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Hard Times: Some small businesses suffer through downturn, others are just getting started

Editor's note: This is the second in a series of stories about how the recession has affected the lives of Northern Shenandoah Valley residents.

By Preston Knight - pknight@nvdaily.com

Economic woes will never rob the Northern Shenandoah Valley of its picturesque views.

The smooth-flowing Shenandoah River, rolling hills and long stretches of uninterrupted green countryside have long attracted residents and visitors alike, no matter the financial climate.

Front Royal restaurateur David Gedney, a Northern Virginia transplant, has come to admire another view as a small-business owner: a steady stream of cars rolling by at 206 S. Royal Ave., home to four of his entrepreneurial ventures: J's Gourmet, a wine shop; Element, a casual restaurant; Apartment 2G, which offers fine dining; and a catering business. Across the street is Jack Evans Chevrolet-Cadillac, a town mainstay of 33 years. The nearby South Towne Apartments offers a pool of hungry patrons.

But these days the economy has made Gedney's view more of a tease than anything substantial, he says. Those rolling cars? They're no longer stopping. The long-standing dealership? It's coping with the uncertainty of the U.S. automobile industry. And those apartment residents? Like people all across the area, they have more reason to brown-bag their lunches and skip eating out for dinner.

The impact has been felt throughout Gedney's endeavors over the past year. The wine shop's sales are down about 40 percent. Element's lunch crowd dwindled to six customers at one point. Apartment 2G cut back to opening only on Saturday nights, with the possibility of closing altogether. And catered events, including weddings, are off.

"We're knee-deep in water," said Gedney, whose wife, Stacy, is a co-owner. "We're not sunk. The boat still floats."

Instead of cutting his 10-member staff, Gedney cut back on their hours and slid into their shifts. Instead of sitting on what money comes in, he's reinvesting in the business. A 30-seat terrace behind the building is under construction to give passers-by another reason to stop in. And, perhaps most noticeably, Gedney traded in his knives and spatulas for some gardening tools, planting a variety of flowers and vegetables along Royal Avenue next to his businesses.

"I have had people drive by and say the garden looks great," he said. "It's like a billboard. At least they're noticing we're here. People ask, 'What are you doing?' I tell them, 'I'm planting customers.'"

***

The economy has many small-business owners throughout the valley concerned about their future.

"We've been in business since 1991 and this is the worst we've ever seen it," said Christina Holt, an owner/officer of Ozark Concrete Corp., which employs about a dozen people in Strasburg.

At the same time, there is a large segment of entrepreneurs who have success stories to report.

Mark Linski, who owns the local Save-A-Lot franchise in Mt. Jackson as well as New Market Grocery in New Market with his wife, Susie, reports a 10 percent increase in business over the past year -- a result of offering a good product at a great price, he said.

Where Linski feels the impact of the economy the most is hiring. The last time he placed a help-wanted ad, 50 applications came in; the norm is one or two.

"When I have an interview, everyone seems so desperate -- 'Hey, I need a job,'" he said. "Everybody's got their own problems. It makes for a difficult decision."

But choosing who to hire is a good problem to have compared to the issues some business owners, such as Peter Hart, are facing.

A certified arborist, Hart has owned Hart Tree Preservation Inc. in Clear Brook for 16 years. He recently entered into a three-year contract with the Virginia Department of Transportation to cut down hazardous trees in western Loudoun County.

It was a contract Hart badly needed because residential work in Frederick and Clarke counties had been slow, leading him to lay off five men. Then VDOT informed him that because of costs, his services may only be needed in emergency situations.

"I personally can't see how the state can ignore something like that," Hart said. "It will literally put people's lives in danger. ... I've seen trees that need to come down right now."

He said he views the current economic climate as a catalyst for creative thinking. In that regard, Hart recently completed the course work to become a certified technician so he could open a second venture, Comfort Clean LLC, a carpet and upholstery cleaning business.

"It's hard to shift from taking down giant trees to cleaning carpets," he said.

But his knowledge of the two niche businesses gives Hart what he feels is a distinct advantage over the competition.

