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How Small Businesses Are Faring Entering Year Two of the Pandemic

2021-02-26

To start the episode, Joe Wall of Goldman Sachs’ Office of Government Affairs gives an overview of survey results from nearly 1,300 Goldman Sachs Small Businesses participants who answered questions about PPP funding, access to capital, affordable healthcare, the personal toll of COVID-19, and more. Then, two graduates of the Goldman Sachs 10,000 Small Businesses program, Brent Reaves of Smokey John’s Bar-B-Que in Texas and JoEllen Hockenbrough of Providence Power Yoga in Rhode Island, share their personal stories about leading a business through a pandemic and how they’re staying resilient and optimistic looking toward the future. 

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is exchanges of Goldman Sachs. We discussed Bob and strictly shaping markets Industries in the global economy, objects, seaward, global health, the communication to the firm today talk about how small businesses in the Eu S are faring. Now there were headed into your two of the pandemic. God forbid, we'll start episode. Hearing from your wallet works with me. Her Goldman Sachs in the Office of Government Affairs Jos can give us an overview of a survey recently conducted of nearly thirteen hundred Goldman Sachs Small business participants are entrepreneurs. They answered questions about p PETE, funding, access to capital, affordable health care and the personal toll, of covert nineteen and much much more then, will hear directly from small businesses themselves, chuck about how those names are playing out to them personally were joined by bread, beads of
smokey Johns barbecue in Texas Enjoy and Hockin brow of Providence power. Yoga both Brent enjoy Eleanor Graduates of Goldman Sachs. Ten thousand small businesses problem Joe Brandon. well and welcome to the programme. Thank you. The railways are right before we to the entrepreneurs. Joe talk a little bit about the serve it I just mentioned. This is not the first we ve done, but the latest worried the entrepreneurs will run. These small businesses have saved by the ongoing impact of the pandemic on their businesses and what they need to keep alive it's all right now. Thank you.
This is actually the seventh survey we ve done dating back to last march, so we ve been sort of doing tracking. You know every sixty weeks or so to keep an eye on the small businesses and also measure you know the various relief programmes that have been put in place. So this latest survey, which took place last Monday and Tuesday, took a look at the second PPP line, which, of course, Congress passed back in December just before the holidays and on the second ppp along, we found that two thirds of small businesses qualify for a second loan of those who qualify. Eighty three percent have applied for a second ppp lawn suggests. Almost everyone about half fifty four per cent of those who have applied, have been approved and received funding, and then it comes to sort of assessing the impact of the second won't already and pretty incredible number. Eighty eight percent say the second ppp alone has been absolutely vital or very important to helping their businesses survive. Fifty
five percent say they been able to rehire or hire new employees as a result of the second loan. However, you know what we do see in our data is that, while the second PPP loan has no doubt been incredibly important in terms of keeping businesses, you know on sustainable path fifty seven percent of small businesses who have taken a second loan. Do you say did they will run out of funding in April or may so yeah two thirds around of funding in April or May and the worrisome data point, I think, is that only eleven percent of small businesses who have taken out a second ppp alone say they are very confident that they will be able to maintain payroll if Further. Government relief has provided, as an aside. Forty three percent of small businesses say they know think their operations are gonna, be back to normal until the fourth quarter of twenty twenty one or two
twenty two yourself for most of them right. They, they sort of see this as a long term recovery, not something that's gonna, not back in the spring. Our summer time- and I would say the other in a few areas that we dug into which I thought were pretty insightful data points at number, one- on access to capital, just thirty percent of small business owner say they are very confident they can access a line of credit or alone for their business from a financial institution in car for ass. Fifty four percent were confident prior to the pandemic on here care which I think is in our consistent issue that we see in our survey data about half of small businesses, fifty percent on the dot provide health insurance to their employees. Seventy nine percent of those who provide health insurance say their employer costs have increased in the past year and then the final You know two points I will touch on. As you know, we also have seen in our data just the personal toll of code that on small businesses and their employees, of forty
