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COVER STORY: Risky business

Jacob Aginsky has a full-time job that supports his small business a co-op café that employs 10 people on Commercial Drive.

Jacob Aginsky has a full-time job that supports his small business a co-op café that employs 10 people on Commercial Drive. On Main Street, 25-year-old fashion phenom Stephanie Ostler can make more clothes in a day than a factory, but is struggling to break even with her eco-friendly clothing line. And on Denman, the former site of Mr. Pickwicks Fish and Chips awaits demolition, the leaseholders having fled the city for lower rents and a less stressful lifestyle on the Sunshine Coast.

Owning a small business in Vancouver has never been easy, but more and more independent entrepreneurs report a combination of factors squeezing the bottom line. Between high rents, rising property taxes and decreased consumer spending power thanks to the recession and reaction to the HST, business just isnt what it used to be and that is seriously jeopardizing the future of the unique coffee shops, cafés and boutiques that form the backbone of Vancouvers distinct and livable neighbourhoods.

WE talked to three of these entrepreneurs to find out what it takes to run a small business in the city and the biggest challenges they face in keeping their doors open.

Its pretty much a given that servers, salespeople and most other frontline workers are living double lives in order to make ends meet. The dancer-yoga teacher, writer-waitress, barista-musician or some combination thereof are par for the course in Vancouver and Jacob Aginsky, a professional keyboardist, is no stranger to the hyphenated career.

As owner of Theresas Café on Commercial Drive, a popular neighbourhood haunt famous for its no-frills atmosphere and roasted-garlic breakfast potatoes, he splits his time between running the business and playing the keys. But its music thats the money-maker and the business that needs subsidizing.

Times have changed. Fuel costs and everything are going up but business volume is not what it was, Aginsky says. He attributes the slide to a cocktail of high rents, increasing property taxes and the HST, which has customers watching their pennies while Aginsky watches the fine line between make and break dwindle down to a hairs breadth. Right now Im in the position of having to go out and work to support this. Thats a really bizarre position to be in, especially as a musician.

Aginsky took over Theresas formerly a greasy spoon called Urban City about 4 years ago, naming it after the original proprietor. An old-school commi-socialist from California, he set it up as a co-op, starting his workers off at $12 an hour plus a profit share, which he considers a base living wage for Vancouver.

For a while it all worked out, the café broke even and was self-sustaining. But last September Aginksy took a major hit when a small fire caused minimal damage and ignited months of negotiations with insurance providers that kept the café closed. Theresas reopened recently but Aginsky is now saddled with a $50,000 debt. Already hurting, he says he got dinged again by the City of Vancouver when it cancelled all his licenses while he was out of business, forcing him to reapply and pay fees for all the necessary paperwork, which had tripled since the last time he went through the red tape. It took him eight weeks to navigate the bureaucracy at City Hall and to top it off Aginsky says hes paying $400 more in property taxes this year than he did last.

Aginskys situation sounds familiar to Laura Jones, Western Canadian vice-president of the Canadian Federation of Independent Business. She points the finger squarely at the City of Vancouver for the strain facing small business. While high rent, the HST, increasing commodity prices and, for restaurants and bars, changes to drunk-driving legislation, have all taken a toll, its the way businesses are nickeled and dimed at the municipal level that is often the nail in the coffin.

Vancouver is a particularly bad offender when it comes to charging businesses far more than what they charge equivalently valued residents and far more than what businesses are using in terms of services from the city, she says.

While theres not much city council can do to reduce land speculation and the high cost of property, Jones says more needs to be done to address an uneven tax system that has seen businesses historically shoulder between 55 and 60 per cent of the municipal tax burden, while consuming fewer services and growing substantially slower than the citys residential tax base. City Hall has taken steps to address the imbalance, enacting a one per cent tax shift from business to residential each year for the past three years, but Jones says unless the city can reduce spending and the overall tax rate, small businesses are headed for a crisis that will have a devastating impact on Vancouvers vibrant neighbourhoods. Small business affects community in a unique way because its your favourite bakery, your favourite restaurant shutting down.

However councillor Raymond Louie rejects the idea that the city is unfairly penalizing small business with taxes and fees, noting the plight of small business is on the radar at City Hall.

