Damage already done? Amid major revenue decreases, some small businesses left hoping to break even
Back in January, Jeff Carter was daydreaming about being debt-free by early next year. Less than five months later, as the coronavirus pandemic plunders on, those dreams are as good as dead, so much so that Carter’s thoughts — morning, day and night — are now focused on not only reviving his three-year-old business, but, more importantly, keeping it alive.
“I was finally going to be debt-free from the business 14 months from now,” Carter, owner of The Glass Die, a popular board game bar in Reno’s Midtown district, told the NNBW last week. “That would’ve been cool … but that’s not going to happen now. I just want to try to get to the point where we can see people enjoying our space.”
As a bar, The Glass Die is one of hundreds of establishments in Nevada mandated to keep their doors closed during phase one of the state’s reopening plan.
Relying solely on curbside service since the state’s shutdown on March 17, The Glass Die has struggled to generate revenue despite support from a loyal customer base, Carter said.
In April, the bar’s first full month of being closed, The Glass Die saw $6,696 in gross sales — an 81% drop compared to April 2019, when it generated $34,972 in revenue, Carter said.
When bars are eventually given the green light to fully reopen, Carter is afraid that running his business at a profit will be near impossible.
The COVID-related restrictions that his 2,000-square-foot bar will likely have to put in place — such as 50% capacity and social-distanced tables — coupled with inevitable changes in consumer confidence and behavior will be “tough” to overcome, he said.
“Our fixed costs don’t change,” said Carter, who has a staff of three people. “The only fixed cost that I can actually control is payroll. We’ve already had the talk that people are going to lose shifts. We’re not going to see Friday-Saturday night crowds of a bunch of people — which we love, that pays the bills.”
BEST CASE: HOPING TO BREAK EVEN
As a hypothetical, Carter said even if he reopens in July and his gross sales are cut in half ($27,000 in 2019 turns into $13,500), and 100% of his sales are in the 300%-margin category, his business would still post a negative-$2,640 profit margin for that month.
“I’ve been doom and gloomy about a lot of this from the start of it, because the numbers are there,” he added. “Once you see all the numbers and margins, you can’t un-see them.”
This, Carter said, is why he is simply hoping to “break even” for the rest of 2020.
“If I can try to break even as many days a possible, then it will be a plus,” he continued. “I don’t think a lot of people should expect good profits for at least 12 months.”
Carter is not alone is his thinking — 81% of small U.S. businesses recently surveyed by Veem, a global payments network, said they expect the coronavirus pandemic to affect them over the next 12-16 months.
Added Carter: “The only people in this industry that have the capital and the means to survive stuff like this are the huge publicly-traded franchises.”
NOT A ‘FLIP OF A SWITCH’
To that end, Ann Silver, CEO of the Reno + Sparks Chamber of Commerce, said she is worried some small businesses in the region might not survive the slowdown. Merchants that were just getting started or were already struggling prior to the pandemic are especially vulnerable right now.
What’s more, she said some businesses are still waiting for federal relief funding or trying to get by with the loans they did receive.
“Our objective is to see every one of our members get up and running,” said Silver, noting the 75% of the chamber’s nearly 2,000 members are small businesses. “I’m relatively optimistic. I think as little as 10% (of our members) might not (survive).
“It was a quick switch to close down. It’s not going to be a the flip of a switch to reopen.”
For the merchants that have reopened under phase one, Silver believes the more compliant businesses are with social distancing and sanitation practices, the “more robust” their business will be.
“I think compliance equals economic rebound,” Silver said. “I think that will have a lot to do with who makes a strong comeback and who doesn’t. We don’t want to regress and repeat this whole cycle, so we’re saying (to businesses), up your game and go one step further to be extra safe.”
‘KNOCKED ME TO MY KNEES’
One small business doing just that is the well-known Junkee Clothing Exchange in Midtown. In addition to rigorous sanitization and social distancing measures, owner Jessica Schneider had a hand-washing sink installed outside of the store for customers to use before entering.
“I went overkill of what was required,” Schneider said. “I knew I needed to win back the trust of Reno.”
One phase-one restriction that should not be a problem for Junkee is maintaining 50% capacity, said Schneider, citing the store’s 15,000 square feet of shopping space.
The only time of year when the store comes close to reaching capacity, Schneider said, is in the weeks leading up to Burning Man, the annual counterculture event that traditionally gives Junkee a spike in revenue before and around Labor Day.
With the recent cancellation of Burning Man 2020 — among countless area events this spring and summer — Schneider is shifting Junkee’s business model in an effort to stay afloat.
“I’m going to try to sell all of my costumes and get out of the festival business and the party business, because that’s going away,” she said. “I’m just going to adapt and totally change. I’m knocking down prices because I think there’s going to be another wave once everyone gets off of unemployment and they’re going to be broke.
“So, I’m taking stuff off the racks right now and marking it down.”
Nevertheless, Schneider predicts that her revenue will be cut in half, if not more, for the rest of the year. Though she said she will not have a clear picture of what kind of profits to expect until she is open for a month.
“It’s hard because it’s not like we have a COVID handbook,” she said. “We’ve never gone through this before. It’s completely knocked me down to my knees.”
Jacob Warwick, CEO of Discover Podium, says the company that launched only a year ago in Reno recently surpassed $1 million in revenue and has big plans for growth in the coming months.