Small Businesses Struggle to Survive in Catastrophic Environment

Kerry Welsh owns Blo Blow Dry Bar in Greenville. In the final days the salon remained open last week, appointments dwindled to a trickle.

For even the best-run and most successful small businesses, a few unexpected bad weeks can be devastating.

There are hard costs that don’t vary just because business may be down.  That includes employee wages, monthly rent, utilities, insurance and more.  Even in good times, margins can be thin and cash flow tight.

Then there is the “Amazon effect,” that has brutalized local shop owners across the country, further impacting their profits and ability to compete.

 

But so many small business owners go to work each day because they are doing what they love. They’ve chosen a field, whether it be retail goods or personal services that suits their passion and interests.

They love and care about people – their employees and customers are often considered family – an undeniable fact because no small business can keep the lights on unless they deliver a special experience to both their customers and staff.

Lauri Hagen runs Fringe Salon in Newark. Four other stylists pay rent to Hagen, who has her own clients and runs the business.

Today small businesses in Delaware are facing an unprecedented existential threat from the forced closure due to COVID-19.  We spoke with several owners of local storefront businesses – hair and nail salons, fitness studios and more – and each voiced the emotional toll of the current crisis as well as the deep concern about their ability to stay afloat and come back after the mandatory shutdown is over.

 

Kerry Welsh of Blo Blowdry Bar in Greenville said even before the state of emergency declaration closing non-essential businesses her daily customer flow was dramatically reduced to the point she couldn’t justify staying open.

“Laying off ten people was the hardest thing I’ve ever had to do,” said Welsh.

Welsh says she is exploring both the state and federal efforts to support small businesses through this period but that she doesn’t want to incur significant debt with the future so uncertain. “I’m not interested in going into debt to finance months of the coronavirus impact. And so our, our options are fairly limited at this point,” she said.

And she says the impact of the two-month closure on her small business, which has seasonal upticks, may be worse than for others. 

“I am definitely anxious. I have been negotiating with some of my vendors and can get by for a few months. But we have seen cancellations of any large gatherings up through the end of June. So even if we re-opened tomorrow, the events that drive much of our business won’t be happening. July and August are slow for us — and most businesses in Wilmington — anyway, so essentially it will be September before we see business pick up again,” said Welsh.

Lauri Hagan opened her Fringe Salon & Boutique in Newark seven years ago.  She employs five stylists cutting mostly women and men’s hair.  She says the pandemic situation is “surreal” and will exact a significant financial toll on both her and her employees.

Hagan, with her adorable grandson, inside her Newark salon and boutique, which carries clothing and accessories

“The shutdown is going to be a financial burden on myself and my girls that work for me or rent from me. I just can’t believe this is happening.”

Hagan says she is deeply concerned for her employees, who had no time to plan for the disruption to their incomes. “I don’t even know what to do because I don’t want to burden my employees. It just happened so fast. I have so much to think about,” she said.

Hagan pays her rent monthly and says she has a business savings account “with not a lot in it” but that she lives a modest lifestyle and definitely will be able to pay the bills at the salon for a few months if she has to. “I’m also hopeful the people I rent from (Lang Development) are going to cut me a break.”

Hagan also says she’s got a supportive family who she could turn to for help. For now, that’s something she would rather avoid. “Financially I’ll be okay for a while. It’s definitely going be hard on me, but you know, it’s not going to ruin my life,” she said.

“I feel sorry for the very poor people or the people that have no one to help them. I’m very fortunate I have a family that would never let me lose everything. You know, I have a different life than some people out there that are living paycheck to paycheck or poor and struggling financially. It’s sad — and scary,” said Hagan.

Meredith McFadden owns Pure Yoga Pilates Studio in Trolley Square

Meredith McFadden of Pure Yoga Pilates Studio in Wilmington said the shutdown “could be potentially devastating for us.”

The individually owned and operated yoga studio has about 15 independent contractors with another ten on the sub list. McFadden launched the business 12 years ago and recently expanded into the space next door at the Trolley Square Shopping Center.

