There’s no question that every business is already feeling the effects of the COVID-19 pandemic, but small businesses are perhaps feeling it the most.
Social distancing has forced many retail and restaurant businesses to shut down for the time being, and a lot of companies have already instituted layoffs, furloughs or salary cuts due to major declines in revenue. The economy is in disarray and there’s great uncertainty surrounding most facets of this pandemic and its looming effects.
Craig Gamble, co-owner of Waterlily Cosmetics & Spa, temporarily closed the shop’s doors on March 14 in response to the growing health crisis and social distancing requirements. Gamble’s eight employees are laid off as long as non-essential businesses are closed, but he is committed to keeping every staff member’s job secure no matter how long COVID-19 restrictions last.
“We told our employees point blank: as soon as we can reopen they’ll all be rehired,” said Gamble. “I think our relationship between us and our employees and us and our customers will be stronger when it’s all said and done.”
Waterlily offers upscale esthetician services and sells a combination of six makeup and skin care brands. While the store is closed and in-service appointments are unable to be filled, Gamble and his wife, Beth Gamble, have been busy fulfilling clients’ orders via mail shipments. Gamble said that any bit of revenue helps.
“As a small business, we’re lucky in the sense that we stock up three to four months of inventory—a lot of other businesses don’t do that,” said Gamble. “We’re confident we have enough products to ship to clients during this shut-down, but a lot of businesses are having a tough time getting products because of supply chain issues.”
Gamble added that before the government enacted the shut-down of non-essential businesses, Waterlily had 80 percent of the available appointments for 2020 filled. Because Waterlily is a relationship business and its staffers have such strong ties with clients, Gamble is confident that when the shop reopens the remaining appointments for the year will fill up quickly.
Gamble has a strong shop local mentality—he and his wife personally avoid shopping online and in big box stores, and they’re still committed to this lifestyle during the pandemic—and he encourages others to do the same to support small businesses during this period of uncertainty.
“I feel that small business is the lifeblood of our community,” said Gamble. “I do fear that if a small business just started or wasn’t on sound footing before COVID-19, then this makes me more concerned for those business’ ability to come back.”
Isaac Heating & Air Conditioning, which is celebrating its 75th anniversary this year, has also felt the effects of COVID-19. Prior to the pandemic, Isaac Heating & Air Conditioning employed roughly 420 people, which adheres to the government’s consideration of a small business being any company that employs no more than 500 individuals. Since the COVID-19 pandemic hit Rochester, Isaac Heating & Air Conditioning has had to temporarily lay off over 100 staff members.
“Reducing our force temporarily is a strategy we’ve had to implement that cuts me right to my core,” said Ray Isaac, president, CEO and partner of Isaac Heating & Air Conditioning. Isaac is also the past president of the Small Business Council of Rochester. “We’ve gone back and analyzed our financial statements. We’re reforecasting our whole budget for the coming year. Luckily, we end our fiscal year on April 30.”
Isaac considers this final month of the company’s fiscal year a cleansing period and a time to “face the brutal facts.” A leadership book enthusiast, Isaac likens the company’s strategy with the Stockdale Paradox popularized by Jim Collins in his book “Good to Great.”
The idea of the Stockdale Paradox is to balance realism with optimism and to establish a coping mechanism for trying times, which is exactly what Isaac and his team are working on tirelessly to ensure the company’s success on the other side of the COVID-19 pandemic.
“I write a nightly email to every employee in the company to let them know exactly what happened that day in the world and the activities we underwent as an organization and as a leadership team,” said Isaac. “It’s my job as a leader to provide hope, but I won’t give out false hope.”
Transparency is essential to Isaac when it comes to leading his staff of hundreds. According to Isaac, a great leader is someone who is a calming presence in an anxious environment.
Jeff Knauss, co-founder of The Digital Hyve, a full-service digital marketing agency, agreed that COVID-19 has presented a unique opportunity for small-business leaders to flex their abilities to protect their staff and their company. He echoed Isaac’s sentiment about the importance of transparency and that employees don’t want to be deceived or left in the dark, especially during such an unsettling time.
“I share my own fears and anxieties because that humanizes me and lets them know that we’re all in the same boat. However, strong leadership also means I’m working day and night to make sure I have a plan for my team based on all of the information that I know,” said Knauss. “Every time (Gov. Andrew) Cuomo or the president comes on the air, I’m watching everything they’re saying to get the best context into the decisions I need to make for my team.
“I’m looking at our financials and working with our partners and doing everything I can to get the most information to make the most informed decisions.”
Knauss added that being nimble and agile is of utmost importance for small-business leaders who are creating plans of action. New information regarding COVID-19 is being dropped into laps on a seemingly hourly basis, and so leaders must iterate and pivot as trends change course.
The Digital Hyve has 50 employees spanning its two offices in Syracuse and Rochester. The agency services clients in a variety of sectors both local and national, including Rochester Institute of Technology, Vision Automotive, the city of Rochester, Excellus BlueCross BlueShield and Little League International. They have not made any staff reductions thus far, but the company has been forced to examine what is nice to have and what they need to have to balance Digital Hyve’s expenditures with the revenue losses from clients who are hit hard by COVID-19 such as higher education institutions, casinos and automotive companies.
“Our No. 1 value is our people and giving people the best opportunity to be successful in a really tough environment,” said Knauss. “We’ve seen unemployment rates skyrocket, so being able to keep people on to keep their benefits and keep them paid through a tough time is very important to us.”
All Digital Hyve staff members are working from home, a transition that was relatively seamless being a tech-based company. Working from home isn’t a new policy for the company, though. Since day one, Knauss and his business partner and co-founder, Jake Tanner, have offered Digital Hyve employees one day a week of their choosing to work remotely.
