Business owners tap into savings to withstand pandemic
NEW YORK – When the coronavirus outbreak forced cruise lines to cancel trips to Alaska, it wiped out Midgi Moore’s tour business, leaving her with thousands of dollars in deposits to refund.
Moore’s company, Juneau Food Tours, didn’t have enough cash on hand. So, she withdrew $30,000 from her retirement account – a painful decision for a 56-year-old starting to look forward to the day when she can stop working.
“It was a gut punch,” Moore says.
Many business owners are tapping the money they socked into personal savings and retirement accounts to withstand the pandemic. For some, like Moore, there are big expenses coming due while for others it’s a way to offset the losses and stay afloat until the virus eases its grip.
Owners are trying to keep their businesses alive at a critical time for the U.S. economy. Small businesses employ nearly half the nation’s workforce. In April, payroll provider ADP reported nearly 20 million jobs were lost at U.S. companies and said more than half were at businesses employing under 500 people. Many economists expect a sizable portion of those job losses will be permanent.
A report issued by the National Bureau of Economic Research found that 2% of small businesses surveyed had shut down permanently in March, a number that certainly has increased since, meaning it’s likely hundreds of thousands of businesses have failed. The government’s Paycheck
Protection Program helped by giving out more than 5.2 million loans to small businesses and nonprofits. But owners and advocates say struggling companies need more help from Congress, and lawmakers themselves are urging the Federal Reserve to expand its lending to small and medium-sized businesses.
How many owners have raided savings to shore up their companies during the pandemic is also unclear; in surveys, the number has varied widely from 4% to about 20%. Even owners with companies outside the stricken restaurant, retailing and travel industries have needed extra funds as high unemployment and a weakened economy made consumers and companies cautious about spending.
Alissa Kelly is forgoing
To build shoppers loyalty, brands need to “create delightful experiences online,” Atherton said.
Emily McKenna, 22, a recent college graduate from Omaha, Nebras
ka, says she’s a big fan
of Asos, an online-only clothing brand, because she likes the video feature that shows what the clothes look like on models.
She also likes shopping at the J. Crew outlet that’s about a 30-minute drive from her home, but she says she’s buying more online now because she doesn’t feel comfortable going into stores and she also sees more options for deals.
But McKenna does worry about the hallowing out of the middle-priced brands and what that means to shoppers who want quality but can’t afford luxury brands.
“I think it is sad that these brands are being wiped out, and in a way, it makes some of our dreams less attainable,” she said.
Juliana Gonzalez, 30, from Howard Beach, New York says she’s been a big fan for several years of the Loft, Ann Taylor’s lower-price division. She gets most of her clothing from the chain and is worried that they will be closing more stores as a result of the bankruptcy filing.
“It’s young and hip. And the clothes fit me,” Gonzalez said.
But even before the pandemic, she only bought the clothes at 50% off. Those discounts will be easier to come by, now that Ann Taylor’s parent has declared bankruptcy.