Small businesses have been crushed by the economic crisis. Research shows those owned by women have declined by at least 25%.
It’s no secret that small businesses across the US have been in crisis since the onset of the COVID-19 pandemic in March. A report released by Yelp last week indicates that over 163,000 businesses have closed as of Aug. 31. Roughly 98,000 of them, or 60%, have shut down for good.
Among small business closures, women and non-white entrepreneurs have been affected at dramatically higher rates. A National Bureau of Economic Research (NBER) analysis found that the number of active business owners in the United States fell by 3.3 million between February and April 2020: Women-owned businesses declined by 25%, Black-owned businesses by 41%, Latino-owned businesses by 32%, and Asian-owned businesses by 26%. Meanwhile, only 17% of white-owned businesses closed.
Women and entrepreneurs of color tend to have less of a financial cushion to fall back on during hard times. That’s because of the structural barriers they faced opening their businesses before the pandemic: They often do not have strong relationships with banks, are denied loans more frequently, or are saddled with more high-interest loans.
Compounding these systemic issues is the way in which the economic fallout has disproportionately devastated women-dominated sectors, including child care, hospitality, leisure, and retail because of social distancing guidelines ordered to reduce the spread of the novel coronavirus early in the pandemic. As a result, 11.5 million women lost their jobs compared with 9 million men between February and May.
Women small business owners are feeling the effects of the crisis. A recent US Chamber of Commerce poll found that women ranked the overall health of their businesses as doing less well than those owned by men. When paired with the gendered statistics on unemployment—in addition to the fact that mothers are bearing the disproportionate load of the distance learning burden—it’s no wonder some are referring to the current recession as a “shecession.”
Beyond the numbers and research, however, are women who worked to build something they could call their own. To get a better sense of what’s been lost to the coronavirus pandemic, COURIER interviewed three women who had to shutter their businesses in recent months.
Namaste Yoga and Wellness
Owner: Kimberly Leo
Namaste Yoga and Wellness was one of Oakland’s most popular yoga studios—it eventually grew to three locations, including one in Berkeley.
Before opening in 2003, owner and Oakland native Kimberly Leo looked for a neighborhood where she saw a gap in service: “I took a map of Oakland and put pins in all the places where there was a yoga studio, and there was a big giant hole in Rockridge.”
Leo knew the Rockridge population, one of Oakland’s wealthier neighborhoods, would want a local yoga studio they could walk to. She was right. Fast forward to 2011, and Namaste had outgrown the Rockridge studio; Leo opened a second location near the heavily trafficked Lake Merritt neighborhood. By that time, the yoga industry had exploded in popularity and was diversifying.
Namaste aimed to offer a wide variety of styles and teachers for students of different levels—that turned out to be one of the reasons for the business’s success. “We became this hub not just for students, but for teachers to expand their offerings … [and] grow their student base,” Leo said, noting that teachers also offered workshops and teacher trainings in addition to regular classes.
Business was steady until March, when all non-essential businesses in California shut down with the state’s shelter-in-place orders. “One day my business was successful … we had thousands of members,” Leo said. “And the next day it was worth nothing.”
Like other yoga studios, Leo tried pivoting to online classes via Zoom, but quickly discovered that wouldn’t work. “All of a sudden … everyone had a studio,” she explained, because they could teach from home. Teachers began offering their own classes independently of the studio—usually with a sliding scale model—and Namaste couldn’t compete. As Leo noted, “You can get a free class on the Internet, so why would you pay Namaste prices?”
Leo made the decision to close her 17-year-old business in May. She recognized that yoga studios wouldn’t be allowed to open anytime soon, given the health risks this breath-heavy activity posed, especially indoors.
She also found herself working harder to figure out how to save the business than when she first opened. “It just didn’t pencil out financially to keep paying rent” at multiple locations, she said, particularly in the incredibly expensive Bay Area real estate market. Leo saw that she would have to rebuild her business completely—it would have to be an online company to match the new habits of students.
Still, closing Namaste was difficult for Leo—and for students. The studio had a steady stream of regulars who attended classes multiple times a week—some even daily.
“For that to be gone and to not have been able to say goodbye” was very sad, Leo said. But, she added, she believes her days as a yoga studio owner are over.
Owners: Kiki Aranita and Chris Vacca
In 2013, Kiki Aranita opened Poi Dog as a food truck with her partner Chris Vacca. Over time, the business expanded to a three-pronged enterprise: the food cart, a counter-service restaurant in the Rittenhouse neighborhood of Philadelphia (opened in 2017), and corporate catering for large events and meetings.
The term “Poi Dog,” according to the website, “refers to the mixed nature of their hybrid Hawaii-style food,” which drew on Filipino, Japanese, and Portuguese cuisine.
One important aspect of the business, Aranita told COURIER, was Poi Dog’s focus on supporting the community, particularly food-insecure people, and eliminating food waste. She wrote recipes to ensure all parts of a given ingredient were utilized in their dishes: With a tomato, for example, the center might be used for soups while the outer peel was saved for a different Hawaiian dish.
