Why are they closing up shop? - KPLC 7 News, Lake Charles, Louisiana

Why are they closing up shop?

LAKE CHARLES, LA (KPLC) -

Everyday in Lake Charles, we see signs of economic development - new subdivisions being built, a lakefront changing before our very eyes, and a downtown that's getting a facelift.  But even in the midst of those positives, you can't help but notice the numerous establishments that are also going out of business. Some of you may be wondering - why are they closing up shop?

Just a couple of months ago, the Piccadilly's on Ryan Street closed its doors for good - another victim of the hard economic times.  A former video store is no longer renting out movies, and a former downtown bistro is boarded up. These sights aren't unfamiliar in Lake Charles these days. In fact, it's a national trend. From Wall Street to Ryan Street - just as quickly as one new business opens up, another is shutting down.

Here in Lake Charles, one well known businessman says it has a lot to do with timing. Rick Richard believes many of the closures can be attributed to the large number of people who rushed into business after Hurricane Rita.

"A lot of people during that time opened stores. The rising tide lifts all boats. They thought they had great business plans, and when the people went away, and people stopped fixing up and building, a lot of those stores failed," said Richard, who knows all too well the risks involved. He was the owner of one of those casualties - Budda's Bistro.
 
"If you don't take a risk, it never gets done. And people like to see something before they'll invest in it," added Richard.

His corner bistro didn't work, but now he's taking on a new project.  He's the man responsible for the new building that's sprung up on the corner of Kirby and Ryan Streets. He calls it the Phoenix Building. He's taking a chance, but it's a gamble he's hoping will pay off.

"The building across the street for instance, I don't have any tenants signed up before I built it. But I built it on faith in the city of Lake Charles, that the downtown is revitalizing," said Richard.

The city administrator's office shared these figures with us - 186 businesses have closed down between January 2011 and April 2011.

One of the major problems with these business closures is cash flow - not having enough capital to keep things going. And ever since the financial crisis of 2009, banks have tightened up on money that's available.
 
"And what happens is, if you have anything goes wrong, and you don't have a lot of capital, like a plumbing problem.  Little things like that kill a small business. Because they run out of cash and they just can't get cash anywhere else," said Richard.

But despite the closures, the entrepreneurial spirit is alive and well in Lake Charles, and Richard and others hope that a life saver is tossed out to those who want to venture out.

"There's so much latent talent in Southwest Louisiana, and they have great ideas. If they can go some place and get some good advice, I think some of those store fronts you're talking about, they can be filled back in pretty quick with good prospering businesses," said Richard.

Copyright 2011 KPLC. All rights reserved.

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