six percent, say they or their employees, have faced mental health related issues stemming from covert nineteen and fish percent of small business owners have dipped into their personal savings. Fifty eight percent have foregone pain themselves at some point during the pandemic and then the fight, no areas sunshine before we handed over to Brenton Jacqueline, is that our data going back to last April as true What has been an uneven recovery for black small business owners, so the most recent data that we found that in a black business owners when it comes to both applying for PPP but also receiving the loan funding, like the overall population, so seventy three percent of eligible black owners have applied for a second ppp loan. Paris into the overall number of eighty three percent. Forty two percent of black business owners who have applied for a second won't, have been approved and receive funding. That's twelve points lower than the overall population and on the axe
The capital is you only. Sixteen percent of black business owners are very confident they would be able to access a line of credit or alone for there from a financial institution that compares to thirty percent from the overall population, then. Finally, healthcare. Twenty percent of black business owners are able to provide their employees with health insurance coverage. That's twenty on points lower than the overall population, which is fifty percent of the total population, provides health insurance alright, Joe. Thank you for that comprehensive. Look at the data itself. but a little sobering in little scary, but now its turn to some voices of hope. We want here dry, they from Brent Joanne about how that data relates to their own personal experience, running a small business over the past year rat joy- and let's start by introducing new and talking a little bit about your businesses, bread, you run smoky Johns Barbie you I wish I were there now I haven't- had lunch, enjoy Ellen Power wind power. Yoga, that's another thing I could probably used today break your base, Texas, how
have been holding up over the past couple weeks with the power outages there and, more broadly, over the course, the pandemic he has otherwise we can have has been a relegates arrived. You know a lot of our team members have been affected by water, not having electricity. I mean, has been absolutely difficult for them to just just angel normal life right now we literally had to members that we have taken five, the Alan buckets and fill them with water for them to take home. So you know it's been little bit challenging. For that then come another experiencing covert members sit up inside man, that's it! It's pretty big here from the last year We all have experienced that as well, but you know what we ve seen some moments of hope, with people just rally behind small businesses in general and trying to release for small businesses, even through covert, which has been great frost
haven't, lay a lotta challenges, lot of pivoting, that's taken place and last year, really has made us grateful for so what's that we take for granted? I think that now let's make an us become more creative. Having creativity is truly our way out of this debate. Joy and you just wrapped up the ten thousand small business programme when the pandemic. Here, I'm sure it wasn't part of the curriculum getting ready for that. How are you adapted pivoted your business over the past year, given that the Euro is to use typically in person, intimate gather yes MA, thanks for inviting us on today prior to come. I had just finished up our cohorts here in Providence and was well on my way with my growth plan, with a fourth studio set you open and release them record revenue numbers whenever this all happened in closed in March, we
immediately closed the studio. We started offering some free yoga classes online, but you don't freeze, The classes is not a good business model. So what we were able to establish some of the item loan and the ppp that first round, we were able to stand up and has some tech support to help us get online and offer virtual classes, which is something we have always wanted to do. But we were busy serving people in the studio, so we didn't think that going virtual was what we needed to do at the time. So it's pushed us really to that point, and now we offer virtual classes any class that we offer in the studio were now able to stream by planning for a pandemic was not part of that. I remember the disaster planning in the ten thousand. Stop is this programme and contingency plans. Our biggest contingency plan was what would happen if we lost heat New England so appeared. it was not a contingency plan. Add it to the course elsewhere. Brain. You talked about the need for creativity, how'd, you switched your bed.
