How a Small Business Holds It Together

NEW YORK, Dec. 13, 2009— -- We hear it all the time: Small businesses play a vital role in the American economy, creating two-thirds of the nation's jobs. But many small business owners say surviving this recession has been an epic struggle, marked by an inability to get economic support from the federal government or, as the president is expected to highlight Monday, credit from banks and lenders.

In April of this year, ABC Business Correspondent Betsy Stark and producers Catherine Cole and Justine Schiro began following one small business as it tried to keep its doors open for business through the worst recession since the Great Depression. For the last seven months, our cameras followed Lisa and Felix Hendrickson of Hendrickson Custom Cabinetry and documented their battle to save their Bronx, N.Y., cabinet business.

When we first met the couple in April, sales at their custom cabinet company had evaporated. Orders were so few, they had been forced to cut their staff of 30 down to five. It was a tough decision laying off people who felt like family, but the Hendricksons said they had no choice.

"The phones stopped," Lisa Hendrickson said. "People canceled jobs overnight."

It was then the Hendricksons realized their days of selling to the luxury market were over. To survive, they would have to make a more affordable product, one they hoped the government would buy with its $787 billion in stimulus money.

Lisa and Felix Hendrickson hoped the help that was available to big Wall Street banks would be available to small businesses, too. They knew it meant a fundamental change in their business, but they said the only way to survive was to become government contractors, so they dove in.

In April, Lisa took the first step, visiting an agency that advises companies on how to get work from the government. The agency gave her half-a-dozen applications -- for state, local and federal projects. The application to become a federal contractor took 30 hours alone to complete. She submitted the six pounds of paperwork and waited to hear back.

'We're Living and Dying by Every Job'

May turned out to be the worst month in the company's history. While Lisa slogged through more government paperwork, Felix bid on odd jobs to generate any income they could. No job was too small.

"We're living and dying by every job," Felix told ABC's Betsy Stark.

In June, the news they had been hoping for finally came. The business was certified to compete for government contracts. The Hendricksons bid to build dormitory kitchens for a state university, library shelves for a courthouse and mail slots for an Air Force base. It was a long shot, "but I have to have faith it will work out," she said at the time.

But July and then August went by without winning any government bids. The Hendricksons exhausted their savings and were falling deep in to debt.

They began to wonder if the government would be able to make things happen quickly enough to save their business.

"I thought the stimulus package was going to roll down with these shovel-ready projects," Lisa said. But for the government, "shovel ready means 2010, or maybe 2011."

The Hendricksons couldn't wait that long. Every month there were bills to pay, loan payments that were due. Every week there was a payroll to make.

By September, Lisa was convinced that the government contract route was a dead end.

"There's no bailout," she told ABC News. "We're on our own."

So in October, after spending hundreds of hours filling out forms, attending dozens of meetings and making countless phone calls -- with nothing to show for it -- Lisa and Felix decided they were finished waiting on the government's help.

"With a super-duper, double-stuttering 'D', I'm done," Lisa told ABC News.

The Hendricksons returned to pitching private clients. And by November, orders had started to trickle in. Lisa and Felix still believe their company will survive the recession, but it saddens them that the business will never be the 30-person operation it once was. They do not think they will ever be able to bring back those 25 people they had to let go.

"This is a jobless recovery for us," Lisa said. "Make no doubt about it."