Staying alive

Part one: Survival mode during Safer at Home

by

I am a fan of small businesses. I grew up in one. My family owned Radio Clinic, a small appliance store in New York City, for 80 years. Like many other small businesses, it’s an immigrant story. My grandfather and his family fled the Jewish pogroms in Russia and landed in NYC. He opened the store in 1934 while still a young man. To distinguish his shop from nearby competitors in those early days of radio, he sat fixing radios in the storefront window — visible to the public in his "clinic" — wearing a white lab coat. At age 10, my first job was to stand in that same glass vestibule and play the latest in modern technology, the Atari arcade video game, to get the attention of people walking by the store. I come by my love of small businesses honestly.

Small businesses do not exist in isolation. They experience the same economic and social forces as the rest of the community. In the case of Radio Clinic, it weathered the Great Depression, suburbanization and white flight from the city, urban decline, urban renewal, the 1977 blackout and subsequent 25 hours of looting, and ultimately gentrification. 

Close to 1,600 small businesses, including Radio Clinic, were destroyed by looters during the blackout. I document my dad’s experience trying to save his business in my book, We Are Staying: Eighty Years in the Life of a Family, a Store, and a Neighborhood. It’s what got me interested in tracking the experience of Madison businesses during the COVID-19 pandemic. My dad found that once the immediate crisis was over, politicians and resources moved on. Decades later he is still annoyed that no one adequately focused on what happened next for the devastated small businesses. In this series, I want to look at “what happens next” for our small businesses as they try to survive this pandemic. 

Many small businesses have a very small cash cushion to weather a financial crisis. According to the Institute for Local Self-Reliance, most small businesses’ reserve of cash will only last 27 days. For retail shops, it is as few as 19 days. There has been government help, but the need is huge.

On March 27, President Donald Trump signed the CARES Act, an economic relief package providing $2 trillion in COVID relief, including the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan, which focused on supporting small businesses. High demand exhausted the funds in very little time with evident inequities in access to it. Many truly small businesses were shut out as larger businesses leveraged their relationships with banks that allowed quick access to the money. The loans can be turned into grants, but the rules for forgiveness are not clear, making some business owners wary of using the money. Regardless of what happens with these loans, the crisis for small businesses is here and now. Local government, philanthropists and community members are stepping into the breach left by the federal government to help our favorite businesses limp forward and make it out of this crisis.

In this series I am focusing on how three small businesses in Madison cope during the crisis created by COVID-19, starting with the period of Gov. Tony Evers’ Safer at Home order, initially designated to run through April 24 and then extended to May 26. What I learned from Radio Clinic’s survival story is that recovery is not a linear process. The business could be looking OK three months after the initial crisis, but residual debt could catch up with the business at month nine. I am going to follow up with these three businesses one month after the Safer at Home order is lifted, and then check back with them periodically until we are a year out from the lifting of the order. The interviews for Part One were done before Evers announced May 11 that retail shops could open up as long as they allowed only five customers in at a time.

It is impossible to choose three businesses that are fully representative of Madison’s business community. Wanting both well established shops and new ones, I will track Genna’s Lounge (a 46-year-old small business and popular downtown bar), Mystery to Me (a 7-year-old much loved local bookstore that is an important part of its near west side community), and Oddly Arranged Media (a 2-year-old audio engineering and music production company on East Washington Avenue).

The origin story

Every small business starts out with a dream. It only becomes a reality after a great deal of hard work is coupled with enough capital to cover initial expenses. But it starts out with a dream. 

Genna’s Lounge: Frank Genna opened Genna’s in 1964 at 614 University Ave. and it quickly became a popular hangout. Kristi Genna spent time at the bar as a kid, and in 1984 started to work with her father at the bar while she was an undergraduate at UW-Madison. She fell into it, but liked what she found: “When I was at the UW, I would stop by the bar on my way home to see my dad. While waiting for him to take me out to dinner, I would make drinks for him, his friends and the customers. Then I just started bartending.” When Frank died in 1987, Kristi took over the business. After purchasing the building at 105 W. Main St., Kristi moved the business there in 1993. 

Mystery to Me: Joanne Berg always wanted to own a bookstore, and when she learned Booked For Murder was closing, she sprang into action. Joanne bought the inventory, changed the name of the store, left her job at UW-Madison, and in 2013 moved the store from a strip mall on University Avenue to 1863 Monroe St. Her vision was for Mystery to Me to be a community hub with the “old-fashioned parlor feel of a bookstore,” yet also have Wi-Fi for customers, and plenty of author readings and workshops. 

Oddly Arranged Media: Richard Jones Jr. opened Oddly Arranged Media in 2018. It’s a music production and audio engineering business, with a focus on songwriting, recording, beat making and engineering workshops. Richard has been involved in music his whole life and has a passion for working with youth. Creating this business allowed Richard to “do exactly” what he wanted to do: “build community while working with youth as they pursue their art.”

Business before COVID-19:

Heading into March, all these businesses were healthy and anticipating a strong year.

Kristi: We just had a great year of business. When we first moved to the Square in 1993, everyone thought we were crazy because it was empty there. But now look at it. There are so many things that bring people to the Square. And now so many people live downtown. The last two years have been phenomenal.

Joanne: Mystery to Me has had tremendous community support since it opened. Our revenue has gone up every year for the last seven years. Our events have been getting bigger and bigger. Even though we are a small bookstore, publishers send big-name authors for events because they know our customers show up. The trajectory for my business was positive.