The smaller pivoted smokey Johns over the past year to deal with the change world live in it. Oh it's been a lot of changes. We really pride ourselves on connecting with the community really love when I guess come in, we try and give it the cheers fail. Will we almost no everybody's name? You know it, time hanging around everyone and higher kids at home in you just make people feel good. People feel scene when we shut down our dining room. We went to basically take out to go on being that really makes us really have a challenge on trading the experience and of what we try to give a ride, so we the yacht awaits. It still give same want love, and so, if we ve had a lot of train with our staff, they helped them be. Even were engaged in everyday over the phone in every way that we can have a touch bomb attack us, but we want to make the path I really gets killing
the early on part of Coca Mayo, the first three weeks, drop fifty five percent and revenue, we lost forty five thousand dollars and catering. It was immediately cancel one covered it I mean it was devastating suppressed. You know been blessed. The PPP long came to prefer that's really happen and then the other thing. My brother, I decided to get on Facebook instagram and we went live every night to just stay connected to our cost base, and then we made a decision to actually start delivery all around the matter, but all in the suburbs everywhere and my brother, and I would actually do some of the deliveries ourselves just to say hi to summer. I customers, we missed it. Ain't easy arrested. He got where the market was because they were all at home, so we just capable. don't be an at home and connected with them it being at home when people saw us fighting
so amazed to see how people rally behind you when they see you fight is like Wanna help I've People will start getting. family males in early packs thing just really really simple Since I was really an opportunity to build something very tough, but to see happen, community came together to help us stay afloat, and I was just there was a beautiful sight to see so subtle. But about funding join you mention it wasn't exactly in your business plan to offer free classes are to sustain a business that way give loans banned the kind of liquidity challenges you faced added you deal with those on the course of the year, the we ve learned came in extremely handy for us, it was a bit challenging in the beginning because we were not in sat to reopen. So we had the money in here.
search for staffing, but yet our state was not able to reopen for probably about three months. We were closed from because March 15th and we didn't open till the first week of July. So we were kind of push to use that money as quickly as we could, but we got a little creative with it. I was able to bring back some staff that could work trying to get our new studio ready to open. Like I said we were in the midst of opening a new studio, so we were able to bring staff in and can It appears tat, even though we didn't quite happy hours for everyone. We were running a start up and I was also able to use the money to hire a video help that someone to help us get our online presents up. My friend said he to keeping the community together. Small business is, is huge. You close your doors and you dont know that you're going to u dont know when you're gonna reopen you dont know who's gonna come back when you do reopen so so much a part of what we did in those early months, which is trying desperately to keep our communities open, so that when we do open our doors fully behind
the clients there and it's not starting over from the beginning. So we used the PPP down for that work, staff as many people as we could, even though we weren't really open and then also looking for some tackle together moving into the new direction. We continue to do that. We reopen the second week into my than we had another shut down in October and November Einstein November, it she December, we were shut down for another three weeks when we applied for the second round, which we just got. That's gonna, be awful to curious through until You mentioned this statistic until April. I think, if we're lucky will be nay, that money will last so bright. Let me talk about losing gate rang losing in person dining, as we now call
in person died. He hastened search for coded fairies, talk about how you use the PPP money or or your how you managed. You know the business model through the pass yourself. Doesn't it was great for Us being an essential business and earlier on. We didn't know that meant what they said, essential for businesses Well, we didn't know that meant restaurant Regan Red is not yet, as about was a whole learn. Experience so funny. Now the sea We now understand now that we didn't. When all is our first started at me, we were really concerned. I got you know, are we gonna be open enough, and so once we realised that we were in essential business, we pretty much kept our staff on hand. we were able to start providing the Tom Hours, just keep and everybody afloat and it was great. Can it took us through all of the summer for months?
