Area small businesses pinched by nation's bigger economic woes

David Folts still loves ice cream, even after what he's gone through.

Folts, owner of the Jack Frost ice cream parlor on S.C. 170, will close his shop for good on Tuesday.

After more than two years of working seven days a week to promote his business and make great ice cream, Folts couldn't overcome market forces large and small that contributed to his business failing.

Except for a spike in dairy prices, the factors that brought down Jack Frost also are causing problems for other small businesses.

Like many small-business owners nationally, Folts faced unexpected costs in the last year, such as fuel surcharges on deliveries, customers less willing to drive because of high gas prices, customers with fewer dollars for discretionary spending and a tight credit market.

"It's so expensive to do business anymore for the small-businessman that I just can't get over it," Folts said.

Doug Woodward, an economist with the University of South Carolina's Moore School of Business, confirmed that the problems Folts experienced are common to many small businesses.

The number of small businesses locally and statewide that have closed in the last year was not available, but, "every indicator we have is heading south right now," Woodward said.

TIGHT CREDIT

One of the biggest challenges for small-business owners is the tight credit market. Credit to start, expand or simply keep a business running is very difficult to come by.

That's an unfortunate twist because small-business loans didn't contribute to the woes financial giants are now facing, like writing risky mortgages, Woodward said.

Holly Slayton decided to start her business without a loan, in part because of the tight credit market and in part because she didn't want debt hanging over her head.

Slayton started Sweet Carolina Cupcakes in June by selling her cupcakes at summer festivals. On Tuesday, she opened a retail store in the lobby of the Courtyard Building on Office Park Road on Hilton Head Island.

Slayton initially wanted to open a cafe that served meals and baked goods. But the difficult economy led her to pare that down to coffee, cupcakes, cookies and muffins for office workers to augment her bake-goods catering business.

She never considered not starting the business.

"It was now or never," Slayton said. "You can always look around and always find a reason not to do something."

More new businesses are seeking advice on overcoming problems and fewer want help launching a new venture, said R.J. LaTourneau, vice chairman of the Carolina Lowcountry chapter of SCORE, a nonprofit association of retired businessexecutives who counsel small businesses.

"That's probably because (the would-be entrepreneurs) don't have any money and there's no capital available for them," he said.

SCORE is advising potential business owners not to launch businesses too quickly. Instead, they should take six months or a year to craft a solid business plan, save up money and clean up any credit rating issues, LaTourneau said.

REASONS FOR CLOSINGS

The state branch of the Small Business Administration has tracked how much more difficult it has been to get credit this year. The number of loans certified by the SBA has decreased by 16 percent in the state this year, said Elliott Cooper, state SBA director. That's better than the national picture, where the number of SBA-certified loans has fallen 27 percent, he said.

The SBA does not give out business loans. However, an SBA certification indicates to a bank that a business loan is a good credit risk.

But credit isn't always what torpedoes a new business.

In the case of the Paper & Party Plantation store that opened on Calhoun Street in old town Bluffton a year ago and closed in July, the owners thought business would be better. And while they could have hung on, they didn't want to struggle through those first few lean years, said co-owner Sheila Goad.

Goad is convinced a party store eventually would do great business in old town. But Paper & Party Plantation is a retirement project for her and her husband, and waiting around for it to grow wasn't appealing.

"There just wasn't enough traffic on Calhoun Street," she said. "Eventually it's going to be a great place."

Other new businesses hang on despite the odds.

Chris Golis owns Golis Family Jewelers in Kittie's Crossing in greater Bluffton. He opened a second Golis Family Jewelers in Berkeley Place on Buckwalter Parkway about two years ago, shortly after that center opened.

Every time he thinks about closing the newer location because of slow business, sales pick up enough to keep it open, Golis said.

"There's a pulse," he said of the new store.

As for the 13-year-old location in Kittie's Crossing, Golis said his established clientele keep him busy. Plus, he's looking forward to the coming months.

"It's 90 days till Christmas," Golis said. "No matter what, in this business, Christmas always shows up."

While Golis is looking forward to winter, the colder months were cruel to Folts, owner of Jack Frost.

The New Jersey native had hoped people here would buy ice cream year-round when he opened his store. It turned out ice cream is a summer-only treat in the South, too.

Still, Folts will hold on to his ice cream-making equipment, which he finished paying off just months ago.

He might want to give Jack Frost another chance in five years or so.

"The entrepreneur in me won't let it go," Folts said. "It's foolish, and I wish I could get it out of my head."

Even as tough as conditions are for some small businesses like Jack Frost or Paper & Party Plantation's Bluffton store, USC economist Woodward said recessions have been getting shorter while expansions have been getting longer, as a general rule.

"Some people are going to come out of this fine," Woodward said. "Hilton Head is going to come back."