Holladay Business Survey examines the damage of the COVID recession
Aug 17, 2020 03:09PM
By Zak Sonntag
Narra Bistro chef preps food and hopes for increased patronage (Courtesy Mario Dubon)
By Zak Sonntag | [email protected]
The good thing about recessions is that they don’t last forever. Eventually, economies recover. The bad news, albeit, is that not all companies make it through to the other side. The deeper the recession the higher the number of businesses that go under, and the smaller the business the worse its odds. That’s a troubling reality for a place like Holladay, a small business hotspot where most companies have less than five employees.
“I want to see every single business survive through this. But the statistical probability of that is obviously low. There are going to be casualties,” said Jason Woodland, president of the Holladay Chamber of Commerce.
City leaders are looking for ways to help local entities in order to ensure the community’s mom-and-pop charm into the future. So they commissioned a survey to find out how they might help.
The Holladay Business Survey, released in July, polled 97 local business owners in an attempt to understand the impacts and needs of business in the ongoing economic downturn. The survey shows that the majority of local businesses have been hit by the COVID recession, with 35% of respondents saying they have temporarily “closed completely.”
The survey reveals that the biggest challenge facing local businesses is making rent, a struggle faced by 48% of those polled. Almost half of the respondents reported receiving some form of federal aid.
Mario Dubon, the owner of the Narra Asian Bistro in southeast Holladay, found himself unable to make monthly rent payments when the economy slowed.
“Fortunately, our landlord did not demand rent payment once the pandemic hit. But now they’re demanding that we get caught up and pay that rent back,” he said.
Dubon believes that his landlord, the Woodbury Corporation, received federal stimulus aid that it allowed it to postpone rent payments. However, it appears their aid is coming to an end, because they’re putting pressure on Narra and other businesses to resume monthly payments. In the nick of time, the bistro qualified for a $12,000 Commercial Rental Assistance lifeline from the Governor’s Office of Economic Development, which will help get the restaurant caught up. Dubon is one of the nearly 50% of survey participants that said they have received some form of federal aid. The majority of aid has come in the form of rent assistance and payroll protection offered in the $2 trillion federal stimulus package known as the CARES Act. But with a $3,500 monthly bill, the business will need to see patronage pick up to ensure its solvency.
“We are starting to see some more confidence in customers who are willing to come in and dine, so hopefully that renewed growth will continue,” Dubon said.
The survey also indicates that the majority of businesses have suffered reduced patronage and curtailed hours, which has made payroll difficult to meet and can lead to the release of employees.
Thais Lassen is the owner of Highland Pets, a dog groomer specializing in smaller breeds, just one of many small companies fighting to stay above water.
“Right before the recession hit, I hired a new employee. But then things crashed and we had to close our doors for more than a month. I was able to get some stimulus from the Payroll Protection Program (PPP), but it still wasn’t enough to keep my employee so I had to let her go,” Lassen explained.
Highland Pets is one of about half of those polled in the survey who’ve received federal aid. For Lassen, the aid has been critical, but navigating its administrative requirements has proven a challenge of its own.
“The loan programs have problems. For instance, I have a small workforce, but my expenses are high. So a cleaning lady with five employees and very low expenses will benefit from the stimulus more than my company, and I don’t think that’s fair,” she said.
Highland Pets’ experience is an example of the way that the coronavirus recession hits some worse than others. Her business has been struck particularly hard due to the demographic of her clientele, who are predominantly older adults with small dogs living in nearby retirement communities. “Because of COVID, they’re not allowed to leave their homes, or their family won’t let them, so we’ve lost a lot of revenue.”
Lassen runs the business with her husband, who is unable to work because he is immunocompromised. They applied for a low interest loan to help absorb the losses. However, she was denied for not proving sufficient monetary damage.
“I’m risking my health because I have to work. I can’t shut down,” Lassen said.
Another big expense has been the additional overhead for hand sanitizer, soaps and cleaning supplies, because companies are compelled to operate under heightened sanitization requirements, driving up costs for 75% of businesses surveyed.
“We’ve had to clean like crazy. Our cleaning expenses have gone through the roof,” said David Hogan, proprietor of the Children’s Cottage, a childcare center that is deemed an essential business.
“These kids are resilient to the virus. But they can still spread it. So we do deep cleaning constantly. That’s the nature of my business, we have to follow strict protocols,” Hogan said.
Hogan has been able to make payroll and keep rent paid despite huge declines in enrollment thanks in large part to federal stimulus.
But with that aid drying up quickly, uncertainty remains for the local economy. The City of Holladay has since obtained $906K in additional stimulus it hopes to direct to Holladay companies, although administrative limitations threaten to hinder their ability to help locals. But the survey data gives officials a strong sense of the direction they need to take to best help the community.
“If stimulus would keep them in business for six months, that could be the difference that would allow them to stick around long term, after the recession passes. So some of this aid is a game changer. That’s helped with optimism too, because optimism was low [in the business community] in the first 30 days. But I think that survivability ratios look good currently,” said Woodland.
For now, locals are doing their best to stay upbeat.
“Yesterday, someone new to the area came into the restaurant for the first time, and she was so pleased with the food she came into the kitchen and thanked me and my wife. Little things like that, helps me feel like it’s going to get better,” Dubon said.