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Politics as Usual

Heart trouble

Small business is the heart of the economy and the community, and it’s in trouble

Small Business Saturday has been a post-Thanksgiving tradition for a decade, drawing people to neighborhood commercial corridors to fulfill their holiday shopping lists. This year, business closures, expanded online shopping, and stay-at-home orders made things very different, and the eyes of many people are on financial help from city, state, or federal sources.

City officials report that restaurants in particular have been hard hit, with their closure rate almost three times as high as other small businesses, as measured by a number of metrics. But small businesses come in all kinds. Hearing “small business,” most people likely think about retail shops, gyms, and restaurants of the type that line Union and Chestnut Streets. But there are also a lot of mom-and-pop landlords who have gone nearly a year without rental income. Fitness instructors, yoga trainers, suppliers of security to stores, office cleaners, and other businesses that have not been able to function fully or at all since March 2020 — they, too, will be either restarting their businesses or else looking for new work themselves.

At a Dec. 22 special meeting of the Board of Supervisors, Supervisor Matt Haney laid out the challenge: “For some [small businesses], the option to move businesses outdoors was a lifeline for those who could keep operating. Sixty percent of the small business owners who participated reported they wanted to continue operating outdoors. Ninety percent said these outdoor spaces kept them from closing permanently. Now, without being open, restaurants have been forced back into takeout-only, which means it is too [costly] to stay open at all. The most recent stay-at-home order, which reduced capacity across the city, came with no additional support at all. Many small businesses in our city feel like they have been left to fend for themselves, [with] few options. Many have dug into their personal savings or have gone deeply in debt.”

Just days after the Supervisors meeting, Haney introduced a bill that, if passed, could provide up to $50 million in city funding for music and entertainment venues.

A CITY MATTER

The success or failure of small businesses is no small matter, and it affects everyone in town, whether or not they work for a small business. In a Nov. 19, 2020, press release, Mayor London Breed’s office noted: “San Francisco is home to approximately 94,000 small businesses, which make up 94 percent of all businesses in the city. This vital sector of our economy generates almost 360,000 jobs, employing about half of San Francisco’s workforce and contributing to the vibrancy of the city’s diverse neighborhoods.”

Breed was touting voter approval of Proposition H in the November ballot. This made some changings to the city’s planning code to make it easier for businesses to do new things and to cut some red tape and expedite permitting. It’s a far cry from a robust reform of the city’s rules for businesses, but it was one of the few olive branches the city has held out to the business community in recent years. The fact that it passed with more than 60 percent voter approval might inspire City Hall to pay more attention to San Francisco’s many political barriers to small business success.

For now, with the pandemic still raging and vaccinations just starting to take place, hope is being placed in help from above. At the supervisors meeting, hope was expressed that Congress and the new administration in Washington would provide relief to states and small businesses. While Congress continues to fight over additional pandemic stimulus bills, the Small Business Administration provides a resource to assistance available for small businesses: sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.

A MATTER OF SIZE

Global e-commerce behemoths Amazon and Walmart had quite a nice pandemic, thank you very much. In late December, Brookings Institution’s Molly Kinder and Laura Stateler say the two companies increased their profits last year by 56 percent, and shareholders became much richer, with Amazon and Walmart stocks rising a respective 70 percent and 36 percent. Meanwhile, the Brookings scholars write, their workers’ wages “will have grown only 7 percent and 6 percent by the end of the year, even after the new December bonuses.”

On the small business side, things have not been so rosy. In October 2020, Alignable issued the results of a survey it conducted with more than 520,000 business owners on the impact of the coronavirus and the recovery of the small business economy in the United States and Canada. The headline news from the survey included 42 percent of small and medium-sized businesses possibly not making it to 2021; year-on-year consumer spending was down 50 percent for restaurants and a whopping 74 percent for arts and entertainment; nearly 70 percent of these businesses were still suffering negative consequences from the pandemic. If there was much of a silver lining, it was that 89 percent of fully closed businesses planned to reopen at some point.

When closed businesses are able to reopen, they will have additional costs, as well as newly accumulated debts and possibly lower revenue than before the pandemic to pay for it all. The owner of an animal boarding company told Alignable, “No one’s traveling and leaving their pets here, and I’m paying $12,000 per month in rent.”

The pandemic might wane, but companies will still have to pay for increased cleaning and sanitizing, not to mention perhaps replacing employees who moved out of the Bay Area, vandalism to temporarily closed stores, and other costs.

It might take a while for things to return to normal, but at least as the pandemic begins to fade with the spread of vaccination, the good news could be a fairly strong spring back of the economy. People will return to work, rents will resume being paid, and there will be great pressure on lenders and legislators to create flexible debt relief rules. But when that happens, the landscape of San Francisco’s small business community could have changed dramatically since March 2020.

Feedback: [email protected]; author email: [email protected]

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