Staying alive

Part two: Uncertainty plagues small businesses four months out from lockdown

by

It was a warm night in early June. Life seemed somewhat normal at Genna’s outdoor patio off the Capitol Square, with roughly 20 customers enjoying some drinks at socially-distanced tables. But in a reminder that these are not normal times, the servers were keeping an eye on the weather as well as their tables. With a rainstorm near, customers were given a choice: they could close their tab now and leave before the rain or keep their tab open and get drenched. There would be no going inside the bar to escape the rain. While bars were open for a short time, current COVID-19 regulations now restrict service to outdoor spaces.

Growing up in a family-owned business, I know how thin a financial cushion most small businesses have and what a precarious spot they are in right now. One of my fears is that when this pandemic is in the rearview mirror, we will come to understand that unconstrained market power and corporate behemoths burned through our local businesses with stealth and precision; an economic version of the coronavirus that operated without us fully aware of the damage.

I started this series to provide an intimate window into how three small businesses in Madison fare during the crisis created by COVID-19. Just as the experiences of Mystery to Me (a 7-year-old much loved west-side bookstore), Oddly Arranged Media (a 2-year-old audio engineering and music production company on East Washington Avenue), and Genna’s Lounge (a 46-year-old popular downtown bar) differ from each other, so will the experiences of other businesses not represented here. A business designed to feed people in close quarters is going to have different needs and challenges than a business that can move its operations online. 

Part one of this series, published May 13, followed the featured businesses under Gov. Tony Evers’ Safer at Home order. Issued March 26, the order was originally set to expire April 24, but was extended to May 26. My plan was to follow up with each business a month later and then to check back with them periodically until a year out from the lifting of the order. A few hours after part one went live, the Wisconsin Supreme Court struck down the order, eliminating most of the restrictions Evers had put in place. Dane County quickly issued "Forward Dane" with a plan for a phased reopening. On May 26 Dane County moved to phase 1, allowing businesses to open at 25% capacity. I started the clock there. But with rising cases of COVID-19, we are in a much modified version of the phase 2 reopening. 

In the midst of the pandemic, the murder of George Floyd by a police officer in Minneapolis set off protests nationwide. During the local protests, many small businesses in downtown Madison were damaged. For the three featured business owners the protests have meant boarded-up windows, blocked streets by their shops, and finding ways to use their businesses to support the Black Lives Matter movement. 

According to Dane Buy Local two member businesses have closed so far, but the organization anticipates that in the weeks to come that number will increase. At least a few eateries have closed for good. Nationally, more than 100,000 small businesses closed as of April due to COVID-19, according to the National Bureau of Economic Research, and those numbers are just going to climb.

Small business closings were a national crisis long before COVID-19. According to the Institute for Self-Reliance the numbers of local retailers has been dropping steadily since 1997 while the number of people starting a new business has decreased by half. The coronavirus has exacerbated the challenges that have long pushed against small businesses. Amazon has already undermined local businesses and customers have shifted even more to online buying due to COVID-19. 

Existing inequities have affected how businesses have fared during this time. Large corporations with their outsized political influence were able to quickly navigate the loan and grant programs in the CARES Act, while smaller businesses struggled to get access. Black-owned businesses are historically underbanked, so having banks distribute the Payroll Protection Program and Economic Injury Disaster Loan shut many businesses out of the federal relief. 

With this series, I had hoped to tell the story of what happens next as our small businesses recover from the economic impact of COVID-19. But the coronavirus is far from being under control. We can’t start recovering from something while it’s still happening. There has been substantial federal, state and local money given out in loans and grants, but will there be financial support in the long term? This grant and loan money is part of what is keeping businesses afloat, but what will happen when the support dries up and the money is all spent? The coronavirus has had a disparate and evolving impact on our lives and now we are in the midst of an uprising focused on systemic racism. No one knows what happens next.

My interviews with Joanne Berg of Mystery to Me, Kristi Genna of Genna’s, and Richard Jones Jr. of Oddly Arranged Media were conducted June 25 and 26. Edited for clarity and length, the interviews have also been updated in parts due to rapidly changing government regulations. 

When did you reopen your business and what did the reopening look like?

Joanne: We reopened Mystery to Me on June 16. We wanted to wait a week or two after we were allowed to open, just to see how the numbers were going to be. June 15 was also our 7th anniversary so we turned it into a celebration. In our newsletter, we let our customers know our safety plans for the store. We have a greeter at the door, hand sanitizer is available, and we sanitize each book a customer touches before it goes back on the shelf. Masks are required and five people at a time are allowed in the store. Our customers have been wonderfully respectful. 

