By Wallace McKelvey
Atlantic City Press
July 12, 2011
They lack the clout to sway votes in Congress or the savvy to set up tax shelters in the Cayman Islands. When they start up, there’s little fanfare, and when they go under, there’s no one to bail them out.
But they are the unseen engines of the local economy.
Small businesses — defined as firms with fewer than 500 employees — represent about 98 percent of New Jersey’s employers and more than 50 percent of the state’s private-sector jobs, the U.S. Small Business Administration says.
Local economic experts say all indicators point to an increase in small business activity in the region. With unemployment hovering at about 9 percent statewide, they say more people are taking their financial futures into their own hands, creating jobs for themselves and their neighbors.
Joseph Molineaux, director of the Small Business Development Center at The Richard Stockton College of New Jersey, said 2011 may be a record-setting year for entrepreneurs.
About 350 visitors have come to his office in the first six months of the year, seeking help with business plans and funding for their endeavors. Molineaux said that is on track to match or beat the record of 704 set two years ago. Last year, he said, about 650 small business hopefuls visited the Atlantic City office.
“Right now, the conditions are ripe for people to do their own thing,” he said. “The opportunities are there — all they need to do is look for unmet needs to help people.”
Most of today’s business proposals involve personal service, especially those centered on technology and the tourism industry, Molineaux said. In the current environment, most tend to avoid ideas that involve large start-up costs, such as restaurants.
“Everyone’s expectations are more realistic today,” he said. “They’re realistic about what they can earn and what people will pay for products.”
In addition to starting smaller, Molineaux said he encourages prospective business owners to design a strong business plan and have an exit plan.
“People look at exit strategies to know at what point to get out,” he said. “That wasn’t part of the business plan years ago. Now it’s integral.”
The Internet has also opened up marketing opportunities businesses didn’t have before, Molineaux said. The smart entrepreneur has a web presence on Facebook and Twitter, if not their own website.
The three businesses The Press of Atlantic City contacted all have either a website or a business page on Facebook.
And while bank loans can still be difficult to obtain, Molineaux said there are micro-loans available through various lenders statewide.
In the first six months of fiscal year 2011, the SBA’s New Jersey district office approved 22 small business loans, totaling $17.6 million in Atlantic County, compared to 14 loans and $3.9 million during the same period in 2010.
As of June 30, the SBA has approved 27 loans for $20.4 million, said spokesman Harry Menta.
He said the increase in small business loans is largely due to the Small Business Jobs Act, which was signed into law last year, clearing the way for $42 billion in tax credits and loan incentives for banks. The bill also guaranteed loans up to 90 percent and waived fees for borrowers, he said.
“Putting capital in the hands of small business organizations has a trickle down effect that can create jobs for our area, put people back to work and lead to more orders for another business,” he said. “One loan can do more than one thing for one small business owner.”
Mayor James “Sonny” McCullough said Egg Harbor Township hasn’t done anything specifically targeting small businesses, but entrepreneurs are good for the community.
“We’re not discouraging it, but what we’re really looking for is commercial ratables,” which won’t come from a home operation, he said.
Although he’s unsure whether home-based businesses — which are difficult to track — are seeing real growth in the township, McCullough said they are more visible. With the Internet, he said people can find a caterer or cleaning service in minutes.
New career as a “rental wife”
When the economic recession struck, Andrea Thonen’s career as a freelance home-care nurse hit the rocks.
“Families started taking care of patients themselves instead of paying and having people come in and do it,” she said. “And a lot of people are starting their own home health care businesses.”
While her client base disappeared, Thonen said her responsibilities as a single mother of 12-year-old twin boys did not.
“It’s been horrible, hard times, but we make it,” she said. “I refuse to be supported by the state of New Jersey, so I do it on my own.”
The solution to her problems, Thonen said, came from her own personal experience with messy boyfriends. There was an unmet need out there for what Thonen calls the “rental wife.”
“Guys houses are sometimes very ‘bachelor,’” she said. “The beer cans everywhere, garbage piled up, no sheets on the bed — just a comforter.”
