Biz Beat: Small businesses struggle to keep afloat in tough economy

Government and agriculture, Kings County's top two industries, roll on as an economic decline tightens its grip on the United States. But for many small local businesses that provide nonessential products or services, the effect can be severe. Nobody knows that better than Shelley Allen, owner of Kings Cheer Core, a cheerleading and tumbling school that opened in May.

At the time, Allen was banking on parents looking for a place to put their kids during summer downtime.

But then gas prices started to skyrocket.

Allen found herself staring at a mostly empty tumbling floor inside the cavernous warehouse that houses Kings Cheer Core south of Armona.

Now, it's not high gas prices -- they've tumbled in recent weeks below $2 a gallon.

It's the general economic downturn.

"Basically, I'm at a third of what I need to be at," Allen said.

It's a story being repeated at other small businesses trying to cope with tough conditions.

In Hanford, at Mrs. T's Sweets next to Save Mart on 11th Avenue, the lights are still on, the oven is working and the overhead fans are turning, but the recession has hit hard.

Tammy Morrison opened the business only eight months ago, but she's already wondering if she'll be able to survive into January.

"It's been hard to even pay the monthly bills," said Morrison, who doesn't depend on the store for her family's income (her husband has a state government job).

At Kings Cheer Core, it's been the same kind of hand-to-mouth existence.

Allen said she's using her own money to keep the business afloat.

"Having kids of my own, I have to support them ... Yeah, the money's getting pretty tight around here," Allen said.

She figures the bad economy has a lot to do with it.

"Of course, an activity like this is a luxury. It's not a real necessity," she said.

Allen and Morrison find themselves in the same bind as many other local businesses trying to sell products to consumers limiting their spending to the essentials.

The problem is magnified in the Central Valley because of higher unemployment rates and lower median income, according to Gil Jaramillo, Visalia manager of the Central California Small Business Development Center.

Small business has made efforts to adjust.

For Morrison, it's meant adding a line of regular food items to supplement the big cake creations she relies on.

For Allen, it's meant renting out her space to a karate instructor.

Allen gets a cut of the instructor's fees, and she has picked up a few additional tumbling students from the karate classes.

That, along with low gas prices, give her hope that the business might eventually get to the 50 regular students she needs (She's got 21 now.)

But if the recession lasts for a year or two, Allen figures she'll have to close the doors.

It's a tough market out there for small startups in need of credit, according to media reports.

The problem is different for some established local firms.

There, the challenge is trying to make mid-course adjustments to meet current conditions.

The process can be seen at Vandersteen Audio, an under-the-radar operation that cranks out high-end stereo speakers from a non-descript factory in Hanford.

Richard Vandersteen's business was born from tinkering he did in a Hanford garage in the late 1970s.

Last year, Vandersteen Audio did $2.5 million worth of business selling speakers ranging from $900 to $21,000 a pair.

In the current downturn situation, two things have been affecting Vandersteen's sales: The rising value of the dollar and the reduction of consumer spending.

Vandersteen has seen his export business -- it was 35 percent of the total earlier this year -- drop off.

Domestically, Vandersteen said, more speaker manufacturing is going to countries like China that can make the equipment a lot cheaper.

So now Vandersteen is doing something that might seem counter-intuitive: He's developing a $40,000 set of speakers made of carbon fiber and balsa wood.

The theory is that the kind of audiophiles who buy Vandersteen speakers are virtually recession proof.

"The higher-end people, there's a percentage of them which are OK," Vandersteen said.

Vandersteen is helped by the fact that he owns the property and the factory building outright, meaning no mortgage payments.

But even he doesn't know what's going to happen as the economy continues to shrink.

"I'll just hunker down and see what happens," he said.

The reporter can be reached at 583-2432

(Dec. 12, 2008)