Starting up in a down economy
Tales of new small-business owners who took a chance and made money to boot
Why on earth would anyone start up a business in the midst of an economic downturn? And, on top of that, how could they do well at it?
Four local people—a pie maker, two builders and the director of a small-business development center—recently shared their stories of how a person can not only survive, but also thrive in the current economic climate as a small-business owner.
Robin and Alvin Rowe’s little cottage-on-wheels is a regular fixture at both the Saturday Farmers Market and the Thursday Night Market. From it, the Rowes sell Robin’s increasingly popular homemade pies—apple, Dutch apple, strawberry-rhubarb, peach, blueberry-peach, marionberry, pecan, old-fashioned chocolate fudge, pumpkin, lemon meringue and so on—packed in brown cardboard boxes lovingly decorated with colorful swirls felt-penned by Robin herself. Their cute cart—hand-built by Alvin—also carries homemade cookies, quiches and jams.
Robin Rowe is an affable, pretty 40-year-old with an attitude suffused with warm positivity. She recently shared the story of how two serious, back-to-back bouts of economic misfortune led to the creation of Sweet Cottage, the Rowes’ pie-making business, which is thriving despite a less-than-robust economy.
“Our plan wasn’t to make pie to support our family,” offered Rowe. “But we just have to accept what is. And you can be inspired—several steps up from acceptance. You can have fluidity. You can go with the flow.”
Hers is decidedly a case of “if life hands you lemons, make lemonade.” Or lemon pie.
The Rowes’ trouble first started in 2006, when Alvin was forced to quit his job as a machinist after he contracted Lyme disease, which was exacerbated by inhaling metal dust at work. At the time, Robin was a stay-at-home mom raising the couple’s two young children, now aged 7 and 10.
With Alvin out of work, “We dumped [Alvin’s] 401K, all of my stocks, into rentals—fixing up old houses and renting them out,” recalled Rowe, who lives with her family in the small unincorporated Glenn County community of Kirkwood. “In ’06 and ’07, we did pretty darned good.”
But by the summer of 2008, Rowe said, “the market started to drop so hard, we started to lose tenants fast. And tenants would just stop paying, even the ones who had been with us for over a year—the economy tanked so badly in Red Bluff,” where their eight rentals were.
“We said, ‘OK, we need to unload the boat before it sinks,’” she said. “The value on the homes dropped so significantly that we owed more on them than they were worth. Plus, the rental market was so bad that everyone was dropping [the price of] rents, and we couldn’t do that.”
The couple sold off their houses, “one by one, until we finally accepted we weren’t meant to be landlords,” she said.
Luckily, Rowe had been dabbling in a hobby she’d been in love with since she was a child—pie-making.
“I’ve always loved to make pies,” she said. “Pie is a lost art. The crust requires a certain level of patience to make. My mom taught me the art of crust.”
April 2008 is when Sweet Cottage officially came into being, at first as a “for-fun” project at the Thursday Night Market. By that summer, when the real-estate market really began to suffer, Rowe’s business “was able to bring in a positive [cash] flow. But it was all going into keeping the rentals afloat.”
“All the money … we put into those rentals was money we didn’t put into our house or into new cars,” said Rowe. “But you know what? Had that [the real estate crisis] not happened, I don’t think I would’ve been receptive to expanding Sweet Cottage the way we did. I would’ve just kept it teeny-tiny. It’s become much more than I ever planned.
“Now, [Sweet Cottage] is how we support the family,” Rowe said. “It’s not huge, but we are able to meet our family’s humble needs at this time of economic struggle.
“I’m so happy doing what I’m doing,” she added. “We’re just so grateful to have something to do in these [difficult economic] times.”
Love of what she is doing, a good attitude, hard work—and a superior product—seem to be key elements of the Rowes’ success.
Local filmmaker Gerard Ungerman—one of Sweet Cottage’s loyal customers—is so taken with Rowe and “the love she pours in her pies” that he refers to her fondly as “the pie fairy.”
“I swear and guarantee it,” said Ungerman. “She makes the best pies in the entire galaxy.”
Local builders Dylan Paul and Wolf Bless joined forces in August 2009 to become Bless Paul Builders, a two-man, sustainability-focused construction firm.
“It wasn’t really a great time to start a business—not really, considering the climate,” offered Bless. “But we went for it.”
They had no choice. Each man had found himself unemployed when the economy started to tank.
Paul, a 32-year-old Chico native, was laid off in December 2008 from his job as land-planning consultant for a Paradise-based private landowner interested in the development of business and research parks in Butte County. At the time of his layoff, Paul’s wife, local artist Celina Paul, was eight months pregnant with their first child, daughter Lilah, now 14 months old.
“As the economy slowed down, talk of research parks faded away,” Paul recalled.
