Covid-19 and the Health of Small Businesses

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Francis Ruiz, owner or Relax-N-Lash Salon, applying lashes to clients.

By Elijah De Castro, CONTRIBUTOR
Not long ago, Metropolitan Barbershop was a thriving establishment in San Francisco. It was a place of comradery and community as customers trekked in and out looking to get a haircut, a shave, a beard trim and to share in conversations ranging anywhere from sports to everyday life.
These days, the place looks like a ghost town minus the tumbleweeds. The barber chairs have not seen much use as the Covid-19 pandemic shut down the city, the Bay Area, and the entire state of California. Previously, each barber had a consistent two customers per hour ranging from thirteen to sixteen haircuts in a day. As time went by, business slowed to cutting only four or five to two or three customers.
In normal times, the phone would ring non stop as customers checked in looking for a cancellation or a rarely available appointment, but now most phone calls consist of cancellations. Luis Gomez, the barbershop owner, has seen customers taper off as most of the public has become increasingly wary of contact with other people. Even weeks before the shelter-in-place order, Gomez noticed that the fear of this pandemic has cut into his business. Now, more than a few months in, not only does Gomez fear for his business but also for the wellbeing of his barbers who are unable to work.
“We’ll have to just make it work,” said Gomez. “I’ve never experienced this but hopefully it’s not for too long. Once it’s over everyone will need a haircut and we will be ready.”
On March 16, officials ordered residents to shelter in place. These Northern California counties include San Francisco, Santa Clara, San Mateo, Marin, Contra Costa, and Alameda Counties. The counties that ordered residents to shelter in place have a combined population of roughly 7 million.
While people are still allowed to leave their house for essential activities such as grocery shopping and bringing food to elderly family members, Gomez and some of the barbers have been going to the shop one or two days per week to scrounge as much business as they can. All while taking the most necessary safety precautions such as cutting while wearing gloves and masks and sanitizing all tools and even the chair after every haircut which is normal practice aside from a pandemic. Walk-ins are no longer accepted and no one is allowed in the waiting area.
Francis Ruiz, who owns Relax-n-Lash salon in Concord has also seen a decline in business as the shelter in place order was put in place. While the order keeps the greater good in mind, the fate in small businesses such as hers and Gomez’s barbershop is left unknown.
“I’ll just have to adapt,” said Ruiz. “We’ll all just have to figure it out and I really hope it doesn’t last too long because I need to get back to work.”
The inherent problem with the shelter in place order is that it does not take the well being of small businesses into account. Although nonessential businesses have been ordered to shut down, the rent is still due. The reality for businesses such as a barbershop or a lash salon is, if there are no customers there is no money for rent, as is the case for many who are self-employed or gig workers. Businesses who rely on human interaction are in danger due to this pandemic.
The Labor Department has reported that 4.4 million people filed initial unemployment claims last week, bringing the five-week total to more than 26 million on May 7.
While other states such as Georgia have considered easing restrictions, California Governor Gavin Newsom has the intention of keeping the shelter in place restrictions until the threat to public health subsides and testing and other safeguards are implemented.
The challenge has been and continues to be, that asymptomatic people can feel completely fine while unknowingly endangering others. According to the U.S National Library of Medicine, results have shown that sheltering in place has been proven to be a very effective method of slowing the spread of viruses. The shelter-in-place order has been extended several times and a definite date has not been given.

Dany Fagundez, barber at Metropolitan Barbershop, shaving a customer’s neck.

Furthermore, into the shut down of nonessential businesses, the beauty industry is ready to open their doors. California barbershops and salons previously were already given strict regulations to abide by. Being an industry that deals directly with the public, health regulations have been strictly put in place by the California Board of Barbering and Cosmetology. California state board agents can drop into business for regulation checks at any given time similar to a health inspection common at restaurants. Sanitation regulations are very strict and fines for not abiding can become very costly. Those in the beauty industry can furthermore adapt to newer regulations if that means their doors can legally be open once again. Although the beauty industry is ready to adapt to more health regulations, barbershops and salons are currently on the third tier of Governor Newsom’s plan to slowly ease shelter in place restrictions.
Stage 1 of the plan consists of the public sheltering in place unless they are a member of the essential workforce. Stage 2 reopens lower risk workplaces, including things such as non-essential manufacturing, schools, childcare facilities, and retail businesses for curbside pick-up. Stage 3 reopens higher risk workplaces, which require close proximity to other people, including barbershops, salons, gyms, religious services, etc.. Stage 4 ends the shelter in place order and reopens convention centers and sporting events with live audiences.
“Business owners will have to show resilience in these unprecedented times,” said Greg Warner, an independent financial advisor. “This has truly never happened in our lifetimes, so entrepreneurs must utilize every aspect of financial planning and guidance available.”
Currently, there are offers to help small businesses survive through this pandemic. According to the U.S Small Business Association (SBA), Coronavirus relief funding options for small businesses include a paycheck protection program, load advance, expedited bridge loans, and debt relief. On Friday, March 27, 2020, the President signed into law the CARES Act, which contains $376 billion in relief for American workers and small businesses. In addition to traditional SBA funding programs, the CARES Act established the new temporary programs stated above to address the COVID-19 outbreak.
The paycheck protection program provides loan forgiveness for retaining employees by temporarily expanding a previously set SBA program. A loan advance can provide up to $10,000 of economic relief to businesses experiencing temporary difficulties brought on by Covid-19. SBA express bridge loans enable small businesses who currently have a business relationship with an SBA express lender to access up to $25,000 in an expedited manner. Finally, the SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.
2020 has not been an easy year for many California businesses. Even before the shelter-in-place order, small business owners and independent contractors were struggling to adjust to Assembly Bill 5, which went into effect on Jan. 1.
AB 5 sets a new standard for hiring independent contractors and requires many workers to be reclassified as employees covered by minimum wage, overtime, workers’ compensation, unemployment, and disability insurance.
Commonly referred to as “Uber Law,” Assembly Bill 5 changed the way independent contractor work was classified. It was signed by Gavin Newsom. Previously companies that classified workers as independent contractors did so as a way to avoid offering costly benefits like health care, paid vacation and sick time, and retirement plans. The costs associated with an employee are generally more than those of hiring an independent contractor.
For the individual worker, being an independent contractor meant that your schedule was up to the individual. The flexibility in independent contracting was a major selling point for people who decided to partake in such work.
“I can pretty much work whenever I want on top of my regular day job,” said Tony Horcyc, a door dash deliverer. “The possibility to work at any time is perfect for people like me.”
Horcycle, a real estate agent, was able to do extra independent contract work to make ends meet. Not being held to a concrete schedule allows him to work freely with his extra time to and serves as a financial cushion when real estate is slow.
Classifying a worker as an employee or an independent contractor has a significant effect on the cost of employing a person. For a small business owner, it is cheaper to hire a contractor.
While Assembly Bill 5 is widely advertised to be beneficial for independent contractors, by giving them benefits and legal protection, many people do not want this because of the changes to taxation and work flexibility.
2020 has proven itself a difficult year specifically for small business owners in terms of changing tax classifications and facing a pandemic deeming businesses essential versus non-essential. The Coronavirus pandemic has shown us how much small business relies on human interaction and how easily our way of life can be deconstructed. Whether or not the majority of small businesses in California will survive this trying an unprecedented time is undecided, but small businesses will have to show much resilience to survive Covid-19. One thing is for sure, the beauty industry is ready to adapt to new regulations if need be if that’s what it takes to return to work.