Richard: We reopened the studio on May 27 cautiously. We only let our regular clients know we opened. We have a firm protocol in place: There is a limit to how many people can be in the studio to record. We don’t schedule that many clients a day, so we are not in that space for too many hours. We leave plenty of time between sessions so we can sanitize the equipment. We keep six feet apart.

Kristi: We reopened on June 3. Instead of the 2 p.m.-2 a.m. shift we used to do, we started with a 4 p.m.-10 p.m. shift. Our regulars were the first to come back. We only opened our ground floor (which is very small) and the patio. Most of our business is on the patio; very few people want to go inside. The patio tables are six feet apart, so we can accommodate a maximum of 30 chairs outside. People are wearing masks when they arrive but can’t keep them on when they are drinking. When someone needs to go inside to use the bathroom they put on their mask. The second week after we opened, we tried a second shift from 9 p.m.–1 a.m. but it did not go well. The customers were younger and did not care about social distancing or wearing masks. After a week and a half, I wasn’t comfortable having this later shift, so we are back to one shift. [On July 1, due to a rise in COVID-19 cases, Public Health Madison and Dane County issued new orders limiting bars to offering only outside seating.] 

What COVID-19 financial relief have you received?

Joanne: We have been fortunate in the financial support we received. I received money through the Payroll Protection Program (PPP) in the first wave of assistance. Initially the PPP only allowed businesses eight| weeks to use the funding, but those rules were relaxed, and we can use it for longer. I applied for an SBA Economic Injury Disaster Loan, but instead of the loan I received a strange letter saying I did not qualify for the loan. The letter did not give me a reason but stated I would receive a much smaller grant. The federal government response is so confusing and ever changing, that I am paranoid to spend [the PPP] grant in case I need to suddenly pay it back. I currently have it in my savings account and haven’t touched it. My bank has been great with regular updates and advising me. We did receive a grant from Dane County/Dane Buy Local’s small business pandemic support grant program and our customers have donated to the store through a link on our website. 

Richard: Financial support has been awesome. Since my business doesn’t operate by payroll, we didn’t get any PPP in the first rollout. Now that they passed the PPP Flexibility Act this summer, I am currently applying for PPP. But we got a decent amount of money locally in grants from the Dane County/Dane Buy Local’s small business pandemic support grant program and Dane Arts. We also got one of the Ethnic Minority Emergency Grants that the Wisconsin Economic Development Corporation created. Usually grants require you spend the money on new initiatives, but with these we can spend this money however we see fit. We are mainly using the money for rent; our strategy has been to pay our rent up ahead for several months just in case. 

Kristi: I got the PPP loan on May 5. At the time the rules were that I had to spend it in eight weeks and would need to pay it back within 18 months. So, I sat on it because I was afraid I couldn’t afford to pay the loan back. But they changed the rules and now I have 24 weeks to spend the money and up to five years to pay back. At a 1% interest rate this is doable for me and I am comfortable using the loan. I also applied for Wisconsin’s “We’re All In" grant and am waiting to hear back.

How are you feeling right now about your business?

Joanne: Right now, we are doing OK. It feels wonderful to have people in the store, answering their questions and giving recommendations. We are still doing curbside pick-up, mail orders, and making sales through the online site Bookshop. We have kept our full staff on payroll. There is a general sense that life will never be what it was before and that greatly impacts how we do business. We were known for having fun and interesting events. These last few months we have been doing virtual book events, averaging 50 people per event, but, unfortunately, those have not led to book sales. 

Richard: One month in, I am still optimistic. That doesn’t mean I have all the answers just yet, but I am optimistic. I am working with my community partners to create virtual opportunities for kids. I just taught a virtual workshop with the Bubbler program at the library, so that was cool. We are about to launch a couple virtual audio engineering and music production workshop series for elementary and middle school kids. We will be able to move into this new workshop format, maybe not at full capacity, but I think it will open a whole different lane for us. Now we will be able to run workshops on our own and not just with school-based partners. We will be able to expand outside Dane County with the click of a button. So, I am optimistic about potentially bringing in a new set of clients and working directly with parents. 

Kristi: We already went down to one shift. Without the PPP, I wouldn’t have a cushion to pay people to come to work, pay myself and pay the bills. Being open for three weeks and putting money in the bank, has been helpful, but not really. We are only running a six-hour shift — and the money doesn’t add up. The sales coming in don’t compare to pre-COVID-19. With the new restrictions [issued July 1] we can’t have anyone inside the bar. It is actually quite depressing right now, because even though we could only have a handful of people at the bar these last few weeks, with that camaraderie it still felt like a bar. Logistically it gets complicated. When it rains in the middle of a shift, we need to close out the tabs quickly because no one can go inside. If we don’t get a vaccine or medication or better testing, I don’t feel very good about our prospects. 

How have the Black Lives Matter protests affected how you think about your business or how you want to do business?

