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Small businesses feel big squeeze

Fewer workers claim their paychecks these days at Commercial Roofing of Tampa. The small, family-owned company, which employed 45 people during the peak of Tampa's recent building boom, has trimed its work force to 30 in an effort to cut costs.

Owners Sandra Fernandez-Lopez and her husband, Thomas H. Lopez, are looking for more jobs on existing buildings than construction sites. They have hired a collection agency specialized in real estate services to dun delinquent customers and recently added an "efficiency expert," a general manager assigned to find money savings in gasoline purchases and inventory controls and uncover costly problems, such as employee theft.

The financial squeeze is a new experience for the Lopezes, who acquired the roofing company six years ago.

"We had experienced nothing but growth," Fernandez-Lopez said.

"We doubled our office staff, put on more equip-

ment," she said. "Now, all of a sudden, it's whoa, put the brakes on."

And try to survive.

Small businesses, which have high failure rates even in good times, are buckling down for the bad. In today's slow market, they are looking for ways to cut costs, boost sales and collect debts.

The economic downturn already has taken its toll. A survey of small businesses last month showed the lowest optimism level since 1980, the period before the last recession, according to the National Federation of Independent Business, a trade association in Washington, D.C. The poll, which surveys such issues as hiring plans and inventory investment, showed that business owners nationwide are most pessimistic about the prospect for sales.

In the Tampa Bay area, the number of filings in U.S. Bankruptcy Court in Tampa continues to climb. New cases jumped 36 percent in the first nine months of the year compared with the same period in 1989.

Some companies failed to predict the slowdown. Businesses that expanded rapidly during the last decade took big loans to finance their growth. When sales slowed, they couldn't pay the debts.

Others couldn't compete in a tougher market.

"The biggest problem is that this is a very unforgiving economy," Tampa bankruptcy lawyer Domenic Massari III said. "You can't make many mistakes."

Business owners and analysts say part of the trick to surviving, and even profiting, in slow times is to be creative and flexible in the market.

When the market for luxury signage in office towers and shopping centers slowed, the owners of Architectural Signage and Design in St. Petersburg developed new uses for expensive computerized equipment. Rather than let it sit idle, they contract to do work for small manufacturers and use the equipment to cut less expensive stencils for sale. "We're finding other applications for it," said office manager Jim Schaedler.

With a sluggish market, the outlook appears grim. But if history repeats itself, Manck and others say, the economic downturn actually will encourage entrepreneurs.

At Service Painting Corp. in Tampa, owner Dick Higgins is looking to expand into environmental work. The company, which does industrial and commercial painting and waterproofing, wants to provide leak-proof linings that are required by recent law for tanks that store oils and other fuels.

"We try to be diversified so we can minimize the downturns," Higgins said.

While it is tough for everyone, businesses owned by black people, Hispanics and other minorities may feel the crunch even more, some say. "We have the least experience, the least capital, the least opportunity," said Paul Curtis, a black general contractor and owner of Curtoom Construction.

"When small businesses have trouble, minorities have calamity," he said.

Like other business owners, Curtis has trimmed the office staff and cut back on telephone use to save money. He tries to limit all of his jobs to government construction work. The bidding is fiercely competitive, but the payment is guaranteed. "I can't run the risk of any non-payers," he said.

Small businesses represent one of the biggest growth industries in Florida. An estimated 250,000 will be formed this year through various means, including corporations and limited partnerships, said Bill Manck, director of the Small Business Development Center of the University of South Florida.

With a sluggish market, the outlook appears grim. But if history repeats itself, Manck and others say, the economic downturn actually will encourage entrepreneurs.

As corporations lay off workers and jobs become scarce, many former employees decide to go into business for themselves.

"In recessionary times, many people who are entrepreneurial may see it as an opportunity to create their own destiny," said Paul Moore, vice president of Effectiveness Inc., a Tampa consulting firm, and past chairman of the small business council of the Greater Tampa Chamber of Commerce.

"Many of those people have severance packages that give them capital to create their own business," he said.

In addition to the opportunity, the timing could be right.

"In theory, the best time for a business start-up is in the trough of a recession," said Doug Handler, an economist for Dun & Bradstreet Corp. in New York. "Labor is cheap, capital is cheap, office space and equipment are readily available."

But the bottom may not have arrived, Handler warned.

Also, he said, there is a lot of uncertainty, particularly with oil prices and the national budget. Finally, he warns that not everyone who starts a new business has the skills and financial support to survive.

"Some people think this is a solution for being unemployed, being cut back, but that's not necessarily true."