Not all companies are able to work entirely remotely. Isaac Heating & Air Conditioning, for instance, is considered an essential business under Cuomo’s New York State on PAUSE executive order, and many employees must work on-site in clients’ homes, risking exposure to the novel coronavirus.
However, Isaac and his team have diligently implemented sanitizing techniques in adherence to Center for Disease Control and Prevention guidelines. Isaac said he has a zero tolerance when it comes to employees not following sanitation protocol.
Isaac has also staggered shifts to reduce the office workforce and some employees are working from home.
“Structurally, we’re right sizing the business to the current conditions,” explained Isaac. “We’re pretending we’re a business that’s half the size of what we were doing last year. Last year we were a $60 million company. Right now we’re making assumptions that we’re going to be a $30 million business.”
Similar to Isaac Heating & Air Conditioning, Integrated Systems is considered an essential business. Founded in 1983, Integrated Systems is a technology firm that develops local communications networks for small businesses and municipalities. Today they employ 20 people, and thus far there have been no layoffs or furloughs due to COVID-19.
President and CEO of Integrated Systems Mark Hamilton said the company fits four categories that make it essential, the primary factor being the data center services and plant services for municipalities.
“Everyone has the capability of working remotely,” said Hamilton. “Our infrastructure crew is slightly different; they’re the ones who provide telecom solutions for our customers. We’re trying to rotate crews and staff. Some are working from home, and we have policies in place to try and protect people from exposure and to protect our clients.”
Hamilton admits that the COVID-19 crisis has him concerned about maintaining his workforce if the pandemic lasts for more than a couple of months, as are many small-business owners, but Integrated Systems has been getting a lot of demand for providing clients with the ability to work remotely.
As in the health care industry, there are shortages in the IT sector for products like laptops, video cameras and microphones, but Hamilton and his team are consistently scouting for any available tools and resources for clients.
Career Start, a local staffing agency, has 52 internal employees, all of whom are indefinitely working remotely. The number of contract workers that Career Start has fluctuates from 6,000 to 12,000 at its peak. Every employee that is contracted out to a Career Start client is considered an employee of Career Start.
Unlike many staffing agencies during this unprecedented time, Career Start is faring well. According to president and founder Lindsay McCutchen, two weeks ago Career Start put over 80,000 hours into essential businesses in a single week.
“We’re a food manufacturing, medical manufacturing agency and a nurse staffing agency, so, we’re going bananas right now,” said McCutchen. “The flip side of that coin is that we’re also in hospitality and staffing universities, so that went to zero because of the coronavirus.”
Similar to Isaac Heating & Air Conditioning and Integrated Systems, Career Start has staggered shifts and break times as well as implemented sanitation measures for workers in industries such as manufacturing and printing facilities. Additionally, McCutchen and her team have asked each of their partners about their COVID-19 plan to keep employees safe.
“We have documents that people sign when they report to work asking if they have the specific COVID symptoms. If the answer is yes, they get sent home right away, no questions asked,” said McCutchen. “We’re allowing people to go into their sick time and go negative into their bank if they are sick or if they have to be quarantined, again, no questions asked.”
McCutchen said that she thinks COVID-19 could be devastating for many local small businesses and she has already witnessed dramatic layoffs at other companies.
“The longer it continues, the worse it is,” said McCutchen. “You have employers who love their employees and they want to keep paying them and assuring them that they’re not going to have to go on unemployment, but there’s a fine line between doing that and cannibalizing your business and taking up all your cash flow.”
McCutchen added that decisions being made now will likely have a significant impact on the company down the road as this pandemic proceeds and eventually ends.
Mark Blood, partner at accounting firm DeJoy, Knauf & Blood LLP, said that he expects a lot of businesses not to return when the pandemic is over.
“What happens in any situation like this, if there is any sort of comparison, the weaker guys at the bottom or the smaller competitors in a particular business area, those are the ones that won’t come back,” said Blood. “The ones at the top will potentially pick up market share in a situation like this.”
Essentially, the strong businesses will come out of COVID-19 stronger because many of its competitors will have been eliminated.
DeJoy, Knauf & Blood’s 65 employees are all working remotely, which is fairly normal for the company since many employees work at clients’ offices, so the organization is well-equipped to support remote work. Accounting and financial services companies are considered essential under NYS PAUSE, and Blood reported zero layoffs or furloughs at the firm.
Blood said the most prevalent concern he’s been hearing from his clients surrounds financing, including cash flow issues, layoffs and different ways of preserving cash flow to keep the company afloat.
“Businesses are concerned about their ability to get tax savings and tax benefits out of this, but that tends to be secondary,” said Blood. “Most of them are focused on their ability to access additional credit.”
From Blood’s perspective, the economy is not going to rebound as quickly as politicians are predicting. He expects the economy to take a minimum of three to five years to recover.
Knauss agreed that COVID-19 will have long-lasting effects on the Rochester small-business economy, as well as the world. In the short-term, everyone is living in fear and uncertainty, which adds intense stress to businesses.
“Long-term, I think there’s been a light shined on how we can work as a community remotely,” said Knauss. “Moving forward, I think leveraging business technology will be huge.”
As the former president of the Small Business Council of Rochester and a mentor in the Greater Rochester Chamber of Commerce’s CLIMB program, Isaac has heard fear coming from fellow small businesses, many of whom live project to project. All of Isaac’s research from industry experts has pointed to the vitality of strategy and calling on lines of credit for small businesses.
“If you can make it through it, you’re going to be stronger as a business and you’re going to learn some lessons,” said Isaac. “You won’t see as many businesses as ill-prepared in the future. Luckily for us, we’ve been working on strategy for the last five years and it’s paid off beautifully for us in this situation.”
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