How small business owners are coping with COVID-19 pandemic: ‘It was my civic duty to be a part of the solution’ – CNBC

Small businesses across America are already feeling the financial crunch from coronavirus restrictions that have millions of people taking refuge from the virus outbreak by staying at home and avoiding unnecessary shopping trips.

One analyst predicted that the disruption to businesses from coronavirus could lead to 15,000 permanent retail store closures in 2020, with the Economic Policy Institute predicting that the disease outbreak could potentially wipe out three million jobs from the U.S. economy before this summer.

Those concerns are certainly setting in for small business owners across the country, as a recent Goldman Sachs survey of more than 1,500 small business owners found that more than 50% of them said they didn't think they could continue operating their businesses for more than three months amid the current conditions caused by the coronavirus outbreak.

Several U.S. states have already begun mandating that non-essential businesses basically anything beyond supermarkets and pharmacies close their doors to customers. But, even in states where that isn't the case, scores of small businesses have already made the move to close up shop totally or reduce their hours of business dramatically.

"I never could have imagined being closed for days and days," says Barb Skupien, the 51-year-old owner of Embellish, a jewelry boutique in Asheville, North Carolina that she first opened in 2015 after previously running a similar store in Chicago for roughly seven years.

Skupien closed the doors of her store on March 16 after a particularly busy day on Sunday, March 15 left her concerned that people weren't taking the coronavirus threat seriously enough. Her shop typically sees anywhere from 15 to 20 people come through on an average day, but despite Sunday's typically being slower, Skupien says she still had about 25 customers throughout the day that Sunday.

"I felt like it was my civic duty to be a part of the solution and not part of the problem," Skupien tells CNBC Make It about her decision to close the store rather than be seen to be encouraging more people to ignore government officials' social distancing recommendations. (North Carolina has not yet mandated that non-essential businesses close their doors, though the state has ordered restaurants and bars to only offer takeout or delivery services.)

Now, with retailers across the country preparing for closures that could last months, Skupien isn't sure when she'll be able to reopen. "Now, it feels like it's going to be weeks, and I guess it could be months," she says.

With the business's cash flow abruptly cut off, Skupien is left to wonder how long she'll be able to cover her storefront's rent, which is $3,800 per month. She adds that her landlord will allow her to defer that expense for two months, with the potential to re-evaluate her position down the road.

Without that break from her landlord, Skupien says she could have been forced to permanently close up shop after about a month. As it stands, she believes she has enough money saved to "string it along for a couple of months," she says.

Still, Skupien quickly gets choked up when asked about her plans for continuing to pay her store's lone other employee (aside from herself) should money get even tighter.

"I have not had that conversation with her," Skupien says, adding that she's continued paying the employee as the two of them work on building a website that would allow them to sell items from the store online in the hopes of creating a new revenue stream.

"Once we're done doing that, I will have to have that conversation (with her)," she says.

Since closing her doors, Skupien says, she's had a few friends and loyal customers reach out to pay her upfront to buy jewelry from her store that they'll pick up once she reopens.

She's also participating in an Asheville-based website, called Asheville Strong, that aims to support local businesses affected by the coronavirus by creating a directory where consumers can buy gift cards for those businesses that can be used at a later date (once the coronavirus outbreak has subsided), giving business owners a temporary influx of cash without asking customers to physically patronize their stores.

Catherine Campbell, who runs an Asheville-based marketing and public relations firm called Bright Planning, started the Asheville Strong website last weekend in the hopes of helping struggling local businesses create a temporary revenue stream. "We were brainstorming all kinds of ways for them to figuratively keep their doors open if they literally couldn't," Campbell tells CNBC Make It.

As of Thursday, Skupien had only sold two gift cards totaling $125, but she says "it meant the world" to know that those customers were intent on helping her business through a tough time.

Indeed, the financial crunch facing Skupien is familiar to hundreds of her fellow small business owners in Asheville and surrounding areas (Campbell's website already had more than 300 listings for local businesses as of Wednesday), and it's an issue affecting millions of small businesses across the country.

"Cash flow, even in a good economy is often a struggle for small businesses," says Holly Wade, the director of research and policy analysis for the National Federation of Independent Business (NFIB), the country's largest small business association. "But, now it has turned into one of the most, if not the most, important obstacle that they face."

With so many businesses closing their doors temporarily or reducing opening hours, Wade is adamant that it's important for consumers to adjust along with their local businesses in order to help them survive.

"To support small businesses during this massive disruption in consumer spending will require all hands on deck," Wade says. Some ways to support local businesses, whether they remain open or not, include buying gift cards or even making a point of ordering carry-out or delivery food from local restaurants, Wade says.

Restaurants, in particular, have faced a massive disruption to their income streams and business models. Many have had to stop allowing sit-down customers, pivoting to offer only takeout or delivery services.

