Small Biz Owners Weigh In On Economic Crisis While small businesses employ fewer than 500 people, or in most cases fewer than 20, they account for half of U.S. economic output. And with cash short these days, many small businesses are on the front lines of the credit crisis.
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Small Biz Owners Weigh In On Economic Crisis

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Small Biz Owners Weigh In On Economic Crisis

Small Biz Owners Weigh In On Economic Crisis

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I'm Michel Martin and this is Tell Me More from NPR News. Coming up, as we conclude this year's celebration of Latino Heritage Month, People in Espanol profiles 100 Latino legends. We'll tell you about some of them later in the program.

But first, we want to talk more about the country's ongoing financial crisis and how it's affecting small business. Small businesses are defined as those employing fewer than 500 people - in most cases, fewer than 20 - but they account for half of U.S. economic output. They generate more jobs than big business, and many are on the front lines of the credit crisis because they have fewer sources of capital.

Joining us to talk about all this are Andy Shallal. He's the owner of Busboys and Poets. It's a series of restaurants and community lounges in the Washington, D.C. area. Doris McMillon is president and chief strategic officer for McMillon Communications. She helps train executives to face the media and make presentations. And Daniel Parra, he's managing director of the Latino Economic Development Corporation in Maryland. He helps small business owners through training and lending programs. They are all here with me in the studio in Washington. Thank you all so much for coming.

Ms. DORIS MCMILLON (President and Chief Strategic Officer, McMillan Communications): Thanks for inviting us.

Mr. ANDY SHALLAL (Owner, Busboys and Poets): Thank you.

Mr. DANIEL PARRA (Managing Director, Latino Economic Development Corporation in Maryland): Thank you.

MARTIN: So I just want to go around. So Andy, first of all, how's business?

Mr. SHALLAL: Actually, it's been pretty good. We just opened a new place, and we're getting ready to open another one in about three, four months. And people will come in and think, you must be crazy doing this during this time.

MARTIN: So how many is the total in the chain?

Mr. SHALLAL: That's a total of three.

MARTIN: Total of three.

Mr. SHALLAL: And we're opening a fourth, and we have a fifth planned in about a year. And I don't look really too much further than that. I just do it one step at a time. That's how I move with my businesses.

MARTIN: But so many people are crying right now. How come you're not?

Mr. SHALLAL: I think it's a combination of things. I think for one thing, we're not just a restaurant. We're a lot of different things. We are a bookstore, a gathering place, a community center. You know, people have to go out. People eat out. I don't think anybody cooks at home anymore, so they have to go some place but it has to be accessible. It has to be reasonably priced, you have to give a good product, and you have to give them a reason to come. And we give them many reasons, so I think that's why we have such a loyal base, a loyal clientele.

MARTIN: Doris, how about you? How's business?

Ms. MCMILLON: I was going through a slump at one point. But just this past month, I got a couple of contracts. So I said, well, we will press on. And I'm the eternal optimist. I feel like we're in a storm right now, but like when you're flying in a plane, once you take off, it may be raining when you're on the ground, but once you take off and you get above the clouds, you see the sun. And I just think that if we, as small business owners who are experiencing a squeeze, if you were, would just hold on, be optimistic and realize that we're not going to be in this slump forever, I think we'll make it through.

MARTIN: Well, tell me about the slump, though. When did you start to notice it?

Ms. MCMILLON: I started to...

MARTIN: Were your repeat customers slower to pay? Were you just not getting the kinds of contracts that you normally get at this time of year?

Ms. MCMILLON: I wasn't getting the kind of contracts that I had been getting, and I was like, what am I doing? Am I doing something wrong? Do I need to be doing something different? And then I noticed that people were saying, we're just kind of cutting back right now. They'd been letting employees go from their companies, and I'm thinking, well, that's not a good sign.

But I pressed on, and then probably a couple weeks ago, I'd followed up on a client who had asked me about doing some media training. She says, we need to train some of our executives, get them ready to meet, you know, the news, if they should show up on our front door because they were going through a big project. So I called her back and I said, well, I just wanted to follow up, see if we need to do this. And she sent me an email, and she said, because of this economic downturn, she said, we are tightening our belts. And then she said, I don't know when I'm going to call you.

