Oct 27, 2008

Mister, can you spare a latté?By Lynn Vincent and Alisa HarrisWorldMag.com

San Diego and New York—When Think Coffee on Mercer Street in Manhattan opens at 7 a.m., there are usually people waiting outside to duck in and stake their claim. As the day wears on, freshmen and teachers, hipsters and nerds pack the place—buried in books, guzzling Fair Trade coffee, eating vegan brownies. Political art covers the walls. Eclectic coffeehouse furniture fills every nook where eclectic coffeehouse furniture will fit. Turn around, and your elbow will likely bump someone’s psychology textbook. Or you’ll fight a grad student for an outlet to plug in your laptop.

Jason Scherr hopes it will stay that way. With a stake in four New York concerns, Scherr is one of millions of small business owners keeping a wary eye on the U.S. economy: Stormy equities markets, spiraling energy costs, tightened lending, the mortgage crisis, and sluggish consumer spending have combined to sink some small businesses, while others have steamed ahead.

In the world of business, small is a relative term. The Small Business Administration (SBA) defines it as a firm with 500 or fewer employees. But when measured by sheer number of establishments, 90 percent of all U.S. businesses are the kind you see along Main Street—gift nooks and beauty parlors, watch repair shops and stores selling used books. They are typically retail and service establishments, “mom-and-pops” putting bread on the table for fewer than 20 workers.

“These are owner-operated businesses, where the owner is not chairman of the board, dealing with strategic issues, but actively engaged on a daily basis in all aspects of the business,” said Allan Adams, state director for the Small Business Development Center at the University of Georgia in Athens. “These are people who often have their personal assets somewhat entwined in the business—their homes leveraged, for example—so that if the business goes under, so does much of their net worth.”

Among such folks WORLD spoke with about the state of the economy, two words popped up again and again: caution and optimism.

Scherr, for example, is cautiously optimistic about the long-term viability of the three-dollar latté. He even theorizes that the flagging economy will boost business: “I think you can possibly get a lot for your three-dollar latté if you come here and hang out for 45 minutes or an hour,” said Scherr, who owns a second Think Coffee location in East Village, as well as slices of a cheese shop and a café in a pricier part of Brooklyn. “It’s actually fairly inexpensive entertainment.”

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