And Paul’s job faded along with it.
Bless was laid off from his job as a builder of “green” modular homes in early 2008, when his daughter, Mina, was 6 months old and his wife was working only part-time. After his layoff, Bless, now 33, went back to Chico State to finish his bachelor’s degree in construction management.
Bless and Paul had known each other for about three years, having first met on a construction job they were both working on, when they decided to “partner up,” as Paul put it.
Bless said that while he had opportunities to relocate to the Bay Area or Los Angeles to work after receiving his construction-management degree, he, like Paul, wanted to stay in Chico to raise his family because of the good quality of life offered here.
“I love Chico. My wife loves Chico,” said Bless. “And we’ve got another baby on the way.”
“Going into business last August was really rough,” said Bless, “because there aren’t enough jobs to bid. Most of the contractors I know say their phone isn’t ringing.”
But he and Paul found a way around that obstacle by doing a little research and applying some smart thinking.
“The Chico and Paradise housing authorities provide assistance for low-income homeowners who need ‘health and safety’ remodels,” explained Paul, “and it gives us jobs to bid on.”
Bless Paul Builders is managing to secure a sustainable amount of work from those federally and state-funded projects, replacing windows, putting in insulation, fixing plumbing leaks, getting rid of dry rot, putting on new roofs, and so on.
“We’ve been lucky to find federal and state money,” said Bless.
But it was more than just luck—Bless and Paul put their combined resources where it would help their business the most.
“We didn’t put money into a fancy Web site or into new trucks,” offered Paul, “but into upping our insurance [so we would be qualified] to bid on federal- and state-funded projects.”
Bless and Paul have also kept their overhead low by keeping a small shop at Paul’s residence, as opposed to leasing a separate business space.
Paul, who is a LEED-accredited professional, and Bless are also picking up regular, private clients, a significant number who employ them to “re-green their existing space.”
On a recent remodel of an atrium in a Chico-area home, “which was full of dry rot due to over watering, [had] a lack of day lighting and poor ventilation,” Paul said they “gutted the walls down to bare two-by-fours, added three windows, new drip irrigation, a climate-control system to monitor humidity, a 32-foot creek, lighting, plants, and a fresh coat of [low-VOC] paint.”
“Our intent when we merged was … to create healthy spaces for people to live in.”
Sometimes the jobs are basic and unglamorous.
“I repaired two toilets the other day,” Paul said. “Sometimes I’ll go repair one pipe—no problem. I’d prefer to do high-end remodels, but in this climate I say yes to everything.”
Keeping a low overhead, offering quality products and workmanship at affordable prices, and building trusting relationships with clients and sub-contractors, said Paul and Bless, are the secrets to the success of Bless Paul Builders.
“And don’t say ‘no,’” Paul added with a smile.
As director of Butte College’s Northeastern California Small Business Development Center (SBDC), Sophie Konuwa knows what it takes to make a new venture work. The SBDC offers in-depth business-management assistance—a good deal of it for no cost—for existing small businesses and individuals wishing to start a business.s
Konuwa said she is seeing more and more people coming to the SBDC for help in starting their own business who “have been laid off or know they are about to be laid off.”
But, she said, “We want them to come to us even before that, so they can be informed and they can make smart decisions. They should come as soon as possible and brainstorm with us, rather than wait until they are stressed out.”
She pointed to the SBDC’s free four-week workshop on the nuts and bolts of the small-business start-up process, which goes over such essentials as licensing, filing a fictitious name statement, market and cost analysis, and making a business plan.
The workshops, which are offered on a regular basis, are “always free to anyone thinking of starting a business, or an existing business owner,” said Konuwa. And workshops are scheduled at various times of the day and evening, to accommodate people’s differing schedules. The Northeastern California SBDC also has offices in Paradise, Orland, Red Bluff and Oroville.
“You have no excuse for starting a business, or even running a business, without help,” Konuwa said.
Too often, said Konuwa, people make common, avoidable mistakes when trying to get a small business off the ground, including not realizing how much money it actually takes to start a business, engaging in unnecessary spending, not having a properly studied understanding of the current business environment and business trends, and not knowing the basics of how to run a business.
“For example, bookkeeping,” offered Konuwa. “They have to understand what it takes to keep books. And they might not able to hire a bookkeeper at first, so they have to learn to keep the books. They also have to learn to ask the right questions of a bookkeeper [if they hire one] to reduce the possibility of embezzling, for example.”
“I can tell you, there are success stories,” said Konuwa, without revealing specific details due to client confidentiality. “For example, for some businesses we helped in December and January, the loan amount we helped them get was a little over $4 million. Despite a bad economy, people can get help. Despite a bad economy, people are starting small businesses and surviving.”