So I began to think, well, what can I do? And I went to a conference recently and they said, do not cut your prices. And I thought, you know, good advice. I don't think I will. Maybe she's not just the client for me right now. And then a couple of other clients came in. So I'm eternally optimistic and eternally grateful.

MARTIN: Well, let me - give me a year-to-year comparison now.

Ms. MCMILLON: I took a 30 percent pickup myself, if that tells you anything.

MARTIN: Yeah, it does.

Ms. MCMILLON: Yeah. And I did it over a couple of months' time. I kept thinking, we're not playing in the kind of income we had been. I have to make payroll. So it means I have to cut. So I cut to bare bones. And it's amazing. There's still a little money left over. I'm amazed.

MARTIN: OK. I'm glad to hear that. Glad to hear that. I was going to offer to buy you lunch.

Ms. MCMILLON: Oh, you can.

MARTIN: But now you're going to have to treat me. Or actually, we'll go over to Andy's.

(Soundbite of laughter)

MARTIN: So, Daniel - so you have a good news story, you have a not-so-good news story. Of the people who you work with, give me a sense, first of all, how big their businesses tend to be and which story is more typical?

Mr. PARRA: Yeah, pretty small business owners. And the experience that we have in Maryland is that most of them are startups, which is a great way to see how this crisis is effecting all everywhere, but additionally it shows that what we are preaching is really what is in need of. Because what we are doing to help the business owners is to help them with the message of strength, their skills that is so important, and be on a planned situation. So we are helping them with their business plan and their marketing plan.

MARTIN: When you say they're mostly startups, is it mostly sole proprietorships, one employee, fewer than five?

Mr. PARRA: Right. That's the size of the business owners that we're seeing today.

MARTIN: And what kind of work do they tend to do?

Mr. PARRA: Definitely home improvement services, cleaning services. So many of them are coming from different sectors of industries with experience in their field, but then moving from being an employee to have their own business. So the message today is still the same: Be prepared. Have your plan. Don't do anything just because you are willing to do it without any advice. And the experience right now is that, that it should be that way.

MARTIN: If you're just joining us, this is Tell Me More from NPR News. I'm speaking with Andy Shallal, Doris McMillon and Daniel Parra about how the economic crisis is affecting small business owners.

Talk to me about the whole credit situation, if you would. Andy, you're expanding. A number of businesses we've been hearing from say that their plans to expand are on hold because they can't get credit or credit lines that they had been relying on have been canceled or cut back. Has that happened to you?

Mr. SHALLAL: Well, we're a cash business, so it's a little bit different. But in trying to expand, I do need to have some credit. And so what I found that's happening right now is that I'm being asked to put a lot more collateral. I'm being asked to do a lot more paperwork that I would normally have done when I'm looking for credit. It is frustrating, and I think for many operators, it's probably impossible for them to come up with all those documents that are needed these days to be able to get a loan. So it's definitely harder.

MARTIN: Is the fact that you're a cash business helping you right now?

Mr. SHALLAL: Oh, absolutely. I mean, if I had to rely on shipments and accounts receivables and all that, it would definitely make it much more difficult.

MARTIN: And are your suppliers getting tougher with you?

Mr. SHALLAL: Yeah. I mean, we have all kinds...

MARTIN: They're saying, no cheese until I get my cash upfront.

Mr. SHALLAL: Well, yeah. I mean, you know, we've been with them for quite a long time, so the ones that are used to us have sort of maintained their posture toward us. But the ones that are new are looking for a lot more verification, a lot more credit than we would have done in the past.

MARTIN: Can you give me an example?

Mr. SHALLAL: Well, if we were to sign up with a new purveyor, for example, that's providing services for us, we would have to be COD for at least a period of time before they get used to us, before we start paying on credit.

MARTIN: Cash on delivery.


MARTIN: Which means, you bring me my cheese. I pay you upfront or no cheese.

Mr. SHALLAL: Exactly. And then there are these surcharges. You know, we're getting the fuel surcharge, we're getting the delivery surcharge, things that we never had to deal with before. And you know, prices have gone up. So it's interesting, in this economic downturn, price has surprisingly stayed either at the level that it is or actually has risen. So it makes it really difficult. Yet the market, on the other hand, from our retail end, is requiring us to not raise prices. So the consumer is very, very picky. They're spending a little bit less. They're still going out, but they're becoming very choosy in how they spend their money and what their expectations are.

