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| Small Businesses Repurpose Lessons From the 2008 Recession | |
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| This article is part of Owning the Future, a series on how small businesses across the country are coping with the coronavirus pandemic. | This article is part of Owning the Future, a series on how small businesses across the country are coping with the coronavirus pandemic. |
| In late 2008, as unemployment soared and consumer spending plummeted, the restaurateur Karl Franz Williams opened a stylish, low-lit cocktail lounge on a gentrifying stretch of Frederick Douglass Boulevard in lower Harlem. | In late 2008, as unemployment soared and consumer spending plummeted, the restaurateur Karl Franz Williams opened a stylish, low-lit cocktail lounge on a gentrifying stretch of Frederick Douglass Boulevard in lower Harlem. |
| His timing, at the beginning of the global financial crisis, could not have been more inauspicious. With its pricey cocktails and global small-bites menu, 67 Orange Street was an ambitious prospect even during the most ideal economic conditions. And the Great Recession — in which nearly nine million jobs were lost from February 2008 to February 2010 — was hardly ideal. | His timing, at the beginning of the global financial crisis, could not have been more inauspicious. With its pricey cocktails and global small-bites menu, 67 Orange Street was an ambitious prospect even during the most ideal economic conditions. And the Great Recession — in which nearly nine million jobs were lost from February 2008 to February 2010 — was hardly ideal. |
| “We knew we could not survive this period on our own, that we would have to collaborate with other Harlem businesses and promote the restaurant as part of a larger community effort,” Mr. Williams recalled. The result was Harlem Park to Park, a nonprofit organization Mr. Williams helped establish in 2009 to boost economic development in Harlem and support its independent businesses during the recession and beyond. | “We knew we could not survive this period on our own, that we would have to collaborate with other Harlem businesses and promote the restaurant as part of a larger community effort,” Mr. Williams recalled. The result was Harlem Park to Park, a nonprofit organization Mr. Williams helped establish in 2009 to boost economic development in Harlem and support its independent businesses during the recession and beyond. |
| Over a decade later, in the midst of the Covid-19 pandemic, Mr. Williams says the need for Harlem small businesses to collaborate has never been greater. So rather than meet quarterly, Mr. Williams said, Harlem Park to Park is now gathering biweekly to help local businesses navigate pandemic-related issues like registering for the Paycheck Protection Program and qualifying for minority-focused relief initiatives like the TruFund. | Over a decade later, in the midst of the Covid-19 pandemic, Mr. Williams says the need for Harlem small businesses to collaborate has never been greater. So rather than meet quarterly, Mr. Williams said, Harlem Park to Park is now gathering biweekly to help local businesses navigate pandemic-related issues like registering for the Paycheck Protection Program and qualifying for minority-focused relief initiatives like the TruFund. |
| Since the 2008 downturn, Mr. Williams has also become a board member of the NYC Hospitality Alliance, where he’s “been able to scale up this spirit of collaboration,” and advocate for Harlem on a citywide level during the coronavirus crisis. “So far we’ve negotiated a cap on restaurant delivery fees and secured (commercial) rent guarantees so business owners won’t lose their shirts if they walk away from leases.” | Since the 2008 downturn, Mr. Williams has also become a board member of the NYC Hospitality Alliance, where he’s “been able to scale up this spirit of collaboration,” and advocate for Harlem on a citywide level during the coronavirus crisis. “So far we’ve negotiated a cap on restaurant delivery fees and secured (commercial) rent guarantees so business owners won’t lose their shirts if they walk away from leases.” |
| Joint efforts like Harlem Park to Park are among the many lessons small-business owners are repurposing from the last economic slowdown to survive in 2020. The need for such lessons is clear: According to a recent survey by the National Federation of Independent Business (N.F.I.B.), 92 percent of small businesses have been hurt by the pandemic, while half report that they cannot continue to operate under current conditions for more than two months. | Joint efforts like Harlem Park to Park are among the many lessons small-business owners are repurposing from the last economic slowdown to survive in 2020. The need for such lessons is clear: According to a recent survey by the National Federation of Independent Business (N.F.I.B.), 92 percent of small businesses have been hurt by the pandemic, while half report that they cannot continue to operate under current conditions for more than two months. |
| “Small businesses simply have far fewer cash resources and liquid assets on hand compared to large corporations,” says Michael Chow, lead data analyst and economist at the N.F.I.B. “While every recession is different, as in 2008, small businesses today must focus on adaptability and prepare for timid consumers.” | “Small businesses simply have far fewer cash resources and liquid assets on hand compared to large corporations,” says Michael Chow, lead data analyst and economist at the N.F.I.B. “While every recession is different, as in 2008, small businesses today must focus on adaptability and prepare for timid consumers.” |
| As Mr. Chow suggests, flexibility — both in product lines and operational structure — will help vulnerable businesses survive. The key, owners and analysts say, is listening to customers and anticipating their needs, both today and after the pandemic. | As Mr. Chow suggests, flexibility — both in product lines and operational structure — will help vulnerable businesses survive. The key, owners and analysts say, is listening to customers and anticipating their needs, both today and after the pandemic. |
