If there is a rock and a hard place in the U.S. economy, small businesses are there.
Right in that little crevice where money is tight – and getting tighter. Right where weekly payrolls can be financed only by personal credit cards or home equity loans. And right where “income” for the boss is taking five bucks from the till and paying for a sandwich that day for lunch.
“Small businesses are in a real tough spot now,” says Todd McCracken, president of the National Small Business Association.
The term “credit markets” sounds so esoteric. But for many companies that are nowhere near the Fortune 500, the credit markets are a very practical place to be. It’s where bankers and other lenders decide if their small business will get money to buy goods, expand or pay employees – or not.
“The economy is very scary right now,” says Judy Robertson, who runs Judy’s Pet Depot on Los Angeles’ west side. “As for me, being a small-business owner, I’ve felt it.”
At J.T. Jobbagy, a meat purveyor to high-end and middle-level restaurants in Manhattan, business has been down by as much as 20% in recent months since the start of the year.
The business, opened since 1981, has expanded into wholesale cuts of meat to supermarkets to try to offset some of the decline in sales to restaurants, says partner John Jobbagy. What’s making the slowdown more difficult, he says, is the rise in costs, including packaging, fuel and energy, which is up 40%.
But the only thing to do is ride it out.
“What can you do when everyone else is being squeezed?” he asks at the end of his workday, which begins at 4 a.m.
Benjamin Swift is a commercial diver who cleans hulls on yachts.
His business is being hurt because many of the yachts he takes care of are owned by business owners who are being hurt by the credit crunch. “As it gets tighter for them, it gets harder for them to spend money on something like this,” he says.
He used to employ a couple of divers for his business, but now it’s just him. And he’s taken on a second job. “I had to let go my employees and scale back until I became profitable,” he says.
“I’m facing no sales, no business, no nothing.”
Tracy Columbus, 47, runs her own “lifestyle, branding and marketing” strategy business.
She says her business is doing fine. Her home value has held up, and she has invested conservatively. She says she has always lived within her means. But she’s still worried about the effects of the meltdown.
“As a citizen, I’m very concerned,” says Columbus, who was visiting a yoga studio near her Westwood home in L.A.
Photo by faungg.