Penny-pinching buyers push local businesses to breaking

Things got harder and harder in the past year for small-business owner Beverly Turner. Fewer customers came in each month. Revenue kept falling. She fell behind on her rent.

She decided to close the corporate office of Weight Loss Forever, as well as two of the seven stores throughout Virginia Beach and Chesapeake. She thought that would be enough to keep her business afloat.

Then two weeks ago she got a letter from her creditor informing her that, as of Nov. 30, it no longer would finance her customers’ weight-loss plans, she said. With about 85 percent of her revenue coming from CareCredit Inc. payment plans, she knew her business couldn’t survive.

So last Saturday, after nearly 15 years in business, she shuttered her centers.

“The economy forced us to have to close,” Turner said. “I fought for it until the last minute, but there was no solution.”

The credit crunch and a deteriorating economy have mounted pressures on small businesses that already struggle to survive. Since July, several small businesses have closed in Hampton Roads, including Chesapeake Hardwood Products Inc., seven David Nygaard Fine Jewelers stores, Green Alternatives in Norfolk, Portsmouth’s Comfort restaurant and Bobby Huber’s Bobbywood restaurant in Norfolk. Tidewater Sports & Collecti bles Inc. also filed for bankruptcy.

Others, such as D & J Unique Gifts and The Delightful Dish, teeter on the brink. Both Virginia Beach businesses have announced that they soon will close.

The problems aren’t limited to small businesses. Retail chains such as Circuit City Stores Inc. and Value City Department Stores have filed for bankruptcy.

“We’ve been seeing an upswing in the number of businesses that are calling us that are experiencing difficulty,” said Jim Carroll, executive director of the Small Business Development Center of Hampton Roads. “The biggest difficulty right now is cash flow. The sales just aren’t there, the profits just aren’t there, and consequently they’re finding it difficult to pay their bills and meet their overhead expenses.”

In some cases, businesses close and leave their employees unpaid and in a lurch.

When Jemm Industries Inc., a sandblasting and maritime painting company in Chesapeake, closed its doors around Oct. 30, about 60 or 70 employees went unpaid. The same happened to employees of six local Burger King franchises that closed a week earlier.

In those cases, the owners didn’t have the funds to pay, said their attorney, Lawrence Glanzer, from the Norfolk law firm of Roussos, Lassiter & Glanzer.

Weight Loss Forever’s employees were worried they wouldn’t be paid either, said Samantha Patterson, who was an area manager over four stores. But they received their final paychecks Friday, she said.

“They’re the ones that made the business,” Turner said. “Never would I not give them a paycheck if I had the means to do it.” Antonica Welvaert doesn’t plan to make that mistake, either. She’s already put out her resume and has informed her six employees of the looming closure of The Delightful Dish.

“We’re hanging on by a thread, like a lot of businesses,” Welvaert said. “The economy is just making it impossible.”

Two years ago, Welvaert worked as a software consultant to support her two children. As a single mother, she knew how hard it could be to work all day and then come home and cook a good meal.

She opened The Delightful Dish in November 2006. The store provides all the ingredients and instructions for customers to make dinners – such as Parmesan tilapia and cider-glazed chicken – that can be frozen and eaten later . It also sells pre-made dinners, wine and other foods.

Welvaert said she has built a loyal customer base of parents, single professionals and retirees.

She started turning a profit after a year in business, she said, but things took a turn in February.

“It just started to die off and never came back,” Welvaert said. “People are not spending money like they were.”

She announced in September that she’d have to close. The decision drew such an overwhelming reaction from her customers that she’s been able to postpone what she believes is probably an inevitable end.

Sales are down. Costs are up. And there’s not a “remote possibility” that she could get another loan, she said.

But she’s fighting to stay open as long as possible.

“It’s a hard thing to battle against,” Welvaert said. “I mean, it’s like an epidemic. … No one is immune to what’s going on in our economy.”

Tidewater Sports & Collecti bles shut down its locations in Chesapeake and Newport News in August and September, respectively. Its store at Norfolk’s MacArthur Center is scheduled to close today , said Raelee Everett, the chief operating officer.

She and her husband started the business in 1999, selling sports and novelty beanies at a flea market in Virginia Beach. Business had been pretty good until the economy turned, she said.

The company filed for Chapter 11 bankruptcy reorganization last month. The store’s sales totaled $1.6 million in 2007, according to the tax return included with its bankruptcy filing. But the business still lost $19,673 last year.

“We grew too fast, took on too much debt and didn’t pay attention to the trends in the economy,” Everett said. “Part of it was poor business management, part of it was the poor economy.”

The hardest part is letting down her employees, which totaled 27 in July, she said. By the end of December, she plans to close the last store, at Lynnhaven Mall in Virginia Beach.

“It’s a very bitter end,” Everett said.

The region has an estimated 161,000 small businesses, forming the backbone of the economy, said Carroll, of the small-business center. Statewide, about 643,600 small businesses employed nearly 50 percent of the nonfarm private labor force in 2004, according to the U.S. Small Business Administration. In 2006, nonfarm proprietors’ income in the commonwealth was $20.7 billion, according to the administration.

To help business owners weather the economic downturn, the small-business center offers counseling and classes. “In some cases we might be able to see something that the business owner can’t see and keep them from having to take that drastic step,” Carroll said. “There is no silver bullet, and so consequently what they’re going to have to do is go back and take a look at the way they do business … and just become smarter businesspeople.”

When that doesn’t work, having to give up on a business can be heartbreaking.

“I hate it,” Turner said. “It’s my passion.”

When she started with the weight-loss centers about 15 years ago, the program helped her lose 73 pounds, Turner said. Since then, she’s wanted to help others do the same.

“I’ve loved every single bit of it,” she said. “I’ve seen hundreds of people’s lives changed.”

But the economy gave her no choice but to end the business, which had more than 400 clients and about 18 employees, she estimates.

“That leaves everybody that works for me without a job, and I hate that,” Turner said. “I wish I could make it right for every single person, but, you know, I can’t.”

Kathy Adams, (757) 446-2583, kathy.adams@pilotonline.com