McFadden recently managed a full renovation and expansion of her studio, essentially creating two studios in the space. She also invested in new equipment, including reformers and springboards that are similar to reformers but are mounted to the walls. 

While the majority of yoga and pilates instructors are part-time independent contractors, McFadden said she does have a group of teachers for whom teaching yoga is their sole income. “They’re definitely concerned. We’re using only about five people right now with our online classes, who depend on this for their income. They’re feeling pretty tenuous at this point.”

Pure Yoga is able to keep some instructors employed by offering some online classes via ZOOM

McFadden said a normal week would bring about 350 customers and the studio has had to innovate to offer live streaming of classes through Zoom. However, she says moving online-only will “drastically change” those numbers. “We won’t have as many offerings, and it’s only going to be online. We also have a retail store that people probably won’t be purchasing from.”

Like other small businesses scrambling to survive McFadden is also investigating government programs and loans and hoping her landlord can provide some relief.

 

Kate Pham came from a very poor family in Vietnam, who she supports with earnings from Kate’s Spalon in Greenville.

The nail salon’s closure leaves seven hourly employees out of work until at least May 15. 

“Of course I’m very upset because the rent is so expensive,” she said. “If we close for a long time we can’t afford it and all my staff doesn’t have money to live.”

Pham says she can make it possibly three months but that bills will be mounting. “I have to pay AT&T, Comcast, power. I pay a lot of other things. The credit card machine. I also need to pay my mortgage.” Because of the terms of Pham’s rental contract at the Greenville Center, Kate’s Spalon is paid two months ahead.

“I hope people can buy gift cards to help me to help me support rent for a couple of months,” said Pham. Her husband’s business is still in its infancy. So she remains the family’s primary source of income.

Despite the burdensome challenges, Pham says she says she is still grateful to live in the U.S. and knows things could be much worse. She grew up in a family with limited access to food and other essentials. “I’m so happy to live in this country. I’m still grateful.”

 

Patty McCoy, owner of Petals Flowers & Fine Gifts in Greenville, is in the fortunate position of being able to remain open. Florists are exempted from the shutdown.

But she says all events — weddings, bridal and baby showers, corporate — have been canceled. In just the first three days of last week, twenty people called to cancel their floral orders. “I have a bin here with canceled orders, and it’s overflowing,” said McCoy. That means she, too, must cancel all of those orders with wholesalers.

McCoy has offered a full refund to everyone who has canceled their orders. “You can’t not refund these people. It’s the right thing to do. Some are paid in full. Fortunately, my wholesaler has been really good about this, too,” said McCoy.

As business has “dropped off,” McCoy felt she needed to ask her hourly employees not to come to work. She still has a few floral orders, but she wants to maintain safe distance standards. So her son and daughter are now making deliveries – wearing pink gloves. They ring the doorbell and leave flowers at the front door without making contact with homeowners.

Patty McCoy’s son Doug, along with sister Brianna, are making floral arrangement deliveries for Petals Flowers & Fine Gifts

Several landlords are of course affected by the sudden closure of the small and large businesses at their properties. Greg Pettinaro, CEO of who Pettinaro, who owns several properties in Greenville, was forthcoming about how his business will try to navigate the economic climate going forward.

“At this point, we’re trying to see how things shake out,” said Pettinaro. “We don’t know if this is going to be a two week or five-month thing. We still have bills like everybody else. Our position with all our tenants who are asking, and a lot are, is that please try to pay what you can we will reassess when we have a handle on when everybody will be getting back to work.”

 


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About the Contributor

Christy Fleming

Christy Fleming

The managing editor of TownSquareDelaware.com, Christy Fleming also supports a variety of non-profit initiatives in Delaware. Her background includes positions in public relations, advertising and journalism.

1 Comment

  • I know that working for a small business has many perks. I love the place that I work and the girls that I work with. We are family and we will all support each other the best we can. It’s hard times for all of us but it especially scary for people who are self employeed. I know they are trying to do for everyone but being out of work will be a huge financial burden for us. We love our clients and hope to see them all very soon. Please pray that this passes fast and that we all stay safe and healthy.

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