The biggest symptom of COVID-19 for businesses
From family-owned sweet shops to convention centers, no one in Lansing has remained untouched by the economic fingers of COVID-19. No matter their size, there’s a popular new phrase all businesses are using about their financial futures: “I don’t know.”
Even businesses deemed essential are feeling the strain of customers staying home. For many, the last few weeks have been a tempest of changing circumstances and challenges, and the next few weeks hold more of the same.
Essential Doesn’t Guarantee Busy
Even without the designation from the state, Preuss Pets in Lansing’s Old Town knew it was an essential business.
Despite remaining open, the shop is feeling the strain of the virus. Sales are down substantially for the family-owned pet store even though, operationally, store manager Kirbay Preuss said they are busier than ever.
“It feels busier and requires more energy,” she said, “But from a profit standpoint, it’s low.”
The store is closed to customers, but Preuss Pets is still providing essential items to pet owners in the Greater Lansing area.
“There is nowhere else to go for exotics in the community,” said Preuss. “It’s not just about your dog or cat, but birds, fish, reptiles and everything they need. We provide essential services and supplies for those with exotic pets.”
Despite the need for those items, the long hours put in by Preuss and the team are more an indicator of the dedication to their customers than their sales numbers.
This same is true for Groovy Donuts in East Lansing and Williamston. Although it was allowed to keep serving customers, the term “essential” does not equate to sales.
Owners Andrew Gauthier and Monica Lucas noticed a change in their sales when the schools closed. The weekend after, Gauthier said they experienced a 50% drop in sales.
“People saw the severity of the situation,” he said. “Everyone hunkered down that weekend.”
Once the stay-at-home order took effect, the business lost its large orders for upcoming weddings and large community events.
When Gauthier and Lucas decided to apply for a Lansing Economic Area Partnership grant for small-business relief, they figured a little community support could help their chances. Lucas posted a video to Facebook asking the community to write letters or share their support for Groovy Donuts.
“We received a few hundred letters and emails and pictures from kids,” said Gauthier. “The response, regardless of the outcome, was a huge morale boost for us.”
The support helped, and Groovy Donuts not only received a $10,000 grant but the public showed up and sales spiked for about a week, putting the business at only 40% less sales than average.
“It’s done a lot to keep things going financially,” Gauthier said of the boost in sales. “We weren’t expecting it.”
The $10,000 helped ease the tension but, “it doesn’t even cover one month of payroll,” he added. “We don’t want to diminish the help, but it’s a fraction of what we may need before this is all said and done.”
Beyond Doing Business: An Economic Indicator
“I don’t think everyone understands the true economic impact to our region,” said Scott Keith, president and CEO of the Lansing Entertainment & Public Facilities Authority.
While small businesses and restaurants continue to do what they can to serve customers, the Lansing Center, one of LEPFA’s three event facilities, is completely shut down. Since the order that halted events of 200 or more, it has lost a little over $1.5 million in revenue.
“There was an immediate impact,” said Keith, adding that he hopes organizations will reschedule at a later date, but no one knows what that date will be. “We have things booked on May 1, but we’re just waiting on the next order. … When events here are canceled, there’s a huge economic impact. It means people aren’t staying at hotels or eating at restaurants or using our gas stations.
“We help support so many other positions in our community,” he continued. “One million to us is about $4 million to $5 million in revenue to the community.”
A New Normal
Even as some businesses continue to function, business is definitely not business as usual — and there is no indicator of when, or if, it will return.
For Preuss, the day-to-day schedule involves constantly finding new ways to answer customers’ questions and get them the supplies their pets need.
“We’re so service-based that we’re needing to find new ways to connect,” said Preuss.
The team is answering questions through email, text and Facebook Messenger, and they are using Zoom to facilitate “face-to-face” interaction with customers. They have staff at the store caring for the animals and are in touch with state representatives and city council members in order to stay on top of the situation.
“We’re preparing for a few more weeks, maybe longer,” said Preuss, but she’s aware that practices they are putting into place now could become a new normal. “This whole experience will change consumer buying habits to the point where we might have to keep some of these elements in place even after things pass.”
Both the Lansing Center and Groovy Donuts are preparing for a slow slide back into normal as well and are looking at what they can do in the meantime. Keith hopes that with the weather changing, LEPFA could get a special designation to open Groesbeck Golf Course if it enforces social-distancing and put new guidelines in place.
“We would need to limit interaction, only let two people tee off at a time, we couldn’t allow golf carts,” he said. But limited activity is better than none, especially because even when it is allowed to resume normal operation, Keith said it won’t bounce right back. “We would need to get people inside to fix up the building, decide how many staff to bring back, get a diagram to the fire marshal. … We can’t just be ready the next day.”
Gauthier noted that Groovy Donuts would face similar problems: “We would have to open back up gradually. We would start building staff back up based on what we can afford.”
Preparing for the Future
As businesses look to an uncertain future and to resources being offered in order to simply get by, there are things they can be doing to prepare for the future economic impact of this pandemic.
Sarah Jennings, director of strategic initiatives and community engagement at Lansing-based accounting firm Maner Costerisan, said that this whole situation should be a wake-up call.
“We thought everything was fine, and it isn’t. It’s difficult to see the impact of this even five months down the road,” she said. “We’re all in this together, so the more we can communicate, the better. … Don’t get anxious and stop communicating because you can’t pay. Set up payment plans when possible and offer them to your customers.”
She said it’s better to get paid gradually than not at all. Jennings knows the assistance available might seem limited, but the biggest goal is to keep people working or getting paid.
“We know businesses don’t have the volume of work, but we want them to keep paying employees even if they’re not working,” she said.
Yet as much as they know they should, many businesses can’t look too far into the future when the everyday is so uncertain.
“As an essential business working on the front lines, we’re just now trying to catch up with the reality of what the economy might do in the future, Preuss said. “When that comes, we will deal with it.”