For seven years, Maxine Sheaffer owned an art studio in Philadelphia Manayunk Section, where budding painters went to take courses and workshops. Her studio, Art on Main, was a gathering place to explore creativity, said Sheaffer, 39, who ran the business with her husband and a part-time worker.
Sheaffer’s studio closed in mid-March after Governor Tom Wolf ordered temporary shutdowns of businesses deemed non-essential because the spread of wildfire-like COVID-19 made gatherings unsafe. Sheaffer lost his clients and couldn’t earn enough on art commissions to pay the bills. She made the difficult choice in May to shut down Art on Main forever.
“It was very difficult,” said Sheaffer. “All you can do is hope that in the future this is not going to continue.”
Sheaffer’s studio is among thousands of small stores, salons, studios and restaurants that could not survive the pandemic. In the Philadelphia area, at least 252 businesses closed permanently between March 1 and July 10, according to Yelp, the business listing and rating website. This tally is almost certainly an undercount, as it only includes businesses that have reported their closures on Yelp.
More small businesses are expected to go bankrupt after resisting the first five months of the pandemic, said the experts. Running a small business is tough enough in the good times, but now they are navigating government restrictions, cautious consumers, and widespread remote working that has reduced foot traffic in the city center, experts have said.
The widespread loss of so many small businesses is not only a concern for individual owners, but will also slow a broader recovery, said Joel Naroff, president of Naroff Economics, a Bucks County consultancy firm. “It will contribute to the problems of trying to grow the economy at a rapid rate, because it will increase the unemployment rate.”
Small businesses collectively employ nearly half of all private sector workers nationwide and account for 44% of economic output, according to the Small Business Administration. In 2017, a large majority of businesses in the Philadelphia area were classified as small, with 99.7% employing fewer than 500 people, while 53.7% employed fewer than five people, according to the Greater Philadelphia Economic League.
Jennifer Kinka saw her staff grow from 21 to seven after closing two of the three storefronts at Nesting House, a retail business she started in 2010 to offer cloth diapers, wooden toys and baby clothes. other durable childcare items for new parents. Although the company has an online presence, most sales are done in-store and foot traffic was suddenly only a fraction of what it was before the pandemic, she said. Kinka made the difficult choice to shut down its South and West Philly locations in mid-May, leaving only one Mount Airy store.
“I woke up with a stomach ache when I realized I was going to have to remove them from the communities,” she said. “There were many, many people relying on them, but our hands were tied.”
It is impossible to get a definitive tally of local businesses that closed during the pandemic. Representatives of state and city government agencies, chambers of commerce and local trade associations said no agency or group was keeping the numbers.
And any count of failed businesses will likely be missing from those operated only by owners. Consultants, independent contractors and “solopreneurs” – who run stores themselves – are often not considered small businesses because they have no employees, said Maura Shenker, director of the Small Business Development Center. of Temple. In addition, there is an informal economy of businesses that operate without a license, such as those that lack their owners, she said.
Yet some companies have tried to quantify the damage. Including the temporary closures, there were 2,053 businesses in the Philadelphia metro area that were still closed as of July 10, Yelp said. Yelp declined to share the total number of Philadelphia-area businesses in its database.
The number of small businesses opened in the Philadelphia metropolitan area fell 15% between January and July 24, according to data from San Francisco software company Womply, released by Opportunity Insights, a Harvard-backed research group.
Womply has tracked the transactions of just under 9,000 businesses in the Philadelphia area and counts the businesses as closed if they haven’t seen a debit or credit card transaction for at least three consecutive days. The 15% drop represents about 1,350 businesses in the Philadelphia area that have remained closed since January.
The leisure and hospitality industry has been hit hardest, with the number of businesses opening in this sector falling by almost 21%. Education and health services activities have fallen 33% since January.
Retailing and restaurants were the worst during the pandemic, according to national data from Yelp. Between March 1 and June 15, more than 27,600 retail stores closed temporarily or permanently, followed by nearly 24,000 restaurants. About 20% of all closures were retail, and 35% of them are permanent, Yelp said.
Small businesses face the additional challenge of having fewer resources than large businesses. Small businesses often carry enough cash to last a month and don’t have as much access to credit or loans as large businesses, Temple’s Shenker said.
Government grants and loans – like the federal paycheck protection program – have kept many small businesses afloat. Over five million PPP loans totaling over $ 521 billion have been approved as of July 31, according to the SBA. But once that money is used up, more small businesses will close, said Naroff, the Bucks County economist.
Not everyone has the same access to these vital loans, some advocates have said. Jennifer Rodriguez, president of the Hispanic Chamber of Commerce of Greater Philadelphia, has worked with companies that have struggled to apply for loans or grants and struggled to transition to virtual platforms. Rodriguez notes that low- and middle-income communities “are not turning to technology and online shopping at the same rate as better-off communities.” This means that their business models still have a strong need for in-person interaction.
She is also concerned about the impact of the pandemic on the local hospitality industry. “The Latino is the backbone of this industry, with both workers and owners,” she said. “For our community, it would be really, really devastating to see these businesses fail.”
National data from Yelp shows the biggest peaks in permanent closings were in March, followed by May and June. This suggests that businesses that were already struggling to shut down right away, and then businesses that tried to hang on, have been forced to shut down in recent months, Yelp said in a recent report.
Shelley Marine and Karen Cooke are affectionately known to their clients as the Shiva Ladies. They own In Time of Need, a two-person business that helps plan shivas, funerals, and memorial services in the Philadelphia area.
Marine said they were getting two or three calls a week before the pandemic, but their phones stopped ringing once restrictions were placed on large gatherings. They have been out of work since March 11.
In Time of Need has been in business since 2010, but Marine isn’t sure how long it can last. What bothers Marine the most is not the potential loss of the business, but the inability to help the community.
“This is the time when everyone needs it, and there is nothing we can do about it,” she said.