By Mitchell Schnurman The Dallas Morning News
WWR Article Summary (tl;dr) More than 130,000 U.S. companies have shut their doors since March. Many experts fear the number of closures will grow as the PPP has run out for many small businesses and additional federal relief is stalled in congress.
For 30 years, Phyllis Lambert has owned and operated a small jewelry store in Duncanville, but the run is coming to an end.
Revenue has fallen by roughly half, the COVID-19 threat remains high and mask requirements make her uneasy about security. And how to cope with all the uncertainty?
Her shop, Gold N Things, was shut down for five weeks during the spring, per government orders, and customer traffic never recovered fully. So now she’s holding a going-out-of-business sale and expects to close the store for good within a month.
“It’s the economy and the pandemic,” Lambert said. “I’m a luxury, not a necessity.”
Gold N Things will join over 130,000 other U.S. companies that have shut their doors since March. That includes an estimated 3,200 small businesses in Dallas-Fort Worth that closed permanently or temporarily, according to a report by the website Yelp.
Many experts fear the number of closures will soar, especially among smaller firms. That’s because the pandemic continues to spread, and federal relief for small business has been winding down while Congress debates next steps.
The U.S. has roughly 60 million small businesses, defined as having fewer than 500 employees. In Texas, over 2.6 million small firms employed nearly 4.7 million, almost 46% of the private workforce in 2015, according to federal reports.
Many small firms had financial risks before the pandemic, and it’s much worse now. An analysis by consulting firm McKinsey projected that 1.4 million to 2.1 million small businesses could close permanently because of it.
Smaller firms are most vulnerable. Among those with 20 employees or fewer, up to 40% could close, McKinsey said.
Lambert will turn 72 in September, and she wasn’t planning to retire. But with so many unknowns surrounding the business, she couldn’t risk the family savings.
“If no money’s coming, we’re not going to stay here,” she said about her and her husband. “How long are you going to keep floating the business?” That’s the tough question, and for good reason. After the 2009 recession, it took an average of six years for small businesses to fully recover, McKinsey said.
Small business owners are usually playing with their own money.
Depending on their age and company reserves, they may not see a profitable path out of the pandemic.
In Dallas County, 17% fewer small businesses were open July 27 compared with January, according to Opportunity Insights’ Economic Tracker. The decline in revenue was even deeper over the period -- almost 20% lower for all small businesses and 51% lower for the leisure and hospitality industry. Federal relief programs were designed to last a few months, under the assumption the recovery would be underway. But many companies elected to close or sell.
“They don’t see how they can survive the length of time it will take to get rid of the virus,” said Cristin Thomas, executive district director of small business and entrepreneur innovation at Dallas College.
But Thomas points to others that pivoted successfully. They moved into related areas and bulked up technology to reach customers in new ways.
Some are thriving now, including interior design firm Urbanology Designs. The North Richland Hills company has a full pipeline of business through the end of the year, thanks to a surge of remote workers fixing up homes.
“People are suddenly in a hurry to get things done and make their homes a priority,” said founder and owner Ginger Curtis. “We’ve had our biggest projects of all time during COVID.”
Revenue is running about 50% ahead of last year’s pace, she said. The firm has eight employees, including some recent hires, and primarily serves residential customers.
The economic shutdown in the spring gave Curtis and colleagues a chance to reassess the business. They beefed up contracts, refined messages on social media and recruited freelance talent that’s now working remotely.
Urbanology Designs also offers walk-through consultations -- virtually. Starting at $1,800 for three rooms and two hours of help, the packages have been “wildly popular,” she said. Customers as far away as Michigan and New Jersey use the service.
“The pandemic made us very aware of what we were capable of -- things we never would have considered if not for COVID,” Curtis said.
Ultimate Ventures, an event-planning company in Dallas, has branched out. It created kits to help people navigate conference calls and remind them of favorite events, such as the canceled State Fair of Texas.
But its big business keeps getting pushed out. The company, which had 21 employees in February, furloughed about half by late March. It took out several loans from the government and hoped to bring back workers by July, said Laurie Sprouse, co-owner and president.
Canceled spring events were optimistically rebooked for October and November. When COVID-19 cases spiked after Memorial Day, those events were canceled and holiday events soon followed. It’s now aiming for dates in February and March.
“The goal posts just continue to move,” Sprouse said. “If we knew where the goal posts would be, we could plan to get there.”
She’s hoping for more government programs, including loans for hard-hit companies and liability protection so customers would consider holding live events again. The pandemic prompted the creation of a new trade association to lobby for help, and Sprouse is chairing the group from Texas.
The live events industry has over 30,000 businesses and 1 million workers in Texas, she said, and average revenue is down 80%. That’s forcing many hard calls.
“We’re looking at how much we’re willing to take out of our personal reserves and where we need to draw the line,” Sprouse said. “You just have to decide how deep you’re going to go.” ___ Distributed by Tribune Content Agency, LLC.