More businesses opened than closed in Cape Girardeau in 2009

Monday, January 18, 2010
Campus Scooters is open on Broadway across from the former Grace Cafe, which closed more than a year ago. Since opening in August, Campus Scooters owner Todd Rapp said business has been better than expected. (Fred Lynch)

Editor's note: The story has been corrected to indicate that Jackson's business and contractor licensing time frame is from July 1 through June 30, separate from the city's fiscal year.

In a time when the economy has proved difficult for a variety of industries, more businesses opened than closed in the area in 2009, a trend up from the two years prior.

But in order for the trend to continue, business owners say future start-ups must think outside the box.

"Economic climates like this one leave no room for error," said Jennifer Hendrickson, who started Hendrickson Business Advisors in 2007. "Small business owners have to rethink how their products and services are marketed to buyers and give them a compelling reason to spend money today as opposed to later when things turn around. It's definitely not business as usual."

In 2007 to 2008 more businesses closed than opened in Cape Girardeau each year. But in 2009, that trend reversed with more businesses opening than closing. A small portion of those businesses are change of ownership and are counted by the city as a new business.

While Jackson does not track the number of businesses that open and close each year, the city keeps a record of business that purchase licenses for a particular year. From July 2007 to June 2008, 424 businesses purchased licenses, seven more than the following year but 16 less than have been purchased since July 2009.

Brian Gerau, executive director of the Jackson Chamber of Commerce, called results from 2009 in both cities encouraging.

"It's a sign of a rebounding economy, with more and more people ready to open their business," Gerau said. "In this area we have a solid group of businesses. And it's good to see growth in both Cape Girardeau and Jackson."

Todd Rapp, who opened Campus Scooters in Cape Girardeau in August, is among the business owners who said they've experienced faster-than-expected success. Rapp recently added a couple of off-road vehicle lines to his growing business, which he attributes to consumer demand for inexpensive transportation.

"My rent-to-own business has accounted for 80 percent of transactions, which has been a big surprise," Rapp said. "Obtaining appropriate cash flow is key, along with finding an niche market that's not being met by most.

"I'm fortunate because I have another business that can produce revenue to help keep me afloat. I expect it will be a year from when I opened before I make a profit."

Doug Leslie, a former city manager for Cape Girardeau, said he's gained a new appreciation for small business owners since he opened Tailwinds RC Hobby Center in July. He believes his store will survive because he has found a niche product that includes model airplanes and accessories.

"It's a pretty complicated business, with tax laws, regulations and one person like myself trying to do it all," Leslie said. "I feel like the business atmosphere is well-positioned in the future with hopefully one day having a four-lane highway going east to west to attract a wide range of new businesses."

Owners say having a strong business plan is important to long-term success.

Lottie James said she planned for a few years before opening the Mousse Salon in Jackson.

"Business has gone shockingly great," said James, whose business has increased by 75 percent since opening in May. "That's due to planning accordingly including advertising and meeting people in the community. They have to get to know you as a person before they trust you with their hair."

Possible regulations by the Environmental Protection Agency and a rising minimum wage could pose obstacles for future business growth.

For industries considering relocating to the area, elected and business leaders fear proposed restrictions by the Environmental Protection Agency could deter businesses from doing so. Cape Girardeau County is among areas nationwide that could face stricter ozone pollution standards, which could cost those areas billions of dollars finding ways to reduce emissions from cars and factories or face sanctions from the federal government.

The agency says the new limits would cut down on emergency room visits and save lives.

However, David Grimes, director of research and special projects for the Southeast Missouri Regional Planning and Economic Development Commission, said there is hope for the county.

"The process for making the final standards change has another year to run, if I understand the rules governing these kind of decisions and rules," Grimes said.

Meanwhile, the rising minimum wage in the state has forced some companies to increase prices and look for ways to keep workers it now costs more to employ. Because the state minimum wage is indexed for inflation, the state Department of Labor may announce minimum wage increases each year. The current hourly rate is $7.25.

Dr. Bruce Domazlicky, an economics professor and director of the Center for Economic Research at Southeast Missouri State University, said the issue affects the fast food and retail industry the most.

"The higher wage rate may cause them to hire somewhat fewer workers than they might otherwise," Domazlicky said. "How many fewer? Who knows? My feeling is that the effect may be a bit stronger in periods like we are going through today where the economy is still weak from the recession, making all employers somewhat reluctant to take on new workers."

Grace Parry, former owner of Grace Cafe in Cape Girardeau, said the rising minimum wage made it difficult to compete against other establishments. The coffee shop closed in late 2008.

"In order to keep up with the bigger specialty coffee franchises and what they offer their employees in salaries and benefits, it became very difficult for smaller, independent shops," Parry said.

Parry said rising costs in products shipped to her facility made if difficult to continually keep prices down.

"At some point you have to decide if it is worthwhile to continue investing yourself personally and financially as costs go up and sales go down or even stay the same," Parry said. "I cannot say that my experience is reflective of the local economy. Rather it would be more so of the national economy."


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