© 2020 Iowa Public Radio
IPR20012_Website_Header_Option2_NewsNavy.png
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
IPR News

Small Businesses Brace For Next Stage Of The COVID Economy

073120-GG-small-business-PPP-clean-2.jpg
Grant Gerlock
/
IPR
Sarah Chem wipes down the checkout screen at 5 Borough Bagels in Clive. The shop offers outdoor seating only and asks all customers to wear a mask when they go inside to order.

At 5 Borough Bagels in Clive, workers wear masks while they steam milk for lattes. Blue tape shows customers where to stand while they order. Owners Sarah and Toney Chem say there’s no room for people to sit at a safe distance inside, so they’ve set up a few patio tables outside. This is business during a pandemic, and it’s still a work in progress.

“We're doing it day-by-day,” Toney said. “I expect this to not just vanish. It's going to definitely be here for awhile, unfortunately.”

The Chems opened their shop in 2016 after impressing themselves with homemade New York-style bagels. Four years later, the coronavirus has them on a learning curve they never expected. When they first expanded their ordering options, it took a while to make the system foolproof.

“We have online curbside, we have phone-in pickup, we have delivery and that's the part where we struggled,” Sarah said. “We did and unfortunately that happened during Mother's Day, which was a nightmare,” Toney remembered.

Grocery store shoppers are not the only ones dealing with price jumps and shortages of things like toilet paper and eggs. It’s happening to businesses, too, they said, and it's adding to their expenses.

073120-GG-small-business-PPP-Sarah-Toney-Chem.jpg
Grant Gerlock
Sarah and Toney Chem started their bagel and coffee shop in 2016. After the coronavirus outbreak caused business restrictions, their regular customers helped keep them afloat with generous tips and gift card purchases.

“The cost of our straws or our cheddar cheese has skyrocketed,” Sarah said. “COVID is messing with not just the restaurants but production: production of cheese, production of pork,” Toney said. “Technically, we should be raising our prices, too, but we don't want to do that to our customers right now.”

Some days, business is normal and some days it’s slow, but one bright spot for the Chems is that they have not laid off any of their 12 workers at the bagel shop, which means they’re doing well compared to others in their industry.

The coronavirus has caused one of the sharpest economic downturns in U.S. history. After the pandemic arrived in Iowa and businesses were required to limit their contact with the public, more than 180,000 jobs were lost. While many have come back, businesses are still adjusting to the COVID economy.

The food and accommodations industry is one of the hardest hit. Even as bars and restaurants across the state have reopened, employment is still down 24 percent from the same time last year, about 30,000 jobs. Those layoffs often impact people who can least afford it.

“We know that the workers in every one of those categories are disproportionately persons of color, generally making minimum wage or close to minimum wage, and those are the ones that have suffered the most,” said Iowa State University economist Dave Swenson.

The state’s unemployment rate peaked in April at 11 percent, which was the highest rate since 1983 during the Farm Crisis. Unemployment has fallen back to 8 percent but Swenson said the pace of Iowa’s recovery will be held back by the national economy, which took an even bigger hit to employment.

“It really depends on how healthy the rest of the United States is,” Swenson said. “We can't be much healthier than they are because we sell what we produce to them.”

"Technically, we should be raising our prices, too, but we don't want to do that to our customers right now."
Toney Chem, 5 Borough Bagels

Congress created the Paycheck Protection Program (PPP) to keep people employed during the pandemic. By the end of June, $5.1 billion in forgivable loans had gone out to 58,466 Iowa businesses. Swenson said it appears to have made a difference, but self-reported data on how many jobs were saved has proven unreliable.

The deadlines to apply for and spend the loans were extended, but some businesses are now wondering what to do when the money they borrowed runs out.

“We are seeing maybe some nervousness come in play with their funds running low or already gone, said Kimberly Tiefenthaler, regional director of the Small Business Development Center in Fort Dodge.

The U.S. House and Senate are negotiating a possible fourth stimulus package that could allow some businesses to have a second PPP loan. That could come into play at places like restaurants and hair salons where Tiefenthaler warns business is not back to normal, in part because they must still physically distance their customers against the coronavirus.

The usual July crowds are missing at Pageturners Bookstore in Indianola. Owner Kathy Magruder said the balloon festival, the county fair and the Des Moines Metro Opera summer festival all helped bring people into the shop a year ago, but in 2020 all of those events are either cancelled or have gone virtual. She has tried to catch up for lost foot traffic with online sales.

“Honestly, I've been impressed with how well we have been doing considering the fact that we've been closed or partially closed to customers during most all of this,” Magruder said. “We've found our online sales were up this year over 400 percent from last year, which is pretty incredible.”

Magruder is already turning her attention toward reaching Christmas shoppers who may not want to visit the store in person during what is normally a busy holiday season.

073120-GG-small-business-PPP-bagels.jpg
Grant Gerlock
The Chems have doubled down on online marketing through platforms like Facebook and Instagram to find new customers while many people work from home.

Other businesses are finding a silver lining in the pandemic. At TC&B Corporate Wearables in Perry, clients started delaying orders in March as the pandemic took hold. They became cautious about spending money on the logo-emblazoned uniforms, ball caps, bags and other apparel the company sells. Digital marketing manager Brad Dains said TC&B decided to try attracting new business by making face coverings. To date, they’ve sold 30 million.

“We kind of thought, in the month of April, if we sold a million masks we'd be on top of our game and we would be really excited about that,” Dains said “And we actually sold our first million within about four days.”

The company did not go on a hiring spree, Dains said, but the new business did help bring back some workers who were furloughed early on.

Sarah and Toney Chem at 5 Borough Bagels said a PPP loan helped them get through eight weeks of payroll while they learned how to reach customers working from home. The next step is figuring out how to fill out the paperwork to have the loan forgiven, which they said is a headache, but it’s better than the situation they faced in March when indoor dining closed statewide and Sarah feared the business would fail.

“I called my dad having a panic attack in the car, and I just I felt like my world was crashing in,” Sarah said. “I don't even care about not going on vacation. I don't care about the little artificial things. I just want to keep our doors open.”

Nearly five months later, they’re still open for business. They can’t be sure what the coronavirus will do next, but having come this far they’re willing to work through it.