Stanislaus County entrepreneurs offset slump by running own businesses

jnsbranti@modbee.comJune 8, 2013 

— The recession has been brutal in Stanislaus County, wiping out nearly 1,000 local companies and almost 20,000 jobs since it began in 2007. That's made it tough for folks to find traditional employment.

So a record number of Stanislaus residents have become entrepreneurs, running private businesses on their own, without employees. From truck drivers and hairstylists to business consultants and housekeepers, county residents increasingly are becoming their own boss.

Just-released Internal Revenue Service data shows that 25,481 Stanislaus taxpayers earned nearly $1.2 billion in revenue during 2011 by operating their own companies. That's an increase of 1,126 businesses since 2008, and it's 5,493 more than in 2002.

Eric Velo of Denair is part of the entrepreneurial trend. He worked for big painting contractors before the housing market crashed, but then he and his wife, Raquel, launched their own firm — Velo's Painting.

"Everybody else's downfall was my saving grace because I started getting painting jobs with investors who were buying up and rehabbing foreclosures," said Velo, 36. "At one point, we were painting three or four foreclosed homes a week, but I haven't done one since Thanksgiving."

Now that foreclosures have dwindled, Velo's doing more painting for individual homeowners.

"Honestly, it's cutthroat out there, but you can make it if you don't try to become a millionaire on one job," Velo said. The Velos do all their own work — from painting to bookkeeping — and they each typically work 40 to 50 hours per week. Last year, they cleared about $80,000, which Velo considers enough to live comfortably.

IRS data show Stanislaus firms run by owners with no employees averaged $45,907 in receipts during 2011.

But incomes vary greatly, depending on the business. Those providing transportation and warehousing services — such as independent truckers — had receipts averaging $98,303. By contrast, those providing administrative and support services — such as janitors — averaged $20,754.

Some entrepreneurs support themselves by providing assorted services that are hard to pigeonhole.

Jacks of many trades

Peggy Gardiner, 67, became self-employed after moving to Modesto in 2007.

"I still work because, like other people, I need the money," Gardiner said. "I plan to keep my businesses going as long as I am able."

Gardiner has a housecleaning business. She's a professional organizer who helps people get rid of their clutter, she cooks for busy families and she teaches community education classes on topics such as wedding planning.

"I also have Smooth Transitions for Senior Living. In that business, I help seniors downsize into their choice of retirement communities," Gardiner said. "I do this by helping them make choices on what to take with them and what to get rid of. I also completely pack them, supervise the movers and then unpack and organize them in their new living space."

Gardiner said her businesses are drawn from her experience. "I think many people who are not currently employed have many skills they could turn into a business," she said. "Once you are self-employed, it is hard to go back to working for anyone else."

Sara Retz now is self-employed, though she never planned to start a business. She was working for a Modesto health care firm but was laid off in September 2011. She hasn't had luck finding another employer.

So in November, she launched a custom costume company called The Red Head's Threads, which is based out of her Modesto home.

"It just sort of evolved," recalled Retz, 26. Her husband bought her a sewing machine a couple of years ago.

"I discovered I sort of have a natural talent with it," she said.

Retz began making elaborate costumes, using materials such as leather from old couches and cloth from thrift stores. She has crafted and sold about 40 costumes, from pirate outfits to Victorian garb.

Her Facebook page connected her with her first customer, who contracted with her to make eight Renaissance costumes for $1,200. Retz spent more than four weeks making them.

"I gave her a deal because she was my first real client," Retz explained. "I'm learning now what my time is really worth."

Thao Le of Oakdale is another entrepreneur who had not planned to run a one-man business. He has owned several nail salons in Stanislaus County in the past decade and has employed numerous manicurists over the years.

The recession, however, forced him to cut back. So he closed all but his Oakdale shop — Nail Lovers — and now works there alone.

These days, Le routinely does nails 10 or more hours per day, six days a week. But if a customer needs him, he'll come in early, stay late or work on a Sunday, too.

A mountain of expenses

"It's very hard. I have to pay for everything," Le said. That includes rent, utilities, insurance, supplies, business fees, taxes and even the magazines customers like to browse while waiting to have their nails done. He keeps busy and makes ends meet by providing combination manicures and pedicures for $40.

Le's not the only one hustling to make a living on his own.

"I'm a believer that if you work hard, make the right decisions and adjust to changes, then you'll do OK in the long run," said Jon Jacobson of Modesto.

Jacobson recently started his own private investigation service, called the Dakota Information Group.

This isn't his first business. Jacobson ran R&J Recovery in Modesto for about a dozen years, employing five workers who repossessed vehicles from owners who had defaulted on their loans.

"The economy got so bad it even put the repo man out of business," Jacobson quipped. "I burned through $100,000 keeping it open the last 1½ years."

Jacobson switched to private investigations in February, and now he works alone.

"I've been busting my tail," Jacobson assured. He said he absolutely loves his new venture, even though it's common for him to work 12-hour days, and he gets no paid vacations or holidays.

Much planning required

Besides being time-consuming, running a profitable company takes planning and business savvy, cautioned Cecil Russell, executive director of the Modesto Chamber of Commerce.

"A lot of small businesses don't have a business plan or a marketing plan, and without those two things, you're probably not going to be successful," Russell said. "That's one of the biggest reasons — even in good times — that businesses fail."

Russell suggested entrepreneurs take advantage of business training offered by the chamber, the Stanislaus Economic Development & Workforce Alliance and SCORE (previously known as the Service Corps of Retired Executives).

While he is surprised by how many businesses without employees the IRS has identified in Stanislaus, Russell said there probably are many more all-cash ventures that tax collectors don't know about. He said many people and small companies have started hiring contract workers "who get paid in cash."

The number of businesses without paid employees in the United States rose to 22.5 million in 2011, which was a 1.7 percent increase. The increase in Stanislaus was 2.5 percent.

By comparison, the number of Stanislaus firms with employees grew less than 0.2 percent in 2011.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or (209) 578-2196.

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