Economists are already forecasting that the U.S. restaurant industry could lose $225 billion in revenue from closures resulting from the coronavirus outbreak, and that the industry could shed up to seven million jobs over the next three months, according to the National Restaurant Association.

In Baltimore, Stephanie Hershkovitz and her brother, Joshua Hershkovitz, run the italian restaurant Hersh's, which closed its doors on March 15. The following day, Maryland Gov. Larry Hogan ordered the closure of the state's restaurants except for delivery, carry-out and drive-thru orders.

Before closing, Hersh's business had actually been pretty good despite government officials warning people to avoid large public gatherings. The restaurant, which features two full stories of dining space, plus a bar with a popular cocktail program, was packed the previous week.

"It was like people were having an End of Days celebration, which is actually the reason that we ended up closing because my brother and I were concerned about how packed it was," Hershkovitz tells CNBC Make It.

On Thursday, she says, the restaurant kicked off a takeout service that she hoped would create a sustainable revenue stream. However, Hershkovitz notes that takeout orders typically only accounted for no more than 10% of their restaurant's overall business. Plus, the restaurant will only be offering takeout service four hours a day, from 4 p.m. to 8 p.m. each evening.

"It's not that much, but we do have a big neighborhood following," she says. "So, we expect that, hopefully, this takeout will take off, so to speak."

Their hope is that carry-out orders of pizza and pasta will generate enough income to help support the restaurant's staff of roughly 20 employees, who have already had to endure a drastic reduction in work hours.

"One of our big motivators in doing this is to keep our employees employed," Hershkovitz says. However, the sibling restaurant owners have also taken steps to obtain government assistance for their employees.

"We've already filed a bulk unemployment claim for them, because you can do that not just for complete temporary layoffs but also for a reduction of hours, which there have certainly been a reduction in hours," Hershkovitz says.

Meanwhile, small business owners are also awaiting further government assistance in the form of a potential emergency financial aid package that has been proposed by the federal government and could include over $300 billion for loans to keep small businesses afloat.

At the same time, small businesses that are affected by the coronavirus can apply for low-interest loans of up to $2 million from the U.S. Small Business Administration, CNBC Make It previously reported. And, the Treasury Department also announced it will defer the deadline for annual tax payments by 90 days.

Skupien tells CNBC Make It that she's considering applying for a loan through the SBA to help keep her business afloat.

"Small business owners are having to navigate a very, very uncertain future right now and it's not a one size fits all impact on small firms," the NFIB's Wade tells CNBC Make It. "It depends on the industry, where they're located, what the degree of the impact is on them."

Max Morey, 69, runs the Crescent Theater, an independent movie theater in Mobile, Alabama, which he decided to close on Thursday, March 12, without any idea when it will be safe to start welcoming moviegoers once again.

Much like Skupien, Morey made his own decision to close his doors, not because business had slowed down (in fact, he had roughly 60 customers for one of his final showings of the movie "Emma" on Thursday), but because he felt remaining open was not in the best interest of public safety and the health of his customers or two employees.

Morey paid his two employees for an extra week of work despite the theater remaining shuttered this week and he tells CNBC Make It he also offered to help them out with rent or money for food if it comes to that.

"I told them that I would be there for them and, we're going to make it through [this]," says Morey, who personally lives off of a combination of Social Security checks and his own savings.

He actually put $28,000 of his own money into the theater to keep it afloat three years ago. "I'll never get it back," he says. "But, hey, life is short. Have fun."

Business has "never been healthy" for the theater, which boasts only a single movie screen with 90 seats that offers three showtimes per day, seven days a week. Morey tries to show a mix of independent films and blockbusters (Paramount Pictures' "A Quiet Place 2" had been set to start showing on Friday).

He typically pulls in between $15,000 and $20,000 for each film that he shows at the theater over the course of a two- to three-week run.

"It's always been fragile [and] on thin ice," Morey tells CNBC Make It, pointing out that the movie theater business has generally struggled in recent years due, in part, to the rise of streaming entertainment. In addition to Morey's own savings, in recent years the theater has relied on Kickstarter campaigns to keep the lights on. One such crowdfunding campaign raised $84,000 in 2012 to keep the Crescent running while another raised $72,000 in 2017.

Still, Morey isn't overly concerned about his prospects of reopening the theater eventually, once the coronavirus threat has subsided. He's already hoping to reopen at some point this summer, though he admits that a movie theater where moviegoers sit together in close confines for hours at a time is "the perfect petri dish" to spread disease. In other words, he doesn't want to rush to reopen.

For now, Morey wants his theater to remain a vocal piece of the local community. He plans to write inspiring messages on the theater's marquee, located in downtown Mobile. "I'm going to put 'We love you, Mobile, stay safe' on my marquee," he says. He wants it to be "a little soundboard for the community, and I'll change it every few days."

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How small business owners are coping with COVID-19 pandemic: 'It was my civic duty to be a part of the solution' - CNBC