Risking it all: Small business, the backbone of the Va. economy, fights to survive COVID-19

None of this was Pat Elliott’s fault.

He’d done everything right: never late paying his taxes, his vendors, the bank or his $3,000-a-week payroll to employees of the Campus Drive-In, for generations a social hub in Gate City, near the Tennessee line. 

Then one day in March, the world flipped upside down because of a predatory virus unheard of three months earlier.

Most days, the Drive-In dining room teemed with patrons, many of them 60- to 80-something retirees who grew up on its burgers, shakes and fries. A home-sheltering order Gov. Ralph Northam imposed to slow the coronavirus spread closed the dining room and relegated Elliott to curbside, carry-out and home-delivery sales.

“We never did delivery before, but you do what you have to do to turn a dollar,” said Elliott, who sank his law-enforcement retirement into buying the beloved Gate City landmark that opened in 1955. With revenue down by two-thirds to three-fourths, he figures he can hold out at best another 40 days.

Across Virginia, the story is the same for tens of thousands of restaurants, shops, salons, spas, gyms, theaters, transportation services, malls — many at risk of disappearing because of the COVID-19 pandemic.

For Elliott and other small entrepreneurs who risk everything, the stakes could not be higher – the stuff of cold sweats and sleepless nights.

It’s important to society as a whole, however, that small businesses emerge from an economic catastrophe that, in just six weeks, has left more than 30 million Americans (500,000 in Virginia alone) jobless – a 15 percent national unemployment rate that is the highest since the Great Depression.

In Virginia, small businesses, a definition that could mean just a handful of employees or hundreds, accounts for half of all employment and 96 percent of all business entities, said Fletcher Mangum, a Richmond-based economist.

While lockdowns in Virginia and other states have waylaid businesses of all sizes in most every sector, they’ve hit small business particularly hard. Mangum said that food service and beverage businesses constitute 58 percent of Virginia businesses with 50 employees or fewer.

The longer lockdowns last, the harder it is for small businesses to rebound, said Mangum, who has been appointed to Virginia’s Joint Advisory Board of Economists by Northam and his predecessors, Govs. Bob McDonnell and Terry McAuliffe.

“Small businesses are notoriously undercapitalized so they can’t weather this as well as larger companies,” he said. They also lack platoons of lawyers and lobbyists who help big companies pick off federal aid Congress appropriated for small businesses.

Owner-operator entrepreneurs, however, are far more agile and innovative, driven by a fierce survival instinct and a singular faith in their own hard work. Here are some of their stories:

Your Taxi Inc., based in Chesterfield, is lucky in a way. Owner Karen Barrett’s business has a loyal cadre of clients who don’t drive and rely on her service to get them to and from doctors’ appointments, dialysis and other health care needs.

“We’re considered an essential business because of that and it has to go on,” Barrett said. “Nobody’s getting out and going anywhere – not to the airport, not to the train station, not out on the town. So it’s hit us pretty hard. We’re down about 50 percent.”

At this rate, she projects, her business can survive 60 days, 90 if she’s lucky. She applied early on for a loan through the federal Paycheck Protection Program, but like many small businesses, she’s received nothing yet. Taking her cabs off the streets is not an option. Expensive mechanical problems pop up when cars sit too long. Handling restaurant food deliveries a la Grubhub isn’t workable because it requires additional insurance, a cost she’d never recoup.

“We don’t really have anyplace else to turn and we don’t have a lot of different options,” she said. “This has put a lot of difficulties ahead of us, but we’ve survived a lot worse.”

Shawn’s Smokehouse Barbecue was on a roll. What Shawn Moss started with one restaurant in Culpeper seven years ago developed a passionate following for its smoked brisket, pulled pork, pork ribs, chicken and his wife’s regionally renowned Oreo-crusted cheesecake. He since opened successful outlets in Warrenton and Fredericksburg and built a busy catering operation.

Suddenly reduced to carry-out, curbside and delivery, business at the three restaurants initially plunged by 75 percent and catering cratered completely, Moss said. Self-pity was not an option.

“There we were, coming out of winter and into spring when things really pick up in the barbecue business and then this happens,” Moss said. “At first, we sort of panicked – ‘What are we going to do?’ Through the grace of God, we decided to keep going and do the best we can under the guidelines we’re given.”

Unlike many small business owners, he was able to secure a PPP loan and keep 95 percent of his staff employed. Business at his three locations has rebounded to about half of its pre-lockdown levels, he said. But with springtime rites such as proms, graduation parties, weddings and other events now canceled, catering remains shuttered for the foreseeable future.

“Are we in dire straits? Absolutely. But I choose not to look at it like that,” Moss said.

McCormack’s built a reputation as an elite purveyor of brown liquors and cocktails in Richmond. Want a $360 pour of impossible-to-find 23-year-old Pappy Van Winkle bourbon? Check.

COVID-19 restrictions have cut to the bone, but namesake owner William “Mac” McCormack has kept all 11 of his employees on the payroll and is using the down time to renovate his Irish pub in Richmond’s Shockoe Bottom neighborhood and relocate his newest location within a suburban mall.

Business is about one-fifth of its pre-lockdown level, he said. From his location in Richmond’s Fan district, he’s doing curbside food and cocktail service as well as home delivery.

“I’ve been working in restaurants since I was 15,” said McCormack, now 52. “I’ve dealt with a major flood, with 9/11, with a pretty big fire. This sort of reminds me of 9/11 because it killed business everywhere, but it’s the first time that I don’t know exactly how to handle it.”

As tough as the lockdown has been, McCormack agrees that Northam’s bitter prescription is prudent long-term, saying Virginia is “kind of privileged to be the only state to have a doctor as governor.”

The Original Burger Bar is Bristol’s classic, old-time diner. Country music legend Hank Williams Sr. ate his last meal there on New Year’s Eve 1952. It opened in 1942 on Piedmont Avenue near its intersection with State Street, Bristol’s east-west thoroughfare bisected by the Virginia-Tennessee line.

That presents an obstacle that few Virginia businesses face: a competing restaurant in Tennessee 30 yards away reopened for dine-in business last week while The Burger Bar, subject to Virginia’s home-sheltering order, is limited to curbside and delivery.

“I’m doing less than a third of the business we normally do,” owner-operator Joe Deel said. “It dropped off this week because just a few yards away, people can go sit down, and that’s what people want – to sit down and eat with friends and family.”

He cut The Burger Bar staff from 13 to five, including himself and his wife who work there six days a week. (Closed on Sundays.) He’s been fortunate to have landed a PPP loan to help meet payroll and pay rent.  Bristol-area essential businesses have helped by placing sizeable lunch delivery orders for their employees.

Proximity to reopened competitors in Tennessee is a disadvantage Deel shares with Elliott in Gate City, 25 miles to the west. Last week, Elliott drove to neighboring Kingsport, Tennessee, and his heart sank when he saw customers dining inside McDonald’s, Waffle House and Texas Roadhouse.

Neither Deel nor Elliott understands why their mostly rural corner of Virginia, with few confirmed coronavirus cases, labors under the same strictures as high-outbreak areas. (As of Friday, Bristol, Virginia, had one confirmed case and surrounding Washington County reported 38, while Scott County reported just seven.)

“We’re not Richmond. We’re not Roanoke. Maybe we should do this region by region or even town by town,” Deel said. “I think Governor Northam should know that there are going to be a lot of empty buildings in downtown Bristol (Virginia) if you don’t ease off on small businesses.”