And that, according to Bill Sirbaugh, executive director of the Lord Fairfax Small Business Development Center in Middletown, is among the reasons why opening a small business now is a good idea, despite the economy.

***

Sirbaugh works with existing business owners and people who are going through the steps of starting a business. The center, funded by the U.S. Small Business Administration and Lord Fairfax Community College, hosts about 70 seminars a year, most recently a standing room-only workshop detailing America's Recovery Capital deferred-payment loan program for small businesses.

Sirbaugh said half of the people he advises are considering opening their own business. Of those, 60 to 70 percent already have started the process.

"Now might be a better time [to open]," Sirbaugh said. "A lot of people over-extended themselves. They know about carpentry or photography, but they don't know about business."

A new business owner might be able to corner the market, he said, and learn from the mistakes of others. Sirbaugh suggests that entrepreneurs adhere to three guidelines: Stick with what makes you strong and what you know best, promote yourself and open a line of communication with the bank.

"Don't drop marketing," he said. "[Entrepreneurs] want to stay visible, stay in front of customers. When it turns around, they don't have to re-make relationships."

Gedney puts an emphasis on just that.

"You put yourself out there in a creative fashion, and when somebody acknowledges that you did something well ... it sticks with you," he said. "If I didn't have the customer connection, it wouldn't do it for me. I wouldn't have the passion for it."

Some common pitfalls to avoid, according to Sirbaugh, are not prioritizing your bills -- the IRS, the bank and the landlord should come first, he says -- and not understanding what your financial statements are telling you.

Randy Collins, president and CEO of the Top of Virginia Regional Chamber, said one of the biggest problems is underfinancing. Since the economy hit banks hard, too, they are demanding "solid credentials" before granting a loan to any business, he said.

"Personally, I don't think we're going to pull out of this mess until banks start lending money away, [especially to small business]," Collins said.

The regional chamber, which boasted 1,200 members two years ago, is now holding steady at around 900, but attendance at events has increased as more owners are discovering the importance of networking, Collins said. However, he fears for the business owner who may be suffering quietly, refusing to reach out for help.

On the flip side, some owners who are successful in this economy don't want others to know.

"They know other business people are hurting," Collins said. "They don't want to gloat, I guess."

***

Neither does Debbie Melnikoff, who owns Dream Baby Boutique on Winchester's Loudoun Street Pedestrian Mall. The business sells baby and maternity items not found in chain stores. Melnikoff has been turning a profit since opening in September.

She attributes her early success to business ideals -- pacing herself, not overstocking and listening to her customers -- as well as the nature of her shop.

"It's a happy place," Melnikoff said. "When people come shopping for babies, they are so excited to be shopping for a new little one or one on the way."

Another newcomer to the Old Town Winchester scene, Richard Oram, who opened the Union Jack Pub & Restaurant seven months ago, has found his own happy place. The pub's profits have exceeded all expectations, he said, largely because of its British theme and authentic food.

"I wish I had done this years ago," said Oram, 57, who put about $1 million into remodeling an old bank and jewelry store for the business. "I've never had so much fun at a job in all my life. I wish I had did it when I was 40."

"He's an example I use all the time of how things are not all going to hell in a hand cart," Collins said.

Carol Fogle, of Pool & Spa Supply Inc. in Woodstock, and Judy Ratcliffe, of Ratcliffe Concrete Corp. in Strasburg, share Collins' optimism, despite their struggles.

Fogle said business is down at least 50 percent, while Ratcliffe reported a downturn of 70 percent. Ratcliffe Concrete also had to lay off two employees.

"We did more advertising in the fall," Ratcliffe said. "It had no benefit. It was actually a larger expense."

But sulking is no way to turn things around, so she and other business owners waiting for the economy to pick up aren't hanging their heads.

Talking about the economy inside of Element on a recent Monday morning, Gedney had the enthusiasm and confidence that any business owner, particularly a restaurateur, should possess.

"I go through my frustrations, but I can't see giving this up," Gedney said. "This is where we are. Hopefully things will be better and we'll have more customers. ... I can just hope I make the right moves. If not, I've played the best game I can."

* Next: Families struggle to adapt.





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