MARTIN: Doris, what about you? What role does credit play in your business?

Ms. MCMILLON: Well, when I first started out, I started out - I hadn't planned on being in business, actually. But I moved from being a news anchor for Channel 7 in Washington, D.C. into business for myself, which I thought would probably last about a year, maybe, until I landed another anchor job. That didn't happen, so here it is 22 years later, I'm still in business, and my business model changed.

So I started looking at things like lines of credit, business credit cards, things like that. So I got all of that in place, and thank the Lord, because here I am, now I have to tap into my lines of credit, you know, sometimes to make payrolls, sometimes to pay different bills. But I've been judicious about it, and I'm thanking the Lord that I'm not out there trying to get a line of credit right now because I probably couldn't.

MARTIN: So nobody has taken away credit, but it's still...

Ms. MCMILLON: It happened to me one time, and it's not because I had a bad credit rating, but they just said, we think we're just going to cut back your line of credit. Well, I thought it was a significant cut. I said, why did you do that? Well, because we can. That was the answer to that. So here it is, about five years later, they gave me more credit and I didn't even ask for it. So I just said, we're going to let it sit right there. We're not going to use it until we absolutely need it, and I pray we don't need it.

MARTIN: Doris is an accidental entrepreneur. Daniel, she has violated all your rules.

(Soundbite of laughter)

MARTIN: And she'll still doing - she's still doing fine.

Mr. PARRA: Yeah.

MARTIN: Yeah, but talk to me about credit and the folks that you're working with right now. Have you found, among the people that you're advising, have they had difficulty getting access to credit? Or have they had credit lines pulled that they were counting on?

Mr. PARRA: Definitely. It's so hard for them to obtain that line of credit. And actually, it's not the one of the first advices that we give to them, to start a business, starting with a line of credit or something like that. Basically because even before the crisis, banks are not willing to put a lot of money in your business when it's just an idea. And then, depending on the sector that you are moving, for instance, home improvement, construction - these days, not even with a good credit score bank will be interested in giving you money.

But additionally, something that we are having for them in our program, we have a lending program, so we are helping them to understand when and where to have a line of credit or a credit service for you. Instead of moving as a first step, we need to know what is your plan before. How are you planning to use the money? And this is one of the things that is pretty interesting. Well, we say, how much do you need? And they say, how much are you able to lend to us?

(Soundbite of laughter)

Mr. PARRA: So now, OK. That is the beginning of a long conversation. So let's talk about that.

MARTIN: But a number of your businesses, it seems to me, are people who provide services. They're in construction, cleaning services. Are these the things that people cut back when they're in trouble?

Mr. PARRA: Right.

MARTIN: Or when they find themselves wanting to save on cash. Are your businesses also experiencing that?

Mr. PARRA: Yes, definitely. But there are so many ways. We encourage them to be on one side optimistic, and on the other side creative. And there are so many ways to move around (unintelligible).

MARTIN: I would have to have - get into a fistfight before I fire my cleaning lady, sorry.

(Soundbite of laughter)

MARTIN: Sorry, it's just not going to happen. It's just not going to happen. We need to take a short break but we're going to continue our conversation about how the economic crisis is affecting small business in just a minute. We're speaking with Andy Shallal. He's the owner of Busboys and Poets. It's a group of restaurants and lounges in the Washington, D.C. area. Doris McMillon, she's president and chief strategic officer from McMillon Communications. She helps train executives to make presentations and face the media. And Daniel Parra is managing director of Maryland's Latino Economic Development Corporation. They are all here with me in Washington. Please stay with us.

(Soundbite of music)

MARTIN: I'm Michel Martin and this is Tell Me More from NPR News. We're wrapping up Latino Heritage Month with a book that celebrates Latino legends from Desi Arnaz to Shakira. We'll have that story in just a few minutes.

But first, we're continuing our conversation about the effect of the economic crisis on small businesses. And I'm visiting with Andy Shallal, he's the owner of Busboys and Poets. It's a group of restaurants and lounges in the Washington. D.C. area. Doris McMillon, she owns a communications company, McMillon Communications. She helps train executives to face the media and make presentations. And Daniel Parra, he's managing director of the Latino Economic Development Corporation in Maryland. They're all here in our Washington Studios.

