Hope for Small Business; Consumer Spending Up
This past week pharmaceutical giant Pfizer announced it's cutting 6,000 jobs. While layoffs at big companies make headlines, 50.2 percent of all U.S. workers are actually employed by small businesses.
The recession has taken it's toll on small business, but some owners are getting creative in order to stay afloat.
It's been a rough two years for shop owner Everil Bell. The great recession turned her clothing boutique "My Favorite Place into a very quiet place. She had to let her one employee go as sales dropped 50 percent, reports CBS News correspondent Ben Tracy.
"People were looking for bargains or not spending at all," said Bell.
In 2008, more than 595,000 small businesses closed their doors and in the past two years more than 100,000 declared bankruptcy.
"The number one problem has really been just lost sales, lost customers," said Bill Rys of the National Federation of Independent Business. "You know, businesses can't survive if they don't have customers coming in the door."
When Bell's landlord raised her rent she figured her 35 years on Los Angeles' Larchmont Boulevard were over. Just down the street, Chris Wolfus' general store was also struggling.
"Sales dropped maybe 20 percent," said Wolfus. "A couple of people we had to lay off."
With both owners facing sluggish sales, Bell had an idea.
"I was thinking she's slow. I'm slow. I'm looking for a place," said Bell
Wolfus said, "She came down here one day and said, 'Hey, what would you think of doing something together?'"
So Bell moved a couple doors down and set up shop with Wolfus. Bell's dresses and scarves are up front and Wolfus' cards and stationary in the back. They now tag team the customers.
"Gee, you've got this cute card, how about this scarf that's out there?" said Wolfus.
They say foot traffic has doubled and sales are actually up nearly 10 percent.
"Does it seem like there are more customers and are they actually buying? Yes," said Bell. "In the last couple of months they've started to open their wallets a little bit more."
In fact, total U.S. retail sales are up 8.8 percent since last year, a sign consumers are getting their confidence back.
Banks are still holding onto their cash, making small business loans hard to get. The Obama administration is calling for a new $30 billion fund for community banks to jumpstart to lending to small businesses.
"Two-thirds of the net new jobs are created by small business owners," said Rys. "So if we're going to see a turnaround in job growth and a turnaround in the unemployment rate, we've got to get small business owners hiring again."
Meanwhile Bell and Wolfus continue to survive through healthy competition.
"I'm getting new merchandise tomorrow, so watch out," said Bell.
