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Recession Bites Even Amid Affluence


Many small ventures are struggling in Burlingame, Calif., a San Francisco suburb full of families and commuters

Even in the recession, business at Marlinda's Skin & Bodycare, in well-to-do Burlingame, is holding steady. Although some clients wait longer before scheduling appointments, owner Marlinda Wilson has found new ones to pick up the slack. She has spent the past year publicizing her extended hours and new offerings. "People still get treatments because it makes them feel better," Wilson says. "It's a small pleasure."

Wilson's business appears to be the exception, though. A year ago, Paul Cornajo, co-owner of Fina Boutique, was struggling to bring buyers into his store, which sold high-end shoes and apparel. In November, he closed his doors. "I didn't even bother to wait until after the holidays, since there was no way I could compete with department stores selling at 60% to 70% off," Cornajo says. He still runs a Fina Boutique in Los Altos, 20 miles away. That store stocks some lower-priced items, but sales are down 50% to 60% from a year ago. Cornajo took a part-time accounting job in November. "We all have to eat," he says.

Tight corporate spending continues to squeeze Victoria Sedan & Limousine Service. "We're surviving, but that's nothing to write home about," says co-owner Ben Majlessi. A year ago his monthly revenue was down 10%. Now it's down 30% more, to about $60,000. He reduced advertising 20%, cut 2 of his 10 drivers, and is stalling on a fleet upgrade. Clients always grill him about price, and Majlessi will give discounts to bring in business.

Falling government spending is hurting Charles Kavanagh, owner of four-person, $250,000 Kavanagh Engineering. Kavanagh used to do some work with public schools, but now those clients are less likely to upgrade their facilities. There's little new work from contractors and homeowners, either. "I've got 8 to 10 existing jobs that will keep me going for the next two or three months," he says. "I've got a few proposals out, but clients are waiting." Despite the hoopla about the federal stimulus, Kavanagh says: "A lot of the stimulus money is for infrastructure, like schools, but in my experience with government projects, a lot of the benefit goes to the bigger companies. We are struggling to stay in business."

Return to the BusinessWeek SmallBiz April/May 2009 Table of Contents

Lee is a correspondent in BusinessWeek's Silicon Valley bureau.

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