Many Businesses Face Off with Pandemic Restrictions, Loss of Revenue and Uncertain Futures
As a military veteran, Danny Farrar has learned to roll with the punches. Founder and CEO of Soldierfit’s five regional gyms, Farrar says veterans tend to thrive on stress and chaos. And although he’s a big believer in personal accountability he cannot help but be rattled by the challenges of owning gyms and accessing financial assistance programs as a global pandemic threatens lives and livelihoods. “I am doing everything I know how in this situation,” he says. “but there’s no ifs, ands or buts. we’re severely hampered by these conditions.”
Many areas of the economy have suffered heavy losses since the state-ordered shutdown on March 23. Small businesses are particularly fragile in the current environment. As a result, many business owners have aggressively sought an edge, a way to survive in an inhospitable environment. Whether it’s a restaurant exploring contactless transactions and delivery services or a retailer offering products online for the first time, those able to pivot quickly to adapt to the strain of mandatory closures strengthen their chances of survival.
Soldierfit went back to its roots, outdoor fitness bootcamps, on May 18. Farrar believes that fear of going out isn’t as widespread as reported. “Look at what’s happening at Lowe’s. People are going there just to get out of the house,” he says.
Although many small business owners are indeed responding to the body blows delivered by COVID-19, the actual numbers offer a sobering view of the effects of an unprecedented pandemic, including shuttered doors and an uncertain future.
Twenty-five of 32 downtown business owners reported a whopping 75 percent loss of income, according to a national survey conducted by Main Street America in April. “That’s a small sample size, but it gives you a sense of how quickly this impacted downtown Frederick,” says Kara Norman, executive director of Downtown Frederick Partnership. “It doesn’t take any special knowledge to know that the longer this goes on, the greater chance we have of losing businesses.”
The Frederick County Chamber of Commerce, with 900 members, represents a small but diverse group of the 10,000 registered businesses in the county. “My intuition tells me that 30 to 35 percent of small businesses are desperately clinging to viability now,” says Rick Weldon, the Chamber’s president and CEO. “We extend that another month, and we lose half of those. Another 60 days? We could see 30 percent [of those businesses] never reopen.”
Those businesses hardest hit, by far, Weldon says, are those in hospitality, food service, events and small retail, especially those who didn’t have a robust online presence prior to the state’s shutdown of nonessential businesses. Helen Propheter, director of Frederick County Office of Economic Development, would broaden the category of hard-hit industries to include personal services like gyms, nail and hair salons, massage therapy and tattoo establishments.
Frederick Indoor Sports Center is one of those businesses that cannot expect to reopen for several months. The 65,000-sqaure-foot indoor sports, training and events complex is made for large gatherings. Owner Tony Checchia, who is also a commercial real estate broker, says the center operates 10-plus months to cover overhead, with only two months to generate profit. “We have lost two months already, and, in all likelihood, we will lose all of May, and in to June,” he says. As for adapting a business centered on large groups of people to pandemic restrictions, he says, “There’s no way.”
Tapping into available financial assistance and forbearance programs may be a saving grace but can be one fraught with confusion and delays. In the end, Propheter says, the assistance programs are “a band-aid” at best.
Checchia agrees. “There’s a lot of resources thrown at businesses, with the Payroll Protection loans being most impactful,” he says. The loans keep employees employed, with 75 percent going to payroll. If staff stay employed within a prescribed timeframe, the loan is forgiven. If not, repayment is expected at 1 percent interest. Although he appreciates the assistance, keeping staff on at his Sports Center when he runs out of work for them to do seems wasteful, he says.
Checchia, who co-chairs a newly created Chamber of Commerce task force, says the goals of the 25-member group include finding best practices protocols and helping the public overcome their fear of the unknown. “Hopefully we can demonstrate to the governor that we are being careful and responsible and not just asking for relaxation of the restrictions,” he says.
Weldon says the Chamber is working on a marketing plan to instill confidence in the community that businesses are committed to keeping customers and employees safe. The rollout for the program and report will come sometime this month, but the Chamber is not tied to a specific deadline at this point.
Going back to their roots has made the transition from a dine-in restaurant to takeout easier for Café Bueno owners Heather Goddard and Francisco Cisneros. Having operated primarily as a takeout business for six years before opening a new location on the corner of 4th and East streets in September 2019, the Frederick restauranteurs were better prepared to switch gears than many of their peers.
Still, the first week of the shutdown was “terrifying,” Goddard says, and business was dead. By the second week, she and her husband came to terms with the new reality and focused on how to operate ethically and safely for customers and employees.
They established a contactless curbside model where customers call in orders and pay by phone, don’t sign charge slips and can have their food deposited in the trunk of their cars. The key, Goddard says, is to ensure that employees and customers are as comfortable as possible.
Her research revealed that although there’s a psychological benefit for customers to see workers in gloves, the risk of cross contamination is higher. “There’s no substitute for handwashing. We have handwash stations only to be used for washing hands next to the window where you bring down the food and at point of sale terminals, along with plenty of hand sanitizer,” Goddard says.
