How small businesses in area are hanging on
Strategies include deep discounts, home delivery, online options
Akin Atak has seen firsthand the damage the coronavirus crisis has inflicted on the Bay Area economy. Business at his San Jose auto repair shop is down 80%, from as many as 45 cars a day to maybe 10 now.
“Even my customers, they don’t have work anymore. They’re all laid off,” he said. “It affects everybody, every business.”
Throughout the Bay Area, thousands of small businesses have been trying to find ways to survive, creating new online shops from scratch, delaying major expenses, offering steep discounts and trying to figure out
how long they can hold on. Some say they have made tough adjustments to keep the lights on, and will be able to survive even an extended shutdown. But others worry if things don’t get better soon, they’ll have to shut their doors for good.
The damage is widespread: 92% of small businesses in California say they’ve been negatively affected by the coronavirus, according to a new study released this week by the Small Business Majority, an advocacy group based in the Bay Area. One-third have permanently laid off workers, and about half have done furloughs.
Atak, who has been running Akin’s Auto Repair for more than a decade, said it’s not just fewer customers but cheaper repairs: more oil changes and fewer brake jobs.
“People are being very careful how they spend their money, and I don’t blame anybody,” he said. “I’m doing the same.”
So far, Atak has been lucky. His business is essential so he can keep operating. He hasn’t laid off or furloughed any of his seven employees, but he said he came into the crisis with more robust finances than many other small businesses. He’s also applied for some of the federal initiatives meant to support small businesses, including the troubled $349 billion Paycheck Protection Program, which ran out of money last week although Congress is expected to pass a $310 billion extension. He still hasn’t heard whether he got approved. If he doesn’t get the loan, Atak thinks he can keep going another three months. But after that, he’ll have to start cutting his employees’ hours or wages.
Lena Swann doesn’t have nearly that much time. She’s been grooming dogs for 27 years and has owned her All About the DOGue Salon and Spa in Emeryville for 11 years. She isn’t considered an essential business, but some customers have still been coming by. To minimize the risk of exposure, the spa has staggered customers’ schedules, picks dogs up at the door and sanitizes anything people touch. But instead of 120 dogs a week, she’s down to 10 — barely enough to keep her four employees working a few days.
“We can’t afford the bills, and we can’t afford the rent, but at least I can make sure they can put food on the table,” Swann said.
She’s tried applying for loans offered by the federal stimulus package but hasn’t gotten any money. She set up a GoFundMe campaign that surpassed its original $15,000 goal, but even that won’t cover all her expenses, including rent, insurance, payroll, utilities and dog grooming products.
She always tried to be financially responsible and had no debt before the pandemic. Now she’s worried that if things don’t improve soon, she’ll have to close.
“I wouldn’t be doing it for 27 years if I didn’t love what I do. I’ve never called in sick; this is the first time I’ve had time off,” Swann said. “I love coming to work.”
Vicky Malvini, co-owner of the BellaJames boutique in San Jose, is also scrambling. Her revenue dropped to zero when they decided to close even before the county issued its shelterin-place order last month. Late last week, she said she received approval for a Paycheck Protection Program loan, which can be forgiven if the shop avoids layoffs through the end of June.
But because the loan is intended for payroll, Malvini still has to work with her clothing, shoe and accessory vendors to get some leeway on paying for items the shop sells.
“It’s frightening, but that’s why we’re adding online,” she said, crediting the community around her Willow Glen shop for offering support and buying clothes through Instagram.
BellaJames is also doing style appointments over FaceTime and moving its trunk shows — get-togethers where customers can interact with vendors from specific brands — online. Still, Malvini is preparing for a future that isn’t normal for another two years.
“I think we’re not going to have those successful trunk shows we’ve had in the past,” she said. “We’re making changes now. We can’t wait.”
The shelter-in-place orders have also been a challenge for wineries in the Livermore Valley, which rely on tasting rooms and large events for most of their revenue. Steve Burman, a one-third owner of 3 Steves Winery, said the business has furloughed staff in the tasting room, which normally brings in 97% of its revenue. It’s cut
all the expenses it can and delayed bottling wines.
To compensate, Burman said 3 Steves is offering 30% to 40% discounts and drive-thru pickups, free home delivery for some customers and shipping well below cost. It’s cut its profit margin and is focused on staying connected with loyal customers. Burman usually brings a roll of toilet paper as a gift during home deliveries.
“We’re doing a bit better than break even,” Burman said, adding that 3 Steves is focused on making it easy for people to get their wine, not make money. “It’s the right thing to do.”
So far, overall sales are actually up from previous years. Burman also has been able to manually bottle enough wine with on-site equipment for the May wine club delivery. The club provides an important financial cushion because members prepay for their wine.
“I hate jinxing things, but we’re in a good trajectory,” he said. “If sales dry up, we still have our May release and that will buy us three months.”
Not all wineries in the valley are turning to deep discounts. Retzlaff Winery, one of the oldest in Livermore,
also gets a majority of its revenue from the tasting room, thanks in part to live music events on weekends that draw a couple of hundred people, said Salome Garau-Taylor, the winery’s business manager. Retzlaff is named after Garau-Taylor’s motherin-law, who started growing organic grapes on the property in 1976. The family still lives on-site, which has made it easier to maintain the regular business hours — beverage production facilities are considered essential.
Still, sales are down 12% compared with last year. Like 3 Steves, it’s offering drive-thru pickups, which is helping keep the business steady. “We have some customers who have been coming forever and some of them just drive through and wave, ‘We miss you!’ ” she said. “That kind of makes my day.”
Retzlaff also has turned to online sales, and so far those have provided a bigger share of revenue — 22% now, up from 13% last year.
“I’m already working on the plan B because we don’t know how this is going to change our business,” Garau-Taylor said. “I have to plan for a scenario of us not opening as we have in the past.”