Recession Spells End for Many Family Businesses

Topic: Effects of Current Economy
Periodical: The Wall Street Journal
Written by: Stephani E. Williams
Source: Dana Mattioli, The Wall Street Journal


Many family owned businesses throughout the nation are heavily suffering from the effect of this current recession. Family members, most since they were young, have spent the majority of their lives established within their family's business. For example, siblings Georgia, Jimmy, and John, from Alabama, have spent most of their lives working in the kitchen of the restaurant their father opened in 1954. The restaurant managed to survive a hurricane and other setbacks, but it wasn't until this August that the recession took its toll on the Roussous family, permanently shutting the doors of the Roussous Restaurant.

After many months of slow sales, family businesses are being forced to close, which is also closing legacies and leaves behind sad and loyal customers.

According to the Small Business Administration and Bureau of Labor Statistics, statistics show that 90% of U.S. businesses are family owned or controlled, form a traditional small business to a 1/3 of Fortune 500 firms. About 4.3 million businesses with 19 or fewer employees closed during the fourth quarter of 2007 through the fourth quarter of 2008.

Sadly, these types of businesses usually are run by traditional techniques and some are not fully prepared, educated, or informed enough in case there is a need, such as a economic shift, to conduct business differently. Some of these small proprietorships usually do not have a formal plan in place to respond to a crisis.

Jimmy Roussos, 60 years old, says the financial meltdown last fall caused business at Roussos Restaurant to drop in half practically overnight. Georgia Roussos, 53, says " You have to discount so heavily to get someone into the door that is was just not profitable anymore."
After months of being unprofitable, the siblings made the difficult decision to close shop, leaving their 55 employess many wo hve worked there for more than 35 years--out of work. The siblings say it was emotional not only for them, but for their workers and loyal customers.

It is sad that so many businesses are stuggling to keep the doors open. By the closings of so many family businesses, it just adds to the mixture of a more worse off economy and a longer process for the economy to neutralize and come to a healthy resortoration.