They’ve also explored more uses for their point-of-sale software for online ordering, a practice they will continue to use. Business has steadily increased, and Goddard is confident Café Bueno will survive.
Experience, aggressive marketing and plain hard work is also paying off for the newly formed Kimberly John Group of REMAX Results, a real estate firm specializing in residential sales. Kim Anselmo and John Potter, with 35 years of combined real estate experience, opened their latest venture in January 2020.
The pair was surprised to discover that they were considered essential, but when they recognized that people who were in the middle of selling or buying a home could potentially be left in the cold, it made sense. And even with the prospect of nervous buyers and sellers reluctant to interact during a pandemic, they have never been busier.
Agents are required to limit personal interactions to three people at a time, including the agent, and no children are allowed in their office or properties. They follow distancing guidelines, wear masks and gloves, and booties if the seller requires it, while the seller leaves lights on and doors open to ensure no one touches anything in the home. The Maryland Association of Realtors recommends that potential buyers fill out a health form prior to entering a home to make the sellers more comfortable.
Anselmo says they quickly learned how to use their phones to video “a whole new level of virtual showings,” but that the most effective way to sell a home is for the prospective buyer to actually visit and develop an emotional attachment.
With less than 400 homes on the market in Frederick County and low interest rates, it’s a seller’s market, Potter says. But those factors are only a part of why they are excelling despite the pandemic. “To be perfectly honest, we bust our asses,” Anselmo says. “We didn’t stop the marketing, exposure and branding we do. I think that helps tremendously.”
Potter agreed and says that one big mistake many business owners make in a downturn is to pull money from their marketing and advertising budgets. “Now is the time you need to be aggressive when it comes to promoting yourself,” he says.
Even those businesses deemed essential have had to initiate major changes to accommodate physical distancing and personal protection standards, including rotating shift changes to spread the workforce out, Propheter says. Grocery stores and others who remain open are investing in sneeze guards and daily deep cleanings, providing masks and sanitizer to employees, and in some cases hiring additional staff to monitor the number of customers allowed in at one time. “They are hoping their workforce continues to stay healthy and come to work, but all that costs money,” Propheter says.
Trout’s Supreme Seafood in New Market is an essential business that’s remained open without having to furlough or lay off employees, but it was rough going at first.
Devin Trout is president of the family-owned business, which encompasses wholesale and manufacturing operations, and a retail storefront, Lighthouse Seafood and Deli. The retail business has increased dramatically, in part because Trout initiated a delivery service early on. “We did it by the seat of our pants, but it worked.” He also offers curbside pickup, another plus with customers.
The wholesale aspect of the business, which caters to regional restaurants and grocery stores, and the food manufacturing, which supplies large-scale food distributors, however, lost about 50 percent of sales in the beginning of the shutdown.
By the third week of the shutdown, online sales were up and running, which has proven a successful strategy. Trout is enthused by some of the changes, including delivery service, and has just signed on with Postmates to be able to make hot food deliveries.
But as the economic fallout from COVID-19 picks up speed, predictions for the fate of small businesses become more dire, creating an increased urgency to reopen. How and when is an issue that has polarized the public and governments alike, with concerns about safety vying with the need to earn a living and stave off permanent closures.
On May 13, Gov. Larry Hogan lifted the stay-at-home order effective May 15, and gave the green light to open more Maryland businesses, with instructions to abide by safety protocols of masking, sanitation and distancing. But Hogan also gave the individual counties the authority to determine their own pace, with the caveat that they could be more restrictive, but not more liberal in their implementation of the order.
Bouncing the authority to counties created some confusion among business owners and the public. For example, Hogan’s order allowed for barber shops and hair salons to reopen, but on May 14, Frederick County Executive Jan Gardner called for a more gradual phase-in of the state’s policy, calling for salons and barber shops to wait an additional two weeks.
“Of course, I want to open, but if my staff is uncomfortable and people are still dying in Maryland, how do I do that? It’s such an awful dilemma,” says Anne Warnock, co-owner of Sam Wong Salon. As hair stylists, her employees have much lengthier and closer exposures to clients than that of workers in different industries. She isn’t sure when it will be safe to open, and says she and partner Sam Wong will continue to research on their own and figure out what’s best for their business and their staff, including the potential liability if anyone becomes ill.
For Warnock, who had recently opened Big Lush Plants and Flowers with two partners, the downtime hasn’t been all gloom and doom. The fledgling floral artists cultivated relationships with local farmers and rented space to grow their own flowers when products from floral wholesalers dried up. Although the selection is more limited, Warnock says she has enjoyed the local connections and she and her partners look forward to incorporating local products into the business.
Although the florist business was too new to qualify, Sam Wong Salon did receive a grant from Downtown Frederick Partnership, and are grateful for the help, Warnock says.
Ultimately, it has been the support of the entire community that has kept many businesses afloat, Devin Trout speaks for many small businesses when he credits community support for the ability to survive. “If everyone stayed home and ordered from Amazon, none of us would make it.”
FOR MORE INFORMATION
Frederick County Office of Economic Development
City of Frederick Office of Economic Development
Frederick County Chamber of Commerce
Downtown Frederick Partnership