Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, April 12, 1990                   TAG: 9004130427
SECTION: NEIGHBORS                    PAGE: S-2   EDITION: METRO 
SOURCE: GEORGE KEGLEY BUSINESS WRITER
DATELINE:                                 LENGTH: Medium

FOR SOME SMALL BUSINESSES, IT'S A STRUGGLE TO SURVIVE

Although their company, Aztec Fixtures & Cabinet Shop, also worked for Signet, Crestar and CorEast banks, the Cartys ran into two big problems, forcing them into liquidation in Bankruptcy Court.

The major problem for the Cartys was the domino effect from the bankruptcy of a Tennessee marble contractor who owed Aztec $114,000. They also were hampered by a shortage of qualified employees who wanted to work.

The Cartys worked on their debt, but they fell behind in tax payments. "We got behind and couldn't catch up," James Carty said.

Finding people "who really want to work is a very big problem . . . Last year, we went through about 42 people and only two were interested and took pride in their work," James Carty said.

The senior Carty, a veteran of 35 years in cabinet work, and his son often worked six or seven days a week, trying to get the job done.

Today, they have bounced back with another company, Custom Stone & Furniture, and they're turning out marble counter tops and tables with a smaller work force. Carl Carty "has a good crew of four men who seemed to fall in; they like stone work."

James Carty believes the labor shortage will improve - after it gets a little worse. "Once things tighten up, a lot of people will be standing at the door, wanting to work," he said.

Survival isn't easy for small businesses. While business failures in the nation dropped almost 13 percent last year, the rate for Virginia turned upward, rising 26.6 percent, according to Dun & Bradstreet, a business information company.

Georgia joined North Carolina and Virginia as the very few states in the nation where business failures increased last year.

The main reason for an increase from 928 to 1,175 business failures in Virginia in 1989 was "a shakeout of weaker and marginal firms . . . [following] a high level of entrance activity in the early 1980's," said Tiziana Mohorovic, a business analyst for Dun & Bradstreet.

Many of the companies failing are in the construction, retail and service fields, Mohorovic said. But she sees a turnaround. "The increase in failures seems to be slowing," she said.

From a national sample of 2,994 new companies, the National Federation of Independent Business said that 77 percent of the new businesses formed in the mid-1980s survived at least three years. Another 19 percent closed and 4 percent were sold.

A market decline and credit availability were two major impediments to business development spotted in the federation's three-year study.

The lack of financial success was the biggest disappointment found by the federation. Slightly more than half of the independent companies said they had lower profits than expected in their third year of operation. Only 15 percent said their profit was higher than expected.

Peter Drucker, an author in the field of international business, sees a decline in the small-business casualty rate. One in three new companies is failing, he said, an improvement from an earlier ratio of four out of five.

Roanoke counselors for SCORE, the Service Corps of Retired Executives, give advice to about 500 small-business owners each year and their work load is running 10 percent ahead of last year, said Robert E. Carter, chairman. Carter opened and managed the former Burroughs business forms plant at Rocky Mount before he retired.

Carter says the primary reason businesses fail is that they do not plan properly. People dream of opening their own shop, but they do not project their expenses, revenue and the number of customers needed for three years. Often, they fail to do adequate market research, he said.

He believes the business casualty rate is lower because people are better educated and a little more cautious.

Another reason for failure, Carter said, is a lack of experience. "They have an idea that it would be nice to open an ice cream shop, but they have never worked in one," he said.

At SCORE, he tells people to work nights or weekends to learn a new business. "If you're going to do it, you have to work there."