By Eileen Buckley
Buffalo, NY – It's getting more expensive to operate a small business in a sluggish Buffalo Niagara economy. Health care and liability insurance and worker comp costs have some local business owners digging deep into their pockets to survive.
It's Saturday afternoon -- one of the busiest days of the week for a local hair salon. Hair stylists chat with customers as they wash, color, cut, and blow dry hair. George Savovic, owner of the Hair Forum on Sheridan Drive in Amherst has been clipping and coloring hair for about 27 years. But with just four employees, Savovic says it is getting harder and harder to afford rising health care costs for workers. He's paying 100 percent of their coverage.
"Health insurance is a big issue, Savovic said. "There are too many people out there without health insurance. There are companies now that can't take the burden of the cost of health insurance, passing it on to employees. It has become a real issue for us and many small businesses."
At some point, Savovic fears he may be forced to ask employees to help share health care costs.
Across town, in North Buffalo, a small construction crew is framing an addition to a home. Joe Avino, owner of J.M. Avino Builders, is disgusted with what he says are skyrocketing liability insurance costs. Avino says after 36 years in the construction field, he's never filed a liability claim, yet his costs have nearly tripled for the insurance.
"To tell you the truth, I took a long hard look of whether I should continue in this business," Avino said. "Between that liability and workers comp, which has gone the same route, it was going to cost me $60,000 to $70,000 before I open the door and that's for a small business. It's absolutely ridiculous."
Like hair stylist George Savovic, Avino also pays health insurance for his four employees, which he says is "astronomical." Savovic is amazed that small business is forced to carry these burdens since they make up so much of the economy.
"We have more people in this country employed by small business, meaning 50 or less then we have in any other major corporation," Savovic said. "Everybody thinks of the masses -- the General Motors, IBM. There are more people employed by small business, 50 employees and under. That's really what makes America the heartland."
And the experts agree with Savovic. Susan McCartney, director of the Small Business Development Center at Buffalo State, says it's true -- a majority of people in the US are employed with a small company. McCartney says small business is what drives the economy.
"Politically and socially, where it becomes complicated is where you are dealing with so many small businesses in contrast to dealing with on mega employer," McCartney said. "The efficiencies of dealing with or helping a Mega business or large organization is so much easier. I don't support that -- I think much more attention and respect should be granted to the small business owners."
McCartney says its most difficult for small business owners because their cost margins are so tight. When unexpected expenses arise, budget difficulties ensue.
"They're just making it on five or eight percent. So when something comes in and pulls their margins down significant and it was unexpected then there is total chaos," McCartney continued. "It can be a very devastating experience."
But lending to the success and survival for the contractor and hair stylist is customer satisfaction. George Savovic says in order to cover his business expenses, he must focus on "customer service" at his salon.
"We all have money problems and challenges in the economy," Savovic said. "But I really believe that customer service is part of what we have to do, whether you are government or local small business."
And Susan McCartney says small business owners must be sensitive to the clients they serve. But she says pricing is not always a big criteria for consumers. McCartney says the bottom line is "low prices don't ensure success."
"They all exist within a competitive environment," McCartney said. "If they don't serve the customer to their satisfaction, that individual is going to go and find another place to get that need satisfied."
But Joe Avino says as operating costs rise, they are, unfortunately, forced to pass it on to customers. Avino says others have really suffered in his industry. He says he knows of seven area construction contractors who have gone out of business. And when that happens, a domino effect occurs.
"If I go out of business there are four people that are gone. Plus the amount of business I give to suppliers and others done the road is quite extensive," Avino explained.
As difficult as it is to survive, Savovic says fortunately the hair care industry is bustling.
"The hair color industry has grown as to proportions I never thought possible. We are a younger generations and people don't want to see gray hair," Savovic said. "We always call it makeup for hair."
Savovic and Avino display a true passion for their work and it is that enthusiasm that keeps their businesses on track.
"I go to work, enjoy myself, never look at the clock -- it's a rewarding field," Avino said.
Avino says that is the only reason he stays in business under these difficult finanical times.