Andy, what's interesting about your business is that it's kind of a location for political activity, and a lot of people come to your restaurants and lounges to watch the debates. Is it interesting for you to kind of listen to the candidates debate the economic crisis when kind of you're in the center of it? Or do you ever find yourself shouting at the TV? Do this, do that.

Mr. SHALLAL: Oh, absolutely. I think oftentimes, the candidates speak to Wall Street. They don't really speak to the average person. You know, and my clients are very astute politically and otherwise. I don't think many of them understand much about what's going on with the economic crisis that's taking place right now.

MARTIN: But what would be helpful? I mean, apparently the administration has taken several steps to address the liquidity issue. Do you think this is going to trickle down to you, as it were?

Mr. SHALLAL: I don't trust the administration, so I really don't think anything is going to trickle down to me. In a sense, I'm a small business owner, and I feel like what I - I need to take care of myself. I need to make sure that I do the basics, and that is, provide a very good service to my guests. I don't really think too much in terms of how the big picture is affecting me. I don't think many small business owners do. I think they look at their cash flow and their personal experiences. And I think that's one thing the economic downturn is probably helping small businesses, at some level, to focus on their main issues. Cutting back here and there when you know you need to, as opposed to just watching money come in and seeing what more sources of revenue. Rather than doing that, focus on the revenue you have and make sure it goes a long way.

MARTIN: Doris, what about you?

Ms. MCMILLON: You get a big amen for me on that one, Andy. That is so true. We do have to take care of ourselves. We don't have someone to bail us out. Now, there's no $700 million - billion-dollar package to help us in our time of need.

Mr. SHALLAL: Amen.

(Soundbite of laughter)

MARTIN: Well, it's supposed to. But it's supposed to and by...


MARTIN: And by sort of a - well, I'm just reporting. I'm just reporting that it's supposed to improve liquidity prices. It's supposed to...

Mr. SHALLAL: I just signed a letter of credit for $600,000 that the landlord told me, if I don't pay it, they can go and draw that money right out of the bank and I'm liable for it. I don't have anybody in government, you know, bailing me out if I can't make that payment.

Ms. MCMILLON: And forget getting a massage and a manicure. That's just out of the picture.

(Soundbite of laughter)

Ms. MCMILLON: That is not happening.

Mr. PARRA: That really made me mad. That really made me mad.

Ms. MCMILLON: It made a lot of us angry.

MARTIN: Well, for people who don't know what we're talking about, AIG is a big insurance giant which was the recipient of a government rescue package, a significant transfer of capital, and right the week or so afterward, there was a retreat for the so-called top performers that - very large bill at a very swank resort...

Ms. MCMILLON: It was $400,000, thank you very much.

MARTIN: Yes. It was.

Ms. MCMILLON: Where they got manicures and massages. But anyway, I'm not mad at them.

MARTIN: Yes, you are.


Mr. SHALLAL: It's her money.

(Soundbite of laughter)

Ms. MCMILLON: I'm trying to keep this on a positive note.

MARTIN: But from a policy perspective, are there things that you think the candidates could be talking about or should be talking about or are talking about that would - that speak more directly to you?

Ms. MCMILLON: Well, we know that politicians do what politicians do, and they speak a lot of horse hockey, as I call it. The bottom line is, as Andy says, we have to take care of ourselves. You know, where we need to retool, we need to retool. Where we need to cut back, we need to cut back. We need to take care of our employees because they take care of us. And if anything, we need to be extremely great in the customer service area skills. We need to be able to really deliver great customer service because that's what keeps people coming back.

MARTIN: What's been - what's the toughest decision you've had to make over the course of this year?

Ms. MCMILLON: Letting people go. And I had to do that, and it was very hard. I mean, I had two people. I loved them dearly. I told them, I said, right now, you're not in my budget. I am so sorry. But they know that as soon as the money starts coming in - because they provided, you know, skills and things that I needed. I've got one person right now, and I just thank the Lord for her every day because she comes in, she works harder, she gives more time, I think, sometimes, than I pay her for. She said, look. I believe in what you're doing. You've been here a long time. We're going to - we are going to get through this.

MARTIN: Daniel, what about you? You're kind of on the cusp of the public and the private. You're a governmental entity, but you're providing support to small businesses.

