply business.

While he has tried to hold his prices down and absorb his increased costs, Pascone said he had to give in with the rising fuel prices.

"We'd love to be able to shout from the roof tops that we are not here to raise prices and change prices," he said of small business owners.

The bigger picture

Anderson and Pascone are not alone in their struggle.

Paul De La Cerda, director of the College of the Canyons Small Business Development Center, has seen a double in the number of small business clients.

He attributes the rise to not only the resource center's marketing efforts, but also to the current economy.

De La Cerda sees two categories for his clients.

On one side are employees who have been laid off as the result of companies downsizing.

"We've seen a influx of phone calls from local community who are thinking about taking matters into their own hands and starting their own business," he said.

The second category, De La Cerda said, are owners of existing small businesses who are calling to learn how they can be more efficient during the down economy.

Why such an impact?

Even though companies of all sizes are facing a tough economy, small businesses face different battles, De La Cerda said.

"For a small business, every dollar counts even more so than when they have a smaller budget and even tighter profit margins," De La Cerda said. "For them, one client can mean half of their business. If they lose one major client, that has a huge impact."

Additionally, De La Cerda said small businesses have a harder time finding good employees.

"They could spend months trying to find that one employee that could really make the impact in their business," he said. If that one employee leaves, the company could be greatly impacted.

What next?

With his hefty property tax waiting to be paid, Anderson is looking at his options.

Although he said he can "ride it out" and hope for the best, he decided to put his store up for sale two years ago.

He has not had any serious offers, so far.

"You can always quit a job," he said. "But you can't quit something that you own."

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