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The Honolulu Advertiser
Posted on: Wednesday, June 28, 2006

Many small businesses upbeat despite rising costs

By Joyce M. Rosenberg
Associated Press

NEW YORK — While small business owners across the country are fretting as they see inflation, gas prices and interest rates rising, many others are optimistic about the coming months.

Some of these owners are in industries that actually benefit when costs are rising, or they own companies that are structured in ways that insulate them from some of the economy's vagaries. Many just have the upbeat attitude of the entrepreneur — they'll find a way to make things work no matter how difficult the business climate gets.

"I feel like I'll figure out some way to do better than the competition and I'll survive — and if some of the competition doesn't, I'll pick up some of their business," said Donn Flipse, CEO of Field of Flowers, a chain of three floral superstores in Florida.

Like many others whose businesses are dependent on delivery vans and trucks, Flipse is considering raising his delivery charges, and he's ordered trucks that run on diesel because they'll get better mileage than gas vehicles.

At B-tween Productions, which markets products for preteen girls based on Beacon Street Girls characters, the company's growth has more than compensated for higher shipping and other expenses, marketing director Bobbi Carlton said.

"There are economies of scale as you grow that offset rising costs," Carlton said, noting that while at one point the company was ordering 10,000 copies of a book from printers, now it's more likely to order 50,000.

Because the company was funded by investors, not bank loans, it hasn't been subject to rising interest costs. And it is now licensing the Beacon Street Girls characters to other manufacturers, which gives it revenue without the costs of producing the merchandise.

A variety of surveys taken of small business owners show that overall, they are an optimistic lot even if they are nervous about higher energy prices. The National Federation of Independent Business' monthly optimism index has fluctuated between 98 and 101.5 since the beginning of the year; it was 98.5 in May.

And a spring survey of small and mid-sized manufacturers and distributors by the Minneapolis-based accounting and consulting firm RSM McGladrey found that 58 percent believed their companies were thriving.

Robert Maffei, who owns Maffei Landscape Contractors on Cape Cod, is upbeat even though the continuing drop in home building has reduced demand for his company's services. "There's an opportunity in this," Maffei said, noting that by giving excellent customer service he can win business away from competitors.