When Derek Cha came to Richmond in 2009, his life as a businessman and the family breadwinner came close to catastrophe.
More than two decades earlier, the Korean-American had started two framing businesses, Art and Frame Depot and Art and Frame Warehouse, which grew into a large chain of 80 stores nationwide. He was a wealthy man, with a home in Potomac, Md., one of the most affluent communities in the United States. But as the housing market began to tank in 2006, followed soon after by the entire U.S. economy, so did his good fortune. “There was no end in sight,” the 46-year-old says now. “Our business kaputted.”
By 2009, only a handful of the 80 stores were still open, and none were providing income for Cha; his wife, Annah Kim; and their two young children. He no longer could afford to pay the mortgage on his house, and in 2009, one year after the 2008 financial crash, he gave up, renting it out to another couple with the intention of moving to Richmond to start over in an artsy and less expensive place. He planned to open a new framing store in West Broad Village.
“We were on the brink of bankruptcy, and all I knew was the framing and art-gallery business,” Cha says. “My finances were in ruins, and it was the only business I knew. But before we were going to open, my wife said, ‘This is not the right time. We’ve got to do something else.’ ”
So the once-affluent businessman turned himself into a courier, using his car as his delivery truck. “I delivered medicines to nursing homes at night. I picked up documents, stuff from the airport, during the day.” And he and his wife prayed. “We turned to God, and we prayed day and night for a new business venture that would thrive in this economy.”
Six months later, Cha re-invented himself yet again, this time becoming rapidly successful in an entirely different kind of business — a frozen-yogurt chain that he named SweetFrog. He expects the chain to have 50 stores by the spring of 2012.
This kind of reinvention is what many people have done — though most at a slower pace and on a smaller scale — to survive during an unsteady economic recovery that has once again become painfully slow.
In the first months of 2011, well-paying jobs started to come back to the Richmond region, and homes that had been on the market for months, even years, began to sell, albeit at low prices. National and regional economic analysts were happily predicting an almost certain economic comeback. Then came the triple whammy of the Libya conflict, which sent oil prices upward; the tsunami-induced paralysis of Japan; and worries about a European debt crisis.
Although the Richmond region, typically, is still doing better than most in the nation, manufacturing and retail sales slipped while employment and home sales were unsteady or flat by midsummer. Now recovery feels glacially paced, like no recovery at all for some people, and many have gone into coping mode.
For Cha, that’s meant figuring out how to do well in a poor economy. For other people, it’s meant becoming newly frugal — replacing living alone with sharing houses or apartments, replacing high-end mall shopping with consignment-store cherry-picking, and replacing full-time jobs with selling their last resources, their own time and skills.
In the worst of economic times, “People do whatever they have to do to put food on the table,” says Oleg Korenok, an economist at Virginia Commonwealth University. “They find new things to do. And sometimes they win.”
Korenok says that generally when a recession is caused by the collapse of financial institutions — as this one and the Great Depression were — recovery is slower because people have to pay back debt before they begin to spend. Still, he says, there’s no reason to believe that the United States won’t heal. The two engines of contemporary economies are capital and technology, and the United States has enough of both, he says.