Marin business owners face dire financial outlook
Debt increases, savings fall; economic stability in question
More than a third of Marin County business owners polled in a recent survey said they have dipped into personal savings, racked up credit card debt or borrowed money from family members to keep their enterprises alive during the coronavirus pandemic.
The survey, which polled nearly 1,200 Marin business owners, highlights the dire financial situation for many companies after a year of lockdowns and restrictions, said Cynthia Murray, CEO of the North Bay Leadership Council. The survey was conducted in February by Keep Marin Working, a business advocacy group.
“I was surprised by the number of people putting their debt on credit cards. Those are last-resort situations,” said Murray, a member of Keep Marin Working.
“We think about money for keeping doors open, but if there isn’t assistance to help them pay their debt, these businesses won’t be able to stay open.”
More than three quarters of the survey respondents said they had seen revenues fall during the pandemic and were concerned about the economic stability of their businesses.
The online survey, which was circulated by Marin’s cities, towns and chambers of commerce, polled business owners throughout the county in more than two dozen industries. Almost 70% said revenues were down 10% or more and 35% said revenues were down more than 50%.
About a third of the respondents said their businesses were only partially open with reduced staff or hours and 13% said all staff were working remotely.
About 9% said they had closed temporarily and 1% had closed permanently.
To weather the next six months, 9% of the respondents said they would close permanently or temporarily until coronavirus restrictions are lifted. About 8% said they plan to downsize and 1% said they would relocate outside of Marin. Just under half said they would stay in business with the same number of staff they had in February.
Many of the business owners secured pandemic relief funding, including 53% who said they got at least one round of funding from the federal Paycheck Protection Program. About 15% said they qualified for PPP money twice.
About 36% of respondents said they had used personal savings toward their businesses over the past year, while 16% built up credit card debt and 6% borrowed money from family members. Some used a combination of the three.
“What I take away is that there’s still a great need out there,” said Joanne Webster, CEO of the San Rafael Chamber of Commerce and a member of Keep Marin Working. “Even though there are a lot of programs out there, people are still incurring personal debt, and that’s scary, because it means they’re not going to be able to invest in their businesses.”
Webster and other members of Keep Marin Working are advocating for a new Marin County program that would provide grants to small businesses.
Webster is urging county officials to set aside at least $2 million for the program.
“We want to avoid bankruptcy,” Webster said. “For these smaller businesses, if they declare bankruptcy or go out of businesses, that really creates problems in our downtowns and on our main streets. We want to avoid blight.”
Even as health officials roll back coronavirus restrictions and the number of vaccinated Marin residents grows, a looming uncertainty continues for business owners, Webster said. The county has eased up on restrictions in the past only to reinstate them amid growing infection rates.
“The anxiety is still there,” Webster said, “and the uncertainty is still there.”
Businesses that have
seen their customer bases grow with looser public health restrictions also face challenges with the sudden boost in demand, said Miriam Hope Karell, director of the Marin Small Business Development Center, who also is a Keep Marin Working member. Some are struggling to hire staff, which is a perennial problem for Marin businesses in need of low-wage labor that has been exacerbated by the pandemic, she said.
Justin Flake has posted ads to online job boards seeking new employees at the Acqua Hotel in Mill Valley, where he is general manager, but he’s seen very few applications come in. Business started increasing around Valentine’s Day and has kept growing since, he said.
“We’re in a spot where we need to be hiring people
very quickly to keep up with the demand, but it’s hard,” Flake said.
Flake, who also manages two other hotels with the Marin Hotels Group, said the business laid off more than 90% of its staff in March 2020. He’s resorted to posting the new job openings on social media in recent weeks in hopes of finding candidates, which has netted a few applicants. But keeping the hotel staffed has become “a balancing act” amid the flip-flopping restrictions, he said.
The business has relied on financial assistance program, including PPP money, which it qualified for twice, to keep running, Flake said.
“It’s been a really tough year,” Flake said. “Without those programs, it would be unsustainable to keep moving forward.”