The amount of tax we collect goes to pay for the services we need in our city overall, so its a balance that we must find in order to provide all the different services our city requires, says Louie, adding municipal taxes pale in comparison to federal and provincial tax.

Licence and inspections fees have gone up in recent years, he admits, but only to cover the cost of delivering services. The city is trying to promote a healthy business climate in Vancouver by courting investment from China and promoting street fairs and festivals like the Celebration of Light, and developing a green job sector on Marine Drive, he says, adding city staff have been asked in several iterations of council to look into what can be done for small business.

While the city may be nurturing the creation of green jobs, Main Street fashion designer Stephanie Ostler is struggling to make a go of her own green business at her eco-friendly fashion boutique Devil May Wear.

At 25, Ostler has been cranking out clothing for eight years behind her own label, but with foot traffic falling, rents rising and a customer base that has less disposable income, maintaining a storefront may prove unsustainable.

Originally a wholesaler, Ostler went brick-and-mortar in 2008 when most stores she sold to went out of business. She managed to score a good lease, paying slightly less than the neighbourhood market value of $60-$90 per square-foot for her 1,500-sq-ft workshop and retail space. Whats more, she isnt subject to a triple net lease the standard agreement in Vancouver that puts commercial tenants on the hook for property tax, building maintenance and city licensing and inspection fees.

Even so, Ostler is falling short, netting about $150 a day $100 less than she needs to break even and working 15-hour days, seven days a week to do it. Its hard because before the economy collapsed we couldnt keep stock in and now Im lucky if I do two sales a day. My regulars are still coming in, they just dont have jobs, they cant buy things and a lot of them are moving away.

Others on the street are also hurting, but you wont hear it from them.

Any of the stores you go in and you ask them, they have to tell you that theyve never had better times, theyre doing great, theyre all doing amazing. But to be honest, I go to all the business meetings where the exact same people are shouting that they have to put another mortgage on their house.

Ostler says theres a code of silence among her colleagues whove been trained to put a positive spin on business, but all thats doing is keeping their concerns off the radar of customers and city brass alike.

People dont want to go into a complainers store, she reasons.

Theres a common misperception among residents in Vancouver that owning a businesses is a surefire way to reach financial stability in this notoriously pricey city, says Ostler, but the reality is small business owners who make up more than 90 per cent of employers province-wide are sacrificing to keep their small economic engines running. Everyones angry at somebody and theyre angry at businesses. But they dont realize that when I have staff I pay them more than I ever pay myself. I give them holidays that I dont take.

After decades working at a frantic pace, Roy and Rayana Blackwell decided theyd had enough of scrambling to stay afloat, much less get ahead. As purveyors of Mr. Pickwicks Fish and Chips, they had given up their health, personal lives and relationship to support the little restaurant that was a Denman Street staple for 17 years.

The couple hatched a plan to get out of city life: They would renew their lease on Denman, where they paid about $7,000 a month in rent, plus property taxes, sell it, and settle in the Sunshine Coast town of Lund. They got a deal on a restaurant space there for $2,700 a month. But they hit a snag. The [Denman] lease came up for renewal and the landlord said, uh uh Im not renewing it, Im demoing it, Rayana Blackwell says on the phone from Lund. Our little nest egg went from having a debt-free life and some pennies left in our pocket to having absolutely zip. So much for 17 years of work.

So the couple was left to start from scratch in their new country digs. Even without the financial cushion, Blackwell says leaving Vancouver was a good decision. You dont have to work near as hard to have just as nice of a living, she says, noting other perks like river otters at her waterfront business and spectacular sunsets. Ive lost 80 pounds in 11 months... just the stress factor going, we sleep better.

Back on Commercial Drive, For Lease signs are starting to dot the storefronts where other community institutions used to thrive. Wazubees Cafe owner Benny Deis shuttered his restaurant earlier this year to focus on his downtown bistro, Subeez. Controversial Kitchen packed it in, as did Mexican restaurant Me & Julio. At Theresas, Jacob Aginksy wonders how many people like him will be willing to pay the high price, financial and otherwise, to fill their shoes with independent businesses. And how many will last. But most of all, he wonders what will happen to the Drive, and other neighbourhoods, if funky little businesses like his can no longer flourish. What makes your favourite cities Paris, London, Tokyo cool is your favourite spots. Variety. And I think the businesses are what help to generate that.