You’d have to forgive small business if they look at the state government as a magician who offers a bouquet of flowers that suddenly turns into a bird that flies beyond their grasp. On Monday, the governor announced a program to boost small business during the pandemic with access to grants, low-interest loans, tax deferrals, and some fee modifications. Three days later, the governor announces new shutdown orders that will adversely affect small businesses during the most important time on the business calendar—holiday shopping season.
The small business relief package is a measure of concern expressed by Gov. Gavin Newsom and is meant to balance the effects of the limitations imposed by the new order. The governor and his staff must have known that the new restrictions were coming when the relief package was offered, but the timing is difficult for small businesses.
The holiday shopping season is prime time in the retail business. Surveys show that the retail industry collects 20-30% of annual sales during the holiday season. This year the figure would probably be greater since so much business was lost in spring and summer months due to the pandemic. Now, with the potential three-week shutdown, many businesses have no hope of catching up.
Some small businesses may be taking their last gasps with a lean holiday selling period.
The governor’s order sets the standard for closing based on the occupancy availability in any of five state region’s Intensive Care Unit hospital capacity. If the figure drops below 15%, the new restrictions take hold. It is anticipated that much of the state will hit this marker in the next few days.
By closing business establishments, the governor hopes to remove incentives for people to go out of their homes. The order limits nonessential retail stores to 20% capacity. Some personal service businesses like hair salons and other businesses like bars and wineries have to close all together.
A number of public health experts said the governor has no choice. If people ignore the order, the virus surge, which has increased greatly in the last few weeks, will overwhelm the hospitals.
A number of Republican legislators blasted the new shutdown order.
Senate Republican Leader Shannon Grove demanded the governor reveal more data to justify his lockdown order. She included in the necessary data the effects of lockdowns on “mental health, on our children’s education, including the achievement gap, on domestic violence and child abuse rates.” Senator Jim Nielsen said in a statement, “The first closure drove the state into a recession. Storefronts are boarded up. Many mom-and-pop shops are on the brink of permanent closure.”
As businesses try to hang on, consumers can help by considering shopping online at a small business’ website, order gift cards for future use, or have products or food delivered by delivery app services. But these methods may not be enough to save some small businesses.
As the California executive director of the National Federation of Small Business, John Kabateck, wrote on this site before Thanksgiving, an American Express Shop Small Impact study “revealed that 75% of small business owners need holiday spending to return to normal so they can stay in business in 2021. Nearly half said they need better than average spending to survive. “
The new lockdown and limitation order could amount to a lump of coal left in the stockings of small businesses this holiday season.