Starting in troubled times
When David and Jeanette Hendrickson decided to relocate Retroville, their vintage-themed boutique, from the state of Washington to Santa Barbara, they had no idea that their first week in business here would be nationally notable.
“We opened on the worst week in Wall Street’s history,” Jeanette Hendrickson said. Retroville, whose owners employ two workers, opened Oct. 3 on State Street.
The Hendricksons are among hundreds of small-business owners trying to open or expand their companies in the Tri-Counties in a challenging economic climate. Across the region, the picture is mixed, with a lack of capital and slow times hampering some businesses while others are optimistic that their openings or expansions will succeed by finding a niche.
Jeanette Hendrickson said she initially had trouble finding a lease because many landlords weren’t ready to take a chance on a small business.
“A lot of the building owners were looking for some more established, kind of corporate-type retailers to come in, and they were hesitant to rent to us,” she said. “But our experience with locals is that they’re very disappointed in the corporate stuff and really like the mom-and-pop.”
So far, Jeanette Hendrickson said, foot traffic from both tourists and locals is looking good.
“This area is so much more of a thriving retail area than the sleepy little town in the Northwest where we came from,” she said. “There’s nowhere to go but up from here. Especially on the weekends, it’s very busy.”
Up the coast, retailers report similar optimism. Kirk Psenner is ordering inventory and gearing up to open a shop on Higuera Street in San Luis Obispo. He already owns a clothing and gift store in Cambria, and the new store, Kwirkworld, will offer “twisted irreverent novelty cards and gifts,” Psenner said.
“So far I haven’t had a problem” getting the new store up and running, Psenner said. “But if you have cash in the bank, I don’t think it’s an issue.”
Indeed, a dearth of available capital is one of the key issues hampering some owners and keeping potential entrepreneurs out of the market.
“Right now I’m trying to help small businesses who are struggling with too much debt and can’t get refinancing,” said David Shepard, a counselor with the Ventura County chapter of SCORE, a volunteer arm of the U.S. Small Business Administration that counsels small businesses. “And for new business, there’s just no money available. We’re seeing a decrease in the number of callers we get who are thinking about going into business.”
Jerry Harter is a former chairman of the Santa Barbara SCORE chapter and now sits on the loan committee for California Coastal Rural Development Corp., or Cal Coast. Similar to the SBA, Cal Coast provides micro-loans and loan guarantees to businesses and farms on the Central Coast.
As recently as two months ago, Cal Coast offered to guarantee up to 90 percent of loans. It now offers only a 70 percent guarantee, Harter said. Micro-loans also are decreasing.
“[Cal Coast is] able to give a loan of up to $35,000, but even that is drying up a little bit,” Harter said.
Small businesses that secured funding just a few months ago say they’re glad they did so. Jay Ferro, founder of Santa Barbara-based restaurant Silvergreens, is opening a new location downtown. His first location, in Isla Vista, had averaged 20 percent year-over-year revenue growth since 2006.
“That’s one of the reasons we were able to go out and get financing,” Ferro said. “Today, I don’t know. I very likely could have been denied, because it’s such a different environment.”
But Ferro predicts restaurant-goers will trade down, looking for less-expensive options. He’s confident his health-oriented cuisine will fare well, even in slow times. The original restaurant weathered the post-9/11 slump.
“We’re pricing our product between fast food and casual dining,” Ferro said. “I think that’s a pretty safe environment.”