Richard: The first two years of a business are challenging ones and, according to the data, many don’t make it to the third. For Oddly Arranged, the first year was about getting our footing. Year two was about confidence that we know what we are doing. Starting year three, we doubled our work in arts education, landed long-term partnerships, and our studio stayed full. We were preparing to see income that we had never seen before. This spring was going to set us in a place of new financial comfort.

Have you received any COVID-19 financial relief?

Access to federal government relief differs business to business.

Kristi: I applied for the PPP loan through my bank, BMO, when the first PPP loan package came out. It was confusing right away whether my bank could administer the loan for me. My accountant was great and helped me fill out the 70-page document of financials. When I was ready to download the document, the system crashed from overuse and my application didn’t go through. By the time I could submit it all the money was gone. I was approved later in the second round, but I am not sure I can use the money because I am required to spend 75% on payroll within eight weeks. We aren’t reopened yet and when we do open it will be at 25% capacity. Unless the rules change this money is all going back. 

Joanne: I applied for the SBA Economic Injury Disaster Loan, a bridge loan meant to help sustain your business until the payroll protection money comes through. It took more than a month to hear back from them, but I received some money in early May. I worked with my bank, Associated Bank, to do the PPP and they were phenomenal helping me through the process. They made it easy and I did get the PPP money, which is great. I put it in a separate account so I can track how I pay for rent and my employees. I have seven staff and no one is on unemployment. I also applied for and got some money from the Dane County small grants administered by Dane Buy Local.

Richard: The Paycheck Protection Program is for businesses that have payroll and we don’t. Everything we do is contract-based. Sound engineers pay us a monthly rate to use our equipment to record their clients, we function sort of like a barber shop in that way. As far as the SBA [Economic Injury Disaster Loan], I think it is too risky for us to take a loan right now. We don’t know when our partners are going to be ready for our workshops and for person-to-person interactions. I am eligible to apply individually for Pandemic Emergency Unemployment Compensation. But for my business, once I saw most things were for loans or for businesses that have payroll, I honestly just kind of stopped looking.

How are you adapting during the Safer at Home order?

All businesses enter this crisis with different strengths and weaknesses that impact their ability to adapt to this moment.

Kristi: The governor made it easier for bars and restaurants to pivot and just become a liquor store. Before this we couldn’t sell off of the premises. Right now, we are open three days a week for a few hours and are selling bottles of alcohol, six-packs, our bloody Mary mix, and patio bricks. Our patio was recently torn up so we are painting the bricks and selling them. It is both memorabilia since customers have very fond memories of that patio and it is a way for customers to show us some support. I own the building which helps. Our little liquor store helps. But it costs us between $6,000 to $8,000 a month to not open the doors.” 

Joanne: The very first week we were shut down Charlotte [an employee] had this idea to do mystery boxes. We had people say if they wanted a $100 or $50 or $30 mystery box and we chose the books to put in the box based on their interest areas. We are now doing curbside pickup. We also joined Bookshop, a new online bookselling platform designed to support independent bookstores. Since we are a member of the American Booksellers Association, I could sign up to be an affiliate of Bookshop. I send customers there and get 30% of a book sale, without ever touching a book. The American Booksellers Association foundation has gotten donations from successful authors and grants are available to support indie bookstores. It all helps. 

Richard: We can do very little right now. Everything that we do is person-to-person interaction. We can’t get in the schools. We can’t do our workshops. We can’t bring people into the studio to record. So, business is stagnant. Since we operate by monthly invoices we haven’t felt the economic damage yet. But starting the end of this month, and through the summer, we will feel it. 

Eyes toward the future

Anyone who takes the risk and starts a small business is a bit of an optimist, otherwise they wouldn’t be able to make the leap. COVID-19 world will surely put that optimism to the test. 

Kristi: When we can open back up, the social distancing requirement will make this difficult. The 25% capacity will make this difficult. The only way we make money as a bar is with volume. I am not sure how we will deal with the limited capacity. I will need to pay the same amount of staff. Genna’s being a small place always worked well for us, but now I think we will only be able to have 15 people inside at a time. Summer will help some because we have the patio. This is unprecedented territory and no one knows how to handle it. Should we map out where people can stand? How will bartenders feel safe? How long will there need to be capacity rules? Nobody knows how to do this yet. 

Joanne: My mantra these days is resilience One of the reasons we have been successful is that I have had tremendous luck with staffing. Our staff has been resilient and ready to change with these times. Every day we have a quick meeting to talk about what is different about this picture today. We are opening on May 26, so what does that mean for the store? When we open the door, what are the expectations of our customers and what can we expect of each other? It has made me think about how we need to be resilient. It is never going to be the same way. Our bookstore will never be as it was before the pandemic hit. I have had to go through some grieving about what that means, because I didn’t get into this business to be a mail order operation. People ask me how are you doing. My standard response is “one day at a time.” 

Richard: We are looking into hosting our workshops online. If there are no camps or summer schools, kids will be at home and have already gotten used to learning online. With Gov. Evers’ Badger Bounce Back plan, we can start bringing clients into the studio with precautions in phase two. We have a long list of clients who are texting me to get into the studio, so we can have clients all day long and sustain the business that way for a while. We are taking this time to do some restructuring and rebranding, and once we can get back to work we will be stronger than ever. 

Part two will look at how these businesses are faring under Gov. Tony Evers’ Badger Bounce Back plan.