Mr. PARRA: Right.

MARTIN: But are there policies that you think would be helpful?

Mr. PARRA: Yeah. Definitely, there is a need to give more support to small businesses in this country. There is a need - and not necessarily to give away. It's to make informed decisions from the government side and from business side, as well.

MARTIN: Who should do that?

Mr. PARRA: I think it's a community work. Everyone should do that. And there's a need to go into the field and do the things. It's one thing to be elected because you think nicely, but the right thing is to be inside the community and do the things with and within the community. I think that is a key.

MARTIN: Well, I'm picking up that maybe this is the small business way that you're all optimists and kind of fired up and ready to go, as it were. So I just wanted to ask for a final thought. How long do you think the tough times are going to last? Daniel?

Mr. PARRA: I would say that it won't last more than you, as part of the community, will like to have that. It's in your hands to do the things to change everything that is happening right now.

MARTIN: How do you figure?

Mr. PARRA: Advice is one of those things. Be creative. Take advantage of all the sources available. Be optimistic but cautious. And usually, within those difficulties, you will be able to produce more ideas to grow up.

MARTIN: OK. Doris?

Ms. MCMILLON: I'm not certain how long this is going to last. But however long it lasts, I've made my decision to march or die, and it's march. So I'm going to stay in business, I'm going to be optimistic, and I'm going to be careful. I'm not going to cut my prices, but I'm just going to keep going until I take my last breath. I don't have a choice.

MARTIN: Note to Doris' clients: do not be looking for a discount, OK? It's not going to happen.

(Soundbite of laughter)

MARTIN: Duly noted, Doris.


(Soundbite of laughter)

MARTIN: Andy, final thought from you.

Mr. SHALLAL: Well, you know, the politicians always tell us how much they appreciate small business, how the small business is the engine of our economy. Yet, I think, as a small businessperson, I really don't feel loved by the politicians, honestly. Just a lot of hot air and not a lot of support. I feel like we have to take care of ourselves and take care of our own. I have to help everybody around me in order for them to become my customers so they come back and buy from me and I buy from them. That's what a market place should look like. People helping each other to raise everybody.

Ms. MCMILLON: Andy, that's a great point. One of the things, Michel, I think, that is very important as we face this economic crisis, is that where there's an opportunity for us to team as businesses, we need to do that. One of the things that I found extremely successful is I have a partner. She's a former news anchor, as well. She has her company. We got together because we realized we could build capacity by working together. Team where you can team. Work with other people where you can work with each other to build capacity and to provide even more and better service.

Mr. SHALLAL: The dollars you spend in a local economy go much further than they would otherwise. When I open a new place, I don't find an architect from California and a lawyer from Chicago and whatever. I find everyone that works here, and therefore the dollars stay within the community and they go a lot further. So think local first.

MARTIN: So the silver lining here is that it's forced you all to be more creative.

Mr. SHALLAL: Absolutely. Absolutely.

MARTIN: And perhaps to think in ways that you had not been thinking or would not be thinking.

Ms. MCMILLON: Crisis will do that to you.

Mr. PARRA: Whenever you spend a dollar within your community, that's a multiplier effect. That is three times in revenue, taxes and employment.

MARTIN: Do you think you see that trend in people?

Mr. PARRA: Yes. They're being with their awareness that this is the best way to do that.

MARTIN: All right. I think we have to leave it there. Daniel Parra is managing director of Maryland's Latino Economic Development Corporation. Andy Shallal is the owner of Busboys and Poets. It's a group of restaurant and community lounges in the Washington, D.C. area. Doris McMillon is president and chief strategist officer for McMillon Communications. She helps train executives and others to make presentations and face the media. They were all here with me in our Washington, D.C. studio. Thank you all so much and good luck to everybody.

Ms. MCMILLON: Thank you.

Mr. SHALLAL: Thank you, Michel.

MARTIN: It doesn't sound like you need it, though.

Mr. PARRA: Thank you for having us.

MARTIN: We would also like to hear from you. Are you a small business owner? What have you had to do to keep your business afloat? And for everybody else, are economic conditions changing your habits? Are you shopping less or differently or in different places or not? To tell us more and to find out what other listeners are saying, please visit our blog at You can also call our comment line at 202-842-3522. That number again is 202-842-3522.

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