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Small Businesses Need Grit, Creativity And Cash To Survive Coronavirus

By Lynn Hulsey Dayton Daily News, Ohio

WWR Article Summary (tl;dr) As Scott Koorndyk, president of "The Entrepreneurs Center" in Dayton puts it, "Running a small business is not for the weak. It is not for the faint of heart. It's a contact sport."

Dayton

When people talk about small businesses they often use words like "resilience," "grit" and "entrepreneurial spirit."

Those business owners are going to need all of that and more as they seek to rebuild amid the economic and human carnage of the COVID-19 pandemic. The virus brought large swaths of the economy to a near standstill for the past two months and killed more than 100,000 Americans so far this year.

"Running a small business is not for the weak. It is not for the faint of heart. It's a contact sport," said Scott Koorndyk, president The Entrepreneurs Center in Dayton. "Then COVID comes along and changes the relationship with the customers and changes the relationships within the general market and that's hard to weather when you didn't cause it to occur. It's really an existential kind of threat."

The COVID-19 pandemic and the stay-at-home orders took a toll on most businesses. But experts say small businesses were particularly hard hit because they typically have only a month or two of cash on hand and because so many of them are customer-facing, such as restaurants, bars, retail stores, barbershops and salons. Those businesses had had to shut down partially or completely to comply with Ohio Governor Mike DeWine's March stay-at-home order.

In Ohio more than 41 percent of small businesses surveyed by the U.S. Census Bureau said they had experienced a large negative effect from the pandemic and another 46 percent said it had a moderate negative effect, according to data collected during the week of May 17.

Nearly 42 percent of Ohio small businesses surveyed anticipate it will take more than six months to return to normal operations, and more than 11 percent believe their business will not return to normal operations relative to a year ago, the survey found. Ohio's results tracked closely with what small businesses nationally said on the survey.

"In two weeks we went from a pretty robust economy to falling off a cliff." said Roger Geiger, Ohio state executive director for the National Federation of Independent Business. "I can tell you, unfortunately I think there's going to be a lot of small businesses that don't survive. And that number is going to be greater than people think."

Interviews with more than two dozen economists, business leaders and government officials found broad concern about the impact of the COVID-19 crisis on small businesses, which play an important role in job creation and community vitality. What lies ahead for small businesses depends greatly on stemming the spread of COVID-19 infections until a vaccine is developed and on how well those companies can restore revenue, adapt to to the changed economic and health landscape and find new ways to do business, according to those interviewed.

"Every path to recovery requires that we first get the pandemic under control," said Bill Adams, a Toledo-based senior economist with PNC Financial Services Group. "Even if the economy is reopened, if customers don't feel safe going out and spending again then the demand still won't be there."

Small businesses are 'lifeblood' Small businesses are generally defined as companies employing fewer than 500 people, but many are much smaller. There are 950,000 small businesses in Ohio and they employ about half of the state' private sector workers.

Locally owned small businesses are often the ones that support Little League and charities and take leadership roles in the community, said Geiger.

And when consumers spend money at a local business, more of the money stays in the local community to be spent again, rather being sent to a corporate headquarters somewhere else, said Bill LaFayette, owner of Regionomics LLC, a Columbus consulting firm.

"Supporting these small businesses has a ripple effect throughout our entire local economy," said Chris Kershner, executive vice president of the Dayton Area Chamber of Commerce. "These local businesses are the lifeblood of our economy. We need small businesses and they need us."

Sandy Gudorf, president of the Downtown Dayton Partnership, said the crisis had a terrible impact on downtown's small businesses -- many of them restaurants or retail -- but she said the business owners were innovative in finding new ways to do business. For example, she said, Tender Mercy, a brand new bar in Dayton that had to close due to the state order converted to selling groceries online for curbside pickup under the name Mercy Mart.

"Our businesses have been so very creative. They're fighting for every curbside pickup. They've adapted. Some of them have changed menu items. Some of them have put family deals together," Gudorf said.

She believes that businesses in the once-thriving downtown will come back.

But with entertainment venues closed and weekly announcements of additional event cancellations, she knows uncertainty will remain until there is widespread testing for COVID-19 and eventually a vaccine.

"I don't think there is any value in sugarcoating all of this," Gudorf said. "We are going to have to rethink how we use our public spaces and how we do things differently."

It is too soon to know how many of Ohio's small businesses will shut down permanently because of the pandemic, said Lydia Mihalik, director of Ohio's Development Services Agency.

"What we do know is that it will be significant. Because this is unprecedented territory for us," Mihalik said. "With the very blunt and necessary action that was taken to flatten the curve it created a lot of stress. There were small businesses that were financially healthy enough to weather this. And there were those that were not."

Government help is key Adams said how well small businesses recover also depends on the level of support that sector gets from government.

"There I think the news is much more reassuring in this 2020 crisis than what we saw in 2008-2009," Adams said.

He said the federal government has taken a more aggressive approach than was used in the Great Recession to financially support businesses.

He pointed to the Federal Reserve's Main Street Lending program and the $2 trillion CARES Act. That coronavirus relief package approved in March funded enhanced unemployment benefits, stimulus payments to individuals and two loan programs: the new Paycheck Protection Program and an expanded Economic Injury Disaster Loan program. PPP loans can be forgiven and the EIDL loan advances don't have to be repaid.

Many businesses "face liquidity issues: not having enough cash flow," said Ohio Lt. Gov. Jon Husted. "I think those businesses that have been able to access the Paycheck Protection Program have found it to be very valuable."

Jerricha Hoskins, founder and chief executive of Arcani Coil Care in Dayton, said the $8,000 PPP loan she obtained allowed her to pay overtime costs as her online hair care products business boomed during the shut down. She said she was able to keep up with demand by ordering thousands of plastic bottles before getting them became impossible and she hired six more people to round out her staff of about 20.

"The ability to employ people during this pandemic when corporations are shutting down is amazing," said Hoskins, "A few of the girls that work for me they are in the hair industry, they are nail techs and hair stylists. They were able to come to work and pay their bills."

Nationally more than 4.4 million PPP loans worth $511 billion, were approved, with Ohio small businesses getting 129,626 loans totaling nearly $18.2 billion, according to Brooke DeCubellis, public affairs specialist for the U.S. Small Business Administration, which oversees the two lending programs.

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