| Pam Weekes and Connie McDonald, the co-founders of Levain Bakery in New York, for instance, said they were able to manage costs in 2008 by keeping their product offerings to a minimum. That never changed, and their coveted cookies and fresh-baked breads remain the core of their business. “Our motto was always ‘do less and do it better’ — we never gave in to trends like cupcakes or Cronuts,” explained Andy Taylor, Levain’s chief executive. “So during this crisis we could easily react to our customers’ shifting behaviors.” | Pam Weekes and Connie McDonald, the co-founders of Levain Bakery in New York, for instance, said they were able to manage costs in 2008 by keeping their product offerings to a minimum. That never changed, and their coveted cookies and fresh-baked breads remain the core of their business. “Our motto was always ‘do less and do it better’ — we never gave in to trends like cupcakes or Cronuts,” explained Andy Taylor, Levain’s chief executive. “So during this crisis we could easily react to our customers’ shifting behaviors.” |
| Mr. Taylor said that from March 30 to May 30, demand for Levain breads, for example, grew by 150 percent as customers avoided major supermarkets out of coronavirus fears. Having had so few products to manage, he added, the company was able to easily quadruple its bread production in just a matter of days. The giftable nature of Levain cookies also prompted the company to invest early in a robust e-commerce business, which has increased by 200 percent during the pandemic. | Mr. Taylor said that from March 30 to May 30, demand for Levain breads, for example, grew by 150 percent as customers avoided major supermarkets out of coronavirus fears. Having had so few products to manage, he added, the company was able to easily quadruple its bread production in just a matter of days. The giftable nature of Levain cookies also prompted the company to invest early in a robust e-commerce business, which has increased by 200 percent during the pandemic. |
| Bronson van Wyck, a Manhattan-based event planner, was able to keep his business Van Wyck & Van Wyck afloat during the last recession by shifting away from mostly private parties to corporate events for clients like Target, Amazon and Samsung. “What we hadn’t considered back then, however, was the sentiment around what we do,” said Mr. van Wyck, who founded the company with his mother in 1999. “I thought our business would improve quickly once the markets stabilized, but it took two years for things to go back to normal.” | Bronson van Wyck, a Manhattan-based event planner, was able to keep his business Van Wyck & Van Wyck afloat during the last recession by shifting away from mostly private parties to corporate events for clients like Target, Amazon and Samsung. “What we hadn’t considered back then, however, was the sentiment around what we do,” said Mr. van Wyck, who founded the company with his mother in 1999. “I thought our business would improve quickly once the markets stabilized, but it took two years for things to go back to normal.” |
| Mr. van Wyck has learned the sentiment lesson and is assuming that his business will suffer long after lockdowns end. | Mr. van Wyck has learned the sentiment lesson and is assuming that his business will suffer long after lockdowns end. |
| “Unlike in 2008, we now understand that even when people are able to splash out on events again, there is no guarantee they will actually want to,” said Mr. van Wyck, whose company is staying busy by producing virtual events as well as a line of celebratory cocktail mixers. “We are structuring our business as if there will be no cash flow until December, while simultaneously preparing for the consequences of a second wave.” | “Unlike in 2008, we now understand that even when people are able to splash out on events again, there is no guarantee they will actually want to,” said Mr. van Wyck, whose company is staying busy by producing virtual events as well as a line of celebratory cocktail mixers. “We are structuring our business as if there will be no cash flow until December, while simultaneously preparing for the consequences of a second wave.” |
| Along with flexibility, technology — as well as strong lines of credit — will also help determine which companies survive after the coronavirus. “Technology is essential for creating stopgap measures until companies gradually reopen,” said Augustine Faucher, chief economist at the PNC Financial Services Group. “Companies need to give their customers a reason to come back to them.” | Along with flexibility, technology — as well as strong lines of credit — will also help determine which companies survive after the coronavirus. “Technology is essential for creating stopgap measures until companies gradually reopen,” said Augustine Faucher, chief economist at the PNC Financial Services Group. “Companies need to give their customers a reason to come back to them.” |
| Like Levain Bakery, and its early e-commerce focus, Singapore-based Aqua Expeditions’ initial bet on technology helped steady operations during both the Great Recession and today. Rather than build costly reservations and management platforms when it launched in 2008, “we outsourced most of these technology needs to cloud-based services,” said Francesco Galli Zugaro, founder and chief executive of Aqua, which operates small-scale luxury cruises in Peru, Cambodia and Indonesia. | Like Levain Bakery, and its early e-commerce focus, Singapore-based Aqua Expeditions’ initial bet on technology helped steady operations during both the Great Recession and today. Rather than build costly reservations and management platforms when it launched in 2008, “we outsourced most of these technology needs to cloud-based services,” said Francesco Galli Zugaro, founder and chief executive of Aqua, which operates small-scale luxury cruises in Peru, Cambodia and Indonesia. |