Joanne: On a practical level, there was a huge uptick in the number of books by Black authors that have been special ordered and books on how to be anti-racist. I have ordered cases of these books. Our store is near West High School and a group of students from the "get it done" club wanted to raise money to give these books to people that can’t afford books. So, we decided that for our opening weekend (and our 7th anniversary) we would give 7% of our sales in donating anti-racist books to the club. In terms of the protests, it was hard to figure out the best response to protect our storefront window. We reluctantly boarded up our store windows for a week, and then took them down.

Richard: Being a Black-owned business, community engagement is one of the pillars of our business. We are looking for ways to engage with the community and support the movement. Music and creativity help the movement and every movement needs a theme song. So, we are going to do a submission competition where people can submit pieces of a song about social justice and we will take a few of those and mix it for free. That is the first way we will contribute to this movement.

In all honesty, not having any chance for the PPP grant in those early months is a lot more damaging to my business than somebody looting my equipment. We can recoup on our equipment. We don’t own this space, we rent it. I understand the rage and frustration right now and the spark that lit this fire.

Kristi: We support the Black Lives Matter protests. Practically it has meant that we have been boarded up and then un-boarded up. We have had to have someone sit at the bar until 2 in the morning, just protecting. Some days people can’t get downtown or leave because the streets are blocked off. The streets around us have been blocked off. Between COVID-19, the protests and rain, it is hard to figure out how to operate as a business.

How are you feeling about your business’s prospects going forward as we continue to live with COVID-19?

Joanne: I know it sounds pat, but we are taking it one day at a time. With this modified opening, our daily sales are strong. I don't know how long that will last. It is an emotional rollercoaster for all of us here. Some mornings we have a stack of emails for orders and the next day there are none. There is no real pattern. Regardless of how long this lasts, we know there is no additional financial support from PPP. Right now, it feels like we are moving forward slowly but surely by opening our doors. We also are very aware that with cases rising we may be required (or opt) to close the store again. That would be devastating emotionally and difficult to have the creative energy we had in March and April to make it work. [On July 6 Joanne notified her customers that “due to the significant rise of COVID-19 cases in Madison and Dane County, we are once again closing our door to walk-in customers. We had so enjoyed having many of you visit us — it almost felt like we were returning to some degree of normalcy!”]

Richard: One cool part about our studio is that our business isn’t built on interacting with crowds. We record individuals. We don’t need crowds of people for our income. If our virtual workshops take off how I envision them to, then I will start to feel better about the studio side of our business being so limited. Doing things virtually is a whole new avenue I want to explore. 2020 is exposing all the inconsistencies and loopholes we have in our world. The time is right now for redefining our world and I am ready to build. 

Kristi: Our outdoor space is making the difference for us right now. Without the patio, we wouldn’t be open. The city of Madison created the Streatery project that can basically help us expand our patio. With this project, bars and restaurants can temporarily take over parking spots to expand our outdoor seating. We need to work with our whole block to make a plan for how we are going to fit everyone in and set it up. For us on West Main Street we aren’t there yet — but soon I hope. I think the city is being very creative and this allows us to remain socially distant and still put out more tables and chairs. The city will let us do this until Oct. 25, which will be a great help in stretching out our earnings this summer and early fall. We might need to close down in November so this extra seating could be the difference in helping us make it through the winter.

What ongoing/additional support do you need for your business to survive? 

Joanne: I feel lucky, we have incredible staff making this work and a great customer base. But I would like better leadership from the city. I know overall the government response has been very partisan and the city probably can’t do everything they want to do, but we need better guidance as to what we should be doing to operate our business safely and for the city to help us through all this. I would really appreciate more concrete guidelines. 

Richard: What I need is not possible right now. I need answers and predictability. The second wave seems inevitable, our COVID-19 case numbers are rising. I hope that as this drags on, the support continues. I hope that there will be new grants out there. I hope that another stimulus package comes. I hope that our virtual workshops pick up so that we can continue to create and build our business on our own terms. I just hope that we find the community answers that we need right now. We are fighting a lot of wars right now. We are fighting disease. We are fighting injustice. This is a time where we need to band together...separately. 

Kristi: I would like to see people be respectful when they are in a bar. I would like people to understand that the virus exists. That this is a thing you are not immune from. We want people to come out and feel safe, but you need to be respectful of the space and the people in it. We are not going to stay open if we can’t keep the distance or be safe. I don’t want my daughter to work in it, I don’t want to work in it, and I don't want my staff to work in it. Until there is a vaccine or something, when the outside weather is done there won’t be places open. 

Part three will continue our check-in with these three businesses as they navigate COVID-19.

Jen Rubin is the author of We Are Staying: Eighty Years in the Life of a Family, a Store, and a Neighborhood, a book about her family's electronics store in New York City.