Juneau Small Business Owner Struggling to Pay Employees
The NFIB Research Center’s latest survey on the current impact of the COVID-19 outbreak on small business offers a stark contrast from the survey released 10 days ago. The magnitude of disruption now on the small business sector is profound.
Currently, 76% of small businesses are negatively impacted by the outbreak of the coronavirus, a dramatic escalation from just under one-quarter of small businesses reporting the same earlier this month. About 5% are positively impacted. These firms are likely experiencing stronger sales due to a sharp rise in demand for certain products, goods, and services. This will presumably ease in the coming weeks as consumers feel more secure about their personal supply levels.
One-in-five (20%) small businesses are not currently affected by the outbreak, but 77% of them anticipate that changing if the outbreak spreads to or spreads more broadly in their immediate area over the next 3 months. This marks a sharp departure from the earlier survey where 43% of small businesses anticipated being impacted if the virus spread. Just 4% do not believe they will be impacted if the outbreak escalates and 18% are not sure.
Of those businesses negatively impacted, 23% are experiencing supply chain disruptions, 54% slower sales, and 9% sick employees. The 9% of owners citing sick employees likely responded out of heightened concern and precautions with sick employees showing some signs of cold or flu-like symptoms, but not necessarily because they have employees who have tested positive for the virus.
“As we can see from this newest survey, the economic downfall from COVID-19 is happening rapidly. Many Alaska small business owners and their employees are struggling. Congress needs to work together to pass legislation that will pump much needed cash flow to small business owners who need to pay their employees, rent, and supplies,” said Thor Stacey, NFIB State Director in Alaska.
In Juneau, Mitch Falk is worried about his employees. He owns pizza parlor Bullwinkle’s, which has two locations and employs 60 Alaskans. Now that his customers are not allowed to eat in the restaurant, Falk has been forced to reduce his employees’ hours. His goal is to not have to lay any of them off. Falk estimates he can make it through four more pay periods before he has to do that – however, he’s concerned about how his employees, who he considers family, will be able to feed their families.
Now that Bullwinkle’s in downtown Juneau can no longer serve cutomers, Falk is hoping his delivery order pick up. Before the coronavirus outbreak, delivery made up about 40% of business.
“A lot of my employees live on the edge. I cried last week thinking about their fragile lives. I’m trying to keep business as normal as possible and stay positive for them. I told them they can eat as much pizza as they can manage to eat during their shift and I’m sending every one of them home with a large pizza for their families,” said Falk. “I’ve tried to spread around hours as evenly as possible and advertised delivery specials, so hopefully that end of the business will pick up.”
Falk is increasing the number of delivery specials he offers in hopes of attracting more customers.
Alaska small business owners are now eligible for loans through the Small Business Administration’s Economic Injury Disaster Loan program, which offer up to $2 million in assistance, providing vital economic support for small businesses suffering from a loss of revenue. The loans may be used to pay fixed debts, payroll, accounts payable and other bills they can’t pay because of COVID-19. The interest rate is 3.75% for small businesses. The loans have long-term repayments in order to keep the payments affordable. Longer loans can be up for 30 years depending on the borrower’s ability to pay.
Almost all small business owners are taking some sort of action adjusting to their changing economic condition or to protect themselves from potential disruption. Just 6% of owners have not taken any action in response to the outbreak, a market departure from more than half (52%) not taking action two weeks ago.
The level of concern among small business owners about the coronavirus impacting their business has elevated significantly over the past two weeks. About 68% of small business owners are “very” concerned about its potential impact on their business compared to 16% in the earlier survey. Another 23% are somewhat concerned and 9% are slightly concerned. Just 1% are not at all concerned.
While many small businesses (47%) have not talked with their bank about financing needs, 30% are planning to do so soon. Another 13% have talked with their personal bank already, 9% with the SBA about their loan programs, and 1% with an online lender.
The vast majority of small businesses are now impacted by the COVID-19 outbreak and owners are taking the threat to their business seriously. Many owners have already sought out financial help and more are planning to do so in the near future. The outbreak will leave few, if any, owners unscathed. We know the economic impact will be immense, and now, the question is how long will it last and how quickly can the small business sector recover once on the other side. Small business owners are anxious to seek clarity to both questions.
Methodology
This survey was conducted with a random sample of NFIB’s membership database of about 300,000 small business owners. The survey was conducted by email on March 20, 2020. NFIB collected 700 usable responses, all small employers with 1-360 employees.