This philosophy meant Poi Dog didn’t generate much excess waste. They also partnered with Fooding Forward—a local nonprofit that works with hotels and restaurants to drive leftover food to different shelters instead of throwing it away—as well as other organizations.
When the novel coronavirus first surfaced, Aranita was in Hong Kong, where some of her family lives. Having endured similar public health crises while in Asia in the past, she had assumed “society would snap into order and everybody would be on the same page, washing their hands and wearing masks.” When she returned to the US in mid-March, however, Aranita quickly realized how unprepared the federal government was in its plans to contain the pandemic.
Last month, Aranita shared the experience of closing down her business in a piece she wrote for Food and Wine. Poi Dog “relied on a combination of busy lunch rushes, a constant stream of office catering, and busy food-truck events in order to survive,” she wrote. “All three of these pillars of our business evaporated in March.”
For a brief period in June, Aranita and Vacca reopened for takeout one day a week—they initially did three days but discovered they brought in the same amount of sales as they did on “Aloha Fridays.” They ultimately realized, however, that the business was no longer sustainable. They’d gotten grants from the Small Business Administration and the City of Philadelphia after Pennsylvania shut down non-essential businesses in March. That money ran out in June, and they were still responsible for rent, insurance, and utilities—not only for their restaurant but also to house the food truck.
Not to mention, Aranita continued, she worried about her staff having to interact with COVID deniers. Although 95% of customers were complying with orders to wear masks and wait outside for their orders to be ready, “a very small percentage of people would walk by and try to elbow into the restaurant and order off the regular menu.”
One of the primary reasons Poi Dog couldn’t survive the pandemic was because so much of its revenue was tied to the corporate catering it had been doing for the University of Pennsylvania and other downtown venues. Once Aranita and Vacca decided to close the business, however, they were still liable for their five-year lease. It took seven weeks to negotiate a release with the landlord, which cost them a good deal of money.
“Closing a restaurant can be a longer process than opening a restaurant,” Aranita said. Instead of trying to sell off their equipment to recoup their losses, they donated it to local entrepreneurs in West Philly: a nonprofit day care and a pop-up dinner project.
Customers were devastated by Poi Dog’s closure. “Strangers stopped me on the street, offering condolences, like there had been a death,” Aranita shared in Food & Wine. As for future projects, Aranita said she hopes to launch “a magazine that celebrates food of multicultural origins.”
She also told COURIER: “I don’t want to be in the restaurant industry ever again.”
OnPoint Rigging and Staging
Raleigh, North Carolina
Owners: Caroline Husa and James Bell
Caroline Husa and her husband own OnPoint Rigging and Staging, which provides and installs equipment for event production and audio-visual companies in Raleigh, North Carolina. As their website states: “We focus on what hangs overhead and the staging under foot.”
Like the hospitality and travel industries, live events have also been impacted by the current economic crisis; as a result, Husa’s company is currently shut down indefinitely. “We obviously have no business right now because there are no large events happening.”
OnPoint was just beginning to take off when the pandemic hit. Husa started the company in 2018 after a long career in the corporate world. Her husband had been a rigger—someone who uses ropes, pulleys, and cranes to move heavy equipment—for 25 years, and saw a market for local equipment inventory and professional-grade installation. They spent the past two years purchasing inventory to rent out and building relationships with clients; the business wasn’t very profitable yet, but OnPoint had a lot lined up for 2020.
Because the company had recently expanded into staging and providing labor for clients, OnPoint was well-positioned to grow—then everything came to a screeching halt in March. “We didn’t have contracts in place for a lot of this and we wouldn’t have even enforced them,” Husa explained. “That just wasn’t the right thing to do. So we had no revenue. And we had no history of payroll.”
Husa and her husband didn’t qualify for federal aid through the Paycheck Protection Program because the people they had hired for their jobs had been gig workers; they hadn’t even been paying themselves through payroll. Although they were able to get unemployment benefits as self-employed people (through Pandemic Unemployment Assistance), those weekly checks don’t cover much now that the additional $600 federal aid has ended.
Unlike many other businesses, Husa said, they can’t resume theirs until there’s a vaccine widely available to protect against COVID-19: “It’s a very difficult pivot.” They’ve approached restaurant owners to see if they’d be interested in staging services—creating temporary outdoor seating by leveling out their spaces—but those owners aren’t investing right now because they too are barely hanging on.
“The industry is trying to figure out how to do this in a socially distanced way,” Husa said, but it’s more complex than for most businesses.
And, she continued, the industry may have changed for good: “There are folks in the production world who have pivoted to virtual events,” Husa said, “but not everybody has that skillset.”
In other words, companies that are able to successfully put on virtual events will likely survive, while those that can’t, won’t. And OnPoint will have to try and focus on the clients who are set up to do virtual well.
In the meantime, Husa may have to find a job. She said that won’t be easy as a “55-year-old woman who’s been out of HR consulting for three years.”