Although errand and housecleaning services are common enough, Thonen said few of them have targeted bachelors. When family or future in-laws are stopping by, she said, even the messiest guys want to clean up their act.
“Bachelors out there don’t have the first clue about cleaning and putting a house together,” she said.
Thonen said her Pretty Girl Service, which provides a range of services from cooking and cleaning to home decor and personal shopping, has attracted three regular clients since it began in May.
Eventually, she said, she hopes to expand her Cardiff home-based business to hoarders and those with more intense cleaning needs.
Financial security at 18
Chop Dawg Studios, a web design firm, will celebrate its second year in business next month. Its 18-year-old owner, Joshua Davidson, said he hopes to move the operation out of his parents’ McKee City home by then.
“We’ll be looking for a studio next month,” he said.
Currently, the studio — with local and national clients ranging from the Community Partnership for EHT Schools to Six Flags Great Adventure — exists anywhere Davidson and his six team members can find an Internet connection. But the brick-and-mortar studio isn’t likely to change that, noted Creative Director Rauf Tur, 27, of Galloway Township.
“You could work at 4 in the morning in Toronto if you wanted to, or 12 at night in Madagascar,” said Tur, who started at Davidson’s firm in March. “It doesn’t matter as long as you meet the deadlines and get the job done.”
Before landing the job, Tur said he struggled to find a job, sending out at least a hundred resumes. He found Chop Dawg through the alumni connection at Richard Stockton College, where Davidson will study business and marketing this fall.
Davidson, who started designing websites for fun, said he started pursuing it as a business to make extra money.
“I got denied about a thousand times before I found my first (client),” he said. “After that first business accepted me, I made a website for them and they became successful and they told two people and they told two people and it became a snowball effect.”
Today, Davidson said Chop Dawg has 140 active clients across the country. And he’s just launched the studio’s first software program, a HTML-free web editor for his clients called Odysseus CMS.
Operating his own business is “amazing and scary at the same time,” he said. “It’s my responsibility for myself that everything happens and becomes reality.”
But it’s far better than the alternative, working a minimum-wage job on the boardwalk, Davidson said.
Joshua’s 42-year-old father, Dave, who works as a shift manager at a casino, said his son has financial security that is rare at any age in the current economy.
“If I should lose my job, I don’t have to worry about him so much as I would for our girls,” he said.
“I always thought he’d find his own way,” added his mother, Lisaanne. “He’s always the one to take the reins and make it work.”
A green evolution
When Sandy Valdivieso’s children, now 9 and 11, went off to school four years ago, she said she had to find something to do with her free time.
“I cannot sit still — I had to do something,” she said. Her first at-home business, an errand service, was “very flexible, so I could still be home for the kids when they came back from school.”
But the jobs stopped coming as the economy forced her clients to cut back on spending. Valdivieso, who emigrated from Ecuador 14 years ago to be with her engineer husband, said she had to expand her horizons.
Valdivieso, 37, gradually refashioned her business into a green, nontoxic cleaning company under the Shore Naturals banner, evolving with the tough economic times.
She said the biggest impact of the economy has been on the prices she can charge for services. A split-level townhouse that would have cost $120 to clean now fetches about $90, she said.
In March, with mounting competition and increasing overhead costs, she teamed up with two of her Steelmanville neighbors to form Brookside Cleaning. The company now has seven part-time employees to cover a growing roster of commercial and residential clients.
“I don’t think I’d be here so quickly by myself,” she said. “It’s not easy to change, but this was a good transition and it allows (the company) to grow.”
Because she’s scrubbed bathroom floors herself, Valdivieso said it’s important to keep her employees as happy as her clients.
“When we’re established, I don’t want to be the employer you say, ‘You work for that company?’” she said. “We try to be a good company to work at. It has its challenges, but that’s important to me.”
One of those employees, Victoria Clark, 41, of Northfield, started cleaning houses in April to supplement her income as a dance instructor. She works about 10 hours a week in the evening and on weekends.
“I enjoy walking out of a house, leaving it the way a person wants to find it and knowing they didn’t have to do it,” she said. “One day, I hope to have that feeling.”