Published in Senior Digest, April 2016
If you are in pursuit of the American Dream, you probably weren’t given a roadmap that would guarantee a successful journey. Ask the average man or woman on the street today what immediate thoughts come to mind about owning your own business, and you’ll probably hear ‘being your own boss’, and ‘working your own hours’ that top the list of perceptions. But when opening your own business becomes the alternative to unemployment in your later years, as Donald, Russell, Jr. found out, it may not be what you expected or even planned. Like millions of middle-aged workers in the early 1990s, a severe economic downturn forced this Central Falls resident to make choices that ultimately would financially hit his pocketbook as he approached retirement.
Donald Russell had worked his way up from stock boy to manager at F.W. Woolworth Co., one of the areas original five-and-dime stores. During his 33 year career with this large big-box retail company, what was at the time the fourth largest retailer in the world operating over 5,000 stores, he eventually managed seven of the retail company’s stores, one located in Providence (at Westminster and Dorrance Streets), and the others in Massachusetts, Vermont and New York.
But everything changed in the late 1990’s, and this 117 year old company struggled to compete with the growing big discount stores. F.W. Woolworth filed for bankruptcy protection, and Russell, facing unemployment, had to quickly make major career decisions. He knew that, “at age 52, big box competitors don’t want you,” or if he was offered a position, the salary would be much lower than what he was used to. “I could not take less because I had to pay for my daughter’s college education,” he added.
Russell credits “courses he took at Boston College” for teaching him valuable lessons on how to open a small business, and with knowledge in hand, he was ready to take that leap of faith and open his own business. . Russell decided to cash out his $80,000 pension (less penalties) and combined with a loan from U.S. Small Business Administration, he would have enough capital to open a small retail business.
Getting into the Pet Business
Russell spent time researching a market niche, searching for one that would not put him in direct competition with the chain store. He discovered that the pet business was not really sought after by “big box retailers” and at that time “there were only 30,000 pet stores throughout the country. Today the number has decreased to 6,000.” Now . Russell found his niche, and in 1997 opened his business “Dr. Doolittle’s Pets & More”, a small pet store in an East Providence shopping plaza. Though situated between two large Petco stores – one in Rumford, RI and the other in North Attleboro, MA., Russell did not view the large chain stores as competition, for he knew his prices were better. In 1997 when Russell opened his store, small business accounted for about 85 percent of the nation’s economy, he states, noting that today this percentage has dropped to 70 percent.
Business was strong when Dr. Doolittle’s first opened and for over 13 years, Russell employed seven full and part time employees. However, by 2004 “the economy began to take a dive” and juggling the monthly rent, utilities and employee salaries became difficult when his cash flow slowed. Russell began to loose money.
By 2006 his revenue had dropped 30 percent from the previous year, and neighboring big stores located in the plaza, like Ocean State Job Lot, began to close. In an effort to trim expenses, Russell was able to renegotiate his rent to a lower amount, however “losing the Stop & Shop Supermarket in the next plaza, which was a main draw to the area, “was ultimately the straw that broke the camel’s back”.
Taking from Peter to Pay Paul
Like thousands of small business owners in the Ocean State, Russell had to juggle each month to meet his expenses, which included his RI sales tax. Choosing to pay his monthly sales tax or paying his employees salary was not an easy choice to make, but he could not pay both. “I chose to pay my employees” first, with the plan to make up my [delinquent] sales tax later” he stated, noting however, that the “economy put the brakes to that”. “I could not even borrow a dime even with an excellent credit rating of 750,” added Russell. The poor economy had forced banks to cut off credit to small businesses – period.
In 2009, the Rhode Island Department of Taxation came knocking on his door, and the now 65-year-old pet store owner was forced to close his business because he was in arrears on his payment of sales taxes. While his business was his sole-source of income, the forced closing of the business put him in a ‘catch 22’ situation – blocking any attempt to rescue his business and pay off the remaining sales tax owed, which had now grown to thousands of dollars. Rather than padlock the door, the State did allow him access to the store to feed and maintain the animals until other arrangements were made.
Two weeks after his closing, Russell hammered out an agreeable payment plan with the State of RI for back taxes, but the economy never recovered, and by September, 2010 the doors closed for the final time. In a valiant effort, Russell paid off $18,500 of the $20,000 owed before he closed, but two years later to his surprise, he was blocked from registering his car because of the remaining taxes (and penalties) still owed. A dispute as to the amount of sales taxes (plus penalties and interest) paid ultimately ended with the state’s tax agency backing off and allowing him to register his vehicle.
Russell’s forced closing and ultimately his bankruptcy caught the eye of both statewide and national media. Two radio talk shows and television coverage brought the news of his closure to the public. Even the nation’s most popular Web site, “The Drudge Report,” posted articles. Amazingly, he says that over 100 pages of blog posting were also generated, too.
Making Ends Meet
Today, Russell, 72, is collecting Social Security supplemented by a part-time job delivering pizzas. He notes that beneficiaries will not receive cost of living this year. Like millions of Social Security beneficiaries, Russell feels the impact of inflation. “There is no extra money to buy groceries after paying my rent and utilities,” he says. Local food pantries provide additional food and the Pawtucket-based Blackstone Valley Community Action Program pays for some of his heating bills.
Reflecting on the lay off in his fifties that led to the opening of his small business and ultimately its closing as he reached his mid-sixties because of an ailing economy, Russell admits he did not have a strategy for getting through the tough times in his later years.
“I just coped,” says Russell. The former business owner has a strong opinion on opening a small business in Rhode Island. “Never,” he says. .