Originally created 12/02/05

Energy drains smaller firms



ATLANTA - Wholesale business for professional landscapers and commercial companies remained strong this fall, the busiest season for Rusty Allen, who co-owns a plant nursery near Athens.

But Mr. Allen said he also noticed a drop in orders from the retail nurseries that sell directly to backyard green thumbs. The warm, dry weather had something to do with it, but so did crude oil prices.

"People are going to put gas in their car, but they're not going to put a whole lot of plants in their yard," said Mr. Allen, who helps run Eastside Ornamentals with its seven full-time workers.

"I'd say they (retail nurseries) are off 25-30 percent, and that's just guessing from our selling to them."

Rising energy cost is one reason behind a recent dip in optimism from Georgia's small-business owners, according to a statewide survey released Thursday.

Based on a November telephone poll of entrepreneurs with 250 or fewer employees, a net 45 percent of owners reported that they felt business is good in their markets - compared to a net 52 percent recorded during the previous quarter.

The net percentage reflects the level of positive responses minus negative ones.

Despite the drop in confidence, Georgia's small business climate is still solid and appears to be earning higher marks than other Southeastern states, said Melody Harrison, the state director of the National Federation of Independent Business/Georgia, a trade group that conducted the survey.

"Just talking to vendors and taking calls for other issues - they all seem very optimistic still and looking very forward to the holiday season spurring sales," Ms. Harrison said about owners in the state.

Still, she said business growth slowed somewhat after Hurricane Katrina.

"Georgia continues to compare favorably to peer states in the Southeast, but many entrepreneurs are feeling pinched in the short term by rising energy prices and pressure on sales and profits," she said.

Surprisingly, the federal government's preliminary estimate of the rise in gross domestic product during the third quarter was 4.3 percent, higher than expected despite the drag of the hurricanes.

Nicki Curreri, a relative newcomer to Savannah's retail market, said she has not seen significant pinch from energy costs yet. But she added that she has been open for less than a year.

"I don't know where they (prices) were before," said Ms. Curreri, who owns a kitchenware shop, Kitchens on the Square, and has four employees. "Where it would affect me is in shipping fees."

Because expenses such as gas and energy costs are largely out of a small-business owner's control, many are adapting by closely monitoring other areas of their operating budgets.

Deborah Partridge, the owner of Martina's Flowers and Gifts in Augusta and Columbia County, said her 30 employees' overtime is one cost she is trying to keep in line.

"We don't get a discount on our gas," she said. "When there's one area of your cost of business that goes up, you find other ways to adjust. We closely watch the overall budget."

The NFIB asked small-business owners about the economic conditions they are experiencing. The survey is based on a telephone poll with employers who have 250 workers or less and contains a sampling error of plus or minus 5 percentage points.



Survey questions



             Ga. (net %)   S.C. (net %)   Fla. (net %)

Local business conditions are good..........46  45  50



Local business conditions are improving.....14  15  18



Outlook is good for next three months.....63  56  63



Currently have job openings*.....................15  19  26



Employee paychecks have risen...................14  11  17



Sales were good last quarter.....................44  44  44



Profits were good last quarter...................28  32  28



*Answers for this question were not a net difference between positive and negative responses but the actual percentage of employers who have job openings.



Source: National Federation of Independent Business/Georgia