Small businesses in McHenry County survive in shaky economy

CRYSTAL LAKE – Joe Ornelas remembers crashing in his office at 3 a.m. after another gig in a Chicago bar.

The then 24-year-old would wake up just a few hours later, take a shower and do what he could to make the Player’s Bench thrive. Nearly 40 years later, the music shop has grown from one employee to a staff of eight, with 20 teachers available to provide lessons in the numerous studios.

Despite the early years of playing gigs four nights a week, teaching private lessons on the side and working at his music shop every day, Ornelas, now in his 60s, never regretted starting his own business.

“I still get letters and emails from customers and people who have worked here,” Ornelas said. “The relationships in here are monumental. It’s what makes independent stores special.”

Ornelas’ shop is an increasing rarity in an economy that has made it difficult for mom and pop shops to start up or stay open. Numbers from the U.S. Labor Department show more than one-third of small businesses launched in 2000 had closed by the turn of the decade.

The trend comes as no surprise to Ornelas, who said he likely would not have succeeded if he attempted to launch his business today. He said everything from the cost of paying a mortgage to obtaining a college degree has made it nearly impossible to launch a small business, which already carries exorbitant costs.

But owners’ mistakes such as starting too big too fast by leveraging more than they should, or living a lavish lifestyle after the first sign of success, are also to blame, Ornelas said.

“From the start, you’re always underfunded,” he said. “You have to start small and then be satisfied with what you’re given.”

There is not much satisfaction among small-business owners, said Kim Maisch, Illinois director for the National Federation of Independent Business. The organization’s May Small Business Optimism Index shows a strong majority of owners believe economic conditions will be worse in six months, and only 6 percent plan to hire new employees.

Maisch said every time there is a glimmer of hope, potential threats to business – such as the full implementation of federal health care reform in 2014 or a proposed minimum wage increase to $10 in Illinois – add obstacles.

“While the stock market is doing quite well ... it seems the small-business sector continues to lag far behind,” Maisch said. “Would the economy have taken off a little more if these burdens hadn’t been placed on small businesses? We don’t know, but it would probably be better.”

Jaci Krandel is proof not everything is doom and gloom.

The Woodstock resident launched her cookie business during the recession and has not only survived, but also thrived, during the past four years. Krandel opened Jaci’s Cookies in October 2008, just missing one of the worst stretches for small businesses when 25 percent of those launched in 2009 folded by 2010, according to the Labor Department.

Krandel credits her success to starting slow by making only what she could afford and not pursuing a loan. After involvement with area schools and community events, word spread about her treats, and she now has close to eight part-time employees and her own space on Woodstock Square.

“I don’t worry about [chain stores]; I just worry about doing my job well,” she said. “People ask if I’ve seen the latest dessert fad or food TV show, but that’s not what motivates me.”

Success stories such as Krandel’s could be more common, Ornelas said. With stores such as J.C. Penney, Best Buy and Barnes & Noble expected to close hundreds of locations, Ornelas said there will be gaps that entrepreneurs can fill.

Consumers, he said, are realizing the currency exchanged at businesses are more than dollars and cents.

“People are always going to want to gather at a place and talk about the stuff that interests them,” Ornelas said. “People don’t equate the store with me or the name; they equate it with the experience.”

Gary Reece, president of the Crystal Lake Chamber of Commerce, said he is optimistic about the future of small businesses despite the “dysfunctional” state government.

He said 1 million square feet of commercial space was purchased or leased last year in Crystal Lake.

“What I’m hearing is they’re encouraged,” Reece said of small-business owners. “People are encouraged with the recovery going on ... but we have a long way to go.”