Small Business Owner Cautiously Optimistic

By Jenny Munro, David Dykes, and Angelia Davis | The Greenville News

Published October 19, 2011

Small-business owners, the backbone of the state and national economies, say they’re seeing mixed signals in the local economy, with optimism for modest gains improving business conditions tempered by fears of a new recession.By nature, these entrepreneurs are a hardy group.

“If I can sell cakes at the economy’s absolute worst, I know I can sell them during better times,” said Andrea Goodjoin, owner of Divine Desserts by Andrea in Greenville.

Goodjoin began her cake-baking business in the midst of the last recession, leaving her job to become a baker in 2008. She not only survived but expects growth will continue as the economy
improves.She shares a bakery now. With proceeds from a Michelin Development Upstate loan, she intends to move to her own storefront early next year. Over the Labor Day weekend, she began operating a cart in Haywood Mall and has hired one employee, who works with her on weekends.

Bruce Yandle, an economist who is the dean emeritus of Clemson University’s College of Business and Behavioral Science, sees at economic data, he sees nothing that “suggests there is any perceptible positive current in the economy.”

“The data I see suggest we are moving along a bumpy road,” Yandle said.Still, he said he looks at past data and business owners tend to look at the present and the future.“They look at the numbers of people who come in. They are looking at the future. I would put a good bit of credence in what small-businessmen and women think,” Yandle said. “They are risk-takers. But they’re also the survivors of a tough period, so that suggests they are cautious risk-takers.”

A recent survey by the National Federation of Independent Business showed a modest gain in small-business confidence in September. The NFIB said small-business optimism gained 0.8 points, ending a six-month decline. “But about the only good thing to say about it is that the index didn’t go down,” the NFIB said. “The net percent of owners expecting real sales to improve became less negative by 6 points, ‘rising’ to a negative 6 percent. The net percent of owners expecting better business conditions in six months ‘rose’ 4 points to a negative 22 percent, not exactly a euphoric development.”The NFIB said the future for small-business sales remains weak and fewer owners are investing in their businesses.

Twenty-eight percent of small-business owners reported poor sales are still their top problem,the NFIB said. In fact, poor sales have been the top problem for small-business owners for the past

three years, the association said.Access to credit isn’t a widespread problem, with only 4 percent saying financing was their worst problem, the NFIB said. Ninety-two percent reported all their credit needs were met or that they were not interested in borrowing.

“An increase in consumer spending would be the best imaginable stimulus right now, not gimmicky Washington policies,” said NFIB chief economist Bill Dunkelberg. “The key to economic recovery is restoring the confidence of consumers; only then will small businesses begin to see the sales they need to expand.”

The Federal Reserve Bank of Richmond said in a recent regional update that over the past 12 months, South Carolina’s economy has generated about 16,500 net new jobs. Private sector firms in the state added “a respectable” 32,200 net new jobs over that time, and government shed 15,700, or nearly 5 percent. Surprisingly, the largest year-over-year percentage increase was seen in manufacturing, where factory payrolls swelled by more than 5 percent, or 11,000 net new jobs. Richmond Fed officials said.Other increases were fairly widespread across service-providing sectors such as leisure and hospitality firms and professional and business services, the officials said.South Carolina’s seasonally adjusted unemployment rate increased to 11.1 percent in August, the highest since May 2010, from 10.9 percent in July.

Justin Kopelman, a 2009 Clemson University graduate who opened a Pita Pit restaurant on College Avenue in Clemson two years ago, said the current economy is forcing small-business

operators to refocus their marketing.During the summer, he boosted his marketing by offered punch cards, allowing customers to receive a free pita after they bought nine, Kopelman said. Customers who filled their cards were entered into a drawing to win an iPad.

Frank Ruby, owner of Blue Ridge Hobbies on North Pleasantburg Drive near Cherrydale Point, shopping center said sales last month were up 7 percent over last year and that’s in “a discretionary businesslike this.”

“Nobody needs model trains to survive, but our business continues to increase so we have to move to bigger digs,” Ruby said, “So, we’re saying, ‘So what with the economy.’ We’re going to keep plugging along.” partly because his Internet business has increased.

“Small-business owners are typically an optimistic lot,” said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. But they also tend to be conservative by nature. “Obviously, there’s still consternation and concern about what the economy is going to do,” Knapp said.

Barbara League, chairman and CEO of G.F. League Manufacturing Co., said her Greeneville company “has drastically changed the way we do business” in recent months. The changes were the result of growth rather than a contraction during the recession and a slow recovery, she

said.The company had few problems during the last three or four years because of the diversity of its client base, she said. When one company slows, another in a different industry is growing, League said.

Employment at the plant, which does fabrication for various industries, has grown in the last several years although it still has fewer than 30 workers, she said.And that growth is a cause for optimism and some fear, she said. The family-owned company has bought the 140,000-square-foot Wunda Weve facility at 2200 Poinsett Highway and is renovating it with plans to move production there in several months.The 140,000-square-foot facility has been empty for several years.G.F. League has run out of space at its 25,000-square-foot facility on Furman Road, where it has been since 1936, League said.

League Manufacturing has diversified since it started in 1917 as a wholesale lumber brokerage. In the 1930s, it began making textile machinery replacement parts. “For the first 40 to 50 years, we were exclusively married to the textile industry,” League said. But when the textile industry began faltering in the 1960s, “we knew we needed to diversify and fast.”

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