| Updated June 24, 2020 | Updated June 24, 2020 |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| Opting for cloud services was an unusual move back then. “Smaller-sized companies typically created their own systems, but we realized we could benefit from all that technological R.&D. as it came online,” Mr. Galli Zugaro said. “Today, cloud services are allowing our entire business to run remotely with automated mechanisms in place to clearly measure company performance and employee productivity.” | Opting for cloud services was an unusual move back then. “Smaller-sized companies typically created their own systems, but we realized we could benefit from all that technological R.&D. as it came online,” Mr. Galli Zugaro said. “Today, cloud services are allowing our entire business to run remotely with automated mechanisms in place to clearly measure company performance and employee productivity.” |
| Of course, for most small businesses, managing — and, particularly, cutting — costs ultimately proves to be the most effective recession survival strategies. Leon Avigad, founder and co-owner of the Israeli boutique hotel chain Brown Hotels Ltd., said that when his firm started in 2008, costly staffing setups like numerous assistants and unnecessary deputies were simply not an option. | Of course, for most small businesses, managing — and, particularly, cutting — costs ultimately proves to be the most effective recession survival strategies. Leon Avigad, founder and co-owner of the Israeli boutique hotel chain Brown Hotels Ltd., said that when his firm started in 2008, costly staffing setups like numerous assistants and unnecessary deputies were simply not an option. |
| “We’ve never had ‘No. 2s’ or multiple managers at the company,” Mr. Avigad said. “Israel is the kind of place where every two years there’s a political crisis or mini-war, so beyond recessions or corona, businesses here must retain the ability to shrink or grow rapidly.” | “We’ve never had ‘No. 2s’ or multiple managers at the company,” Mr. Avigad said. “Israel is the kind of place where every two years there’s a political crisis or mini-war, so beyond recessions or corona, businesses here must retain the ability to shrink or grow rapidly.” |
| Still, Mr. Avigad added that this did not necessarily mean simply hiring and firing at will. “Costs must be contained as cleverly as possible; for us this can mean combining jobs — perhaps having the front-desk manager also become a reservations manager.” | Still, Mr. Avigad added that this did not necessarily mean simply hiring and firing at will. “Costs must be contained as cleverly as possible; for us this can mean combining jobs — perhaps having the front-desk manager also become a reservations manager.” |
| For Vivek Mathur, creative director and president of Indika Entertainment Advertising in Manhattan, cost management meant “replacing a culture of excess with a culture of thrift,” during the last downturn — a move which is helping to keep his company lean today. | For Vivek Mathur, creative director and president of Indika Entertainment Advertising in Manhattan, cost management meant “replacing a culture of excess with a culture of thrift,” during the last downturn — a move which is helping to keep his company lean today. |
| Indika closed its Los Angeles office in late 2008, “because it involved not just the office itself, but also the cost of the travel, the cars, the digital connections between the offices in a pre-broadband world,” said Mr. Mathur, whose firm develops advertising and strategic marketing campaigns for movie studios, television channels and digital platforms. Indika’s New York office was also downsized, and unnecessary recurring expenses — multiple phone lines, special stationery, water delivery services — were eliminated. | Indika closed its Los Angeles office in late 2008, “because it involved not just the office itself, but also the cost of the travel, the cars, the digital connections between the offices in a pre-broadband world,” said Mr. Mathur, whose firm develops advertising and strategic marketing campaigns for movie studios, television channels and digital platforms. Indika’s New York office was also downsized, and unnecessary recurring expenses — multiple phone lines, special stationery, water delivery services — were eliminated. |
| “As the economy recovered, some of our old habits did return, but we were better prepared for this crisis because we had already significantly lowered nonessential expenses,” during the last recession, Mr. Mathur said. | “As the economy recovered, some of our old habits did return, but we were better prepared for this crisis because we had already significantly lowered nonessential expenses,” during the last recession, Mr. Mathur said. |
| Back in Harlem, 67 Orange Street is still open, with take-out and delivery menus, along with take-home cocktail kits for purchase. As for Mr. Williams, he is back where he started — behind his bar preparing drinks and keeping a close eye on operations. | Back in Harlem, 67 Orange Street is still open, with take-out and delivery menus, along with take-home cocktail kits for purchase. As for Mr. Williams, he is back where he started — behind his bar preparing drinks and keeping a close eye on operations. |
| “I worked the bar half of the time during those early lean years,” said Mr. Williams. “Now I’m there two days a week; not only does it reduce overhead, but I’m extremely close to what is happening with the business so I can manage costs and immediately figure out the best ways to pivot.” | “I worked the bar half of the time during those early lean years,” said Mr. Williams. “Now I’m there two days a week; not only does it reduce overhead, but I’m extremely close to what is happening with the business so I can manage costs and immediately figure out the best ways to pivot.” |