for another 10 years at $1.1 million.
“We have our fears, especially with the rent rising,” said Jamie Rusche, a barista at the UnUrban Coffee House at the eastern end of Pico Boulevard. “Business is still kind of the same, but we’ve noticed that a lot of people have gone out of business. On this street it’s the record store, the pharmacy, the party supplies store.”
Rusche, who has worked at the coffee house/community center for the last two years, said the owner has had to cut back on certain things like an alarm system to keep prices low in light of rising rents.
“Eventually the quality of service has to go down,”she said.“That’s the only thing we can do. We figure people just understand you might have to wait a few extra minutes … We had to raise our prices a little, although we’re still cheaper than other places. The owner didn’t want to, but we had to.”
When the economy is sluggish, as it is now, that makes matters worse for independent businesses. People aren’t moving products as often as they used to, forcing them to cut back on orders and hours for employees.
Gary Gordon, executive director of the Main Street Merchants Association, said the word around town is “soft,” meaning the economy is not as robust as it once was, making some merchants nervous.
On top of that is the rent. “It seems that landlords just took whatever the rent was and multiplied it by three,” Gordon said. “It’s crazy.”
Property owners said they are just trying to make a living like anyone else and said demand is what is driving up rents, not them. If a business can no longer afford to remain in a certain area, then it is best for them to close up shop and locate to another area where their services are more in demand, enabling them to afford the rent, said Russ Barnard, a property owner on Main Street who also operates Rusty’s Surf Ranch on the Santa Monica Pier.
“I own properties and I’ve paid rents and I never found that rents have been a dramatic problem because it’s an open market,” Barnard said. “There’s always somebody else with property with a different price. You are not stuck with having your business on a particular block or street so rents are typically a reflection of the business atmosphere.”
Barnard said landlords aren’t evil. The good ones will work with their tenants to make sure both are successful.
Speaking of success, with all the obstacles facing small businesses, why are there some that have been able to remain in the community for decades while others have folded? What are their secrets to success?
“It’s simple — loyal customers,” said Rich Braaksma of the Talking Stick coffee house on Ocean Park Boulevard. “We have a lot of faithful customers who keep coming back for their coffee fix. A latte is easy to justify. Even during a recession, people want simpler pleasures. I would say 30 percent of our customers come specifically because we’re not corporate.
“I think versus Starbucks, we try to make it more of a living room, the coffee house equivalent to Cheer’s.”
Customer service is key and so is a business’ reputation. Offering a quality product or service keeps customers coming back even though they may be able to get a similar product or service elsewhere at a lower price.
“So much of it is service,” said Carla Barrett of Barrett’s Appliances Inc., a community staple for 62 years. “People come in here and get acknowledged. I had a woman who came in and said she could-n’t get help at Sears.”
Barrett’s is a classic example of a business that is threatened by chain stores like Best Buy, which sell appliances and have the ability to offer products at a lower price because they can buy in bulk. To remain competitive, Barrett’s is part of a national appliance buyers group that has more partners than Sears and Best Buy combined, said Pat Barrett, Carla’s husband and business partner.
“By being a part of the buyers group it not only gives us purchasing power, it also gives us inventory and retail finance programs so we can compete eye-to-eye and toe-to-toe with Lowe’s or Home Depot,” Pat Barrett said. “We not only offer customers discount prices, but we offer them local service. Here you can actually talk with the person who sold you your appliance. We answer our own phones, make appointments and take care of problems ourselves. Almost no other appliance store can do that.”
Another way to remain competitive is to offer something unique.At Vidiots, customers can find films on VHS, something that is hard to do in the age of the DVD and Blu-ray.
“If you carry VHS, you stand out,” Ryan Marker, a clerk at Vidiots, said. “That keeps people in the store.”
Tony Lardas has chosen a different route. Coming from a family with a long history of running their own restaurants, Lardas decided to buy a McDonald’s franchise instead of opening up “Tony’s Burgers.” By partnering with an established brand like McDonald’s, an entrepreneur gets financial backing and name recognition. For a relatively small fee, you also participate in national advertising campaigns. McDonald’s also invests money in product development, coming up with new products that the franchisee doesn’t have to invest in.
“It makes it easier,” Lardas said as he sat in the patio of his McDonald’s restaurant at the corner of Second Street and Colorado Avenue, which is currently under construction. McDonald’s provided some of the cash to rebuild the restaurant, which was demolished after a developer wanted to create a mixed-used development with restaurants, retail and office space.
“Franchises really increase in value faster than a traditional mom and pop business and at the end of the day what you want to do is build up equity,” said Lardas, whose family also owns the McDonald’s on the promenade. “This gives me a chance to get a good return on my investment.”
But again, owning a franchise requires one to work a lot of hours.
“Freezers still break at three in the morning,” Lardas said.
With all that’s at stake for a small business owner, why bother? Wouldn’t it be easier to work for an established company with some financial stability and security? Perhaps, but those who have taken a leap of faith by opening up shop say there is no greater feeling than the one you get from being your own boss.
“Once you are your own boss, it’s tough to be someone else’s employee,” said Howell, who works with his son at the safe and lock company. “For us it’s always been a family deal. I get to work with my son every day and how many people can say that? You also get to meet so many people in the community and really get to know them, almost to the point where they become family, too. It’s those relationships that you build that I think you can’t do if you were working for a large corporation.”
For Taherian, it’s all about pride. “There’s a certain amount of pride that comes along with owning your own store,” he said as he leaned over his glass counter filled with tobacco pipes. “I’ve never wanted to work for somebody else. But on the other hand, there are those challenges that you face.”
Originally published in the Santa Monica Daily Press print edition on February 9, 2008. Read the original PDF.