and then again China would change for us. What kind of the answer instead happen over the summer, but the whole George Floor incident that really some awareness to blackmail? this is so bad rallied from the community really from the country, to begin those poor black on businesses. Really, was a saving grace for our company, because people's of all areas started the patron this- and it really was amazes amazing see how the country pull together and we really benefit is that people are really is what enables flow. So it all men. For years now, when we talk about the workforce, she talked about resilience and seen my kind of an abstract concept at some level. But I think really, the questions around. We saw the survey ram mental health and much more center now for all businesses of all people, her
a little about what it was like to be a small business owner and how your employees been coping. Let's start with joy on right, They got to this first days in March, will never be closed and, on the incredible sadness of closing your doors. Anyone you lock up and you really I'm quite sure, if you're going to win, you're gonna come back or if you're going to come out and its It's been it's not gonna break. Certainly, since last march, I think I've worked harder this past year. Then then I did probably the first. She were open and spin depressing some days ass. The days you really pat yourself on the back- and you say: oh my god, I can't believe rashly doing this and we ve arrived and were still here, but its sides. Sundays is just really devastating to think, like all the work that you put into it and then did the sense of loss
I had to close and you studios be as a result of the shut down, and that was sad that was challenging because they were might first studios that I opened. So I think that on business owners, the toll is pretty heavy duty and I do believe every small businesses that I talk to you here in the Providence here that unconnected with their exhausted, absolutely exhausted and you care about your staff, your staff and you're on family members and when you you're exhausted, but then you also see your staff. Struggling parents who are trying to work from home and school, their children and many of our staff are women, and several of them have had to leave full time jobs in order to stay home. Their children and the whole school and its sound the toilets taken on our staff in business owners. I think as pre happy because we care you can't help when you're a small business owner to not think of every single person that works for you as a family member and those
those days were hard. The day that I had the day that I had to call and tell three. My manager is that they needed one on a planet, because I couldn't for it to pay them. I was with devastating. That was a hard day. I mean Dick Brazil. Cars have a lot of resources Brent when you're dealing with somebody's similar issues. How do you think about What you can afford to provide. the families that work for you and the people who work for you. When there confronting some of the challenges, joy and mention its difficult, I think ass his business owners as entrepreneurs. We must be cut from a different clause which we must be probably the craziest people in the world, as well as the text the burden of responsibility Yedo. Does they well, you know what I think I'm going go ahead, take this risk and you know what it's ok I'll take off
the responsibility and the burden as well? I think all that and, and and and hope, that I've mega competition really gotta be the crazy thing in the world, but I think the thing about the death of this year. People is motivation in the morning. The analysis you want to provide a service. You want to buy something then You think he's gonna make a deal with a yoke studio. You know I've been people making a different every day in someone's eyes, and that that's why we get up in the morning then am and it starts with our team members. So when they are heard, or when there are struggling it hurts me. I get hurt, be ended and too have to lay some one. I mean this is like a piece of you is going away, especially in our very valuable part of the team I made you can figure out what ever you can do. Keep people on here
seen in our needs and that's what our heart is, I'm sure she can attest about a menu it ways on you like it's hard to sleep at night at times in its are dead, and strategy eyes, because you know that decision, then you make could affect several families. Are you know what it's like that battle? certain of walking with that burden. Is definitely in a way on you, and so, but that also for me turns into motivation and that's where the creativity cows, because I think to myself, like my dad, was a big Now he believed in his team, and he would give it all for everyone to stay on the team and that's the heart that I now have and no matter what were, figure out how to keep her, but so it had. But a deadly takes to tell lies.
so brain you merchant, in a lot of the great tragedy of George Floyd and Brown, tell and others that there's been a new spotlight million black on businesses and has been a little positive momentum that comes out of that awful those awful events last year. Talk about how you you know that as well. Meant you personally and tells the story of Shoe box lunches reaches the really cool thing that you done Yeah? You know it, so it's meant a lot to us just to see how people who have supported us. Specifically personally, we ve been whereby people all around the community will hold incident with George, what happened? It really shine a light dark places for our country but the beauty in the hope was the response and the reaction that, people had and they started to want to give back to different communities which was made it all happened. After that happen. You know week, there was no it like anything, they things color where,
often died down a little bit, and so you know for black history month. My brother not decided hey, we're gonna do is about box and we did last year in them, so they should work basically in the south by people travel A number of restaurants depicted no longer go to get at nice pair of shoes and some thousand with a really nice. She wants it, so they would take that box pack, their lunch at use it to travel across the country. And so they knew it until the restaurants of they had packed around through well what we That was, let's do that and create that same experience. We actually got true shoe boxes and weed the lunches- and we saw those launches- and it was last year as well this year. We decide to take it up a notch. There was a lot of support, like on business and what we thought about was part with other opposite, other chick ASP be graduates that we have partnered with and so we have created a bygone offspring
Schubert Sludge, because back then we couldn't own restaurants and but our own in restaurants, and so we wanted to show evolution of what has happened with the african American speedily and highlight that British Box, much of our partner with carbon hydrogen Mama wars popcorn and at their all grand ten days bay and so has been really cool, to see the impact of its action well. I've ordered mine and I'm looking for getting it. But I am also looking forward to telling numb telling judge the story behind the shoe box, because I can see resonating in some ways there that other stories nest. So we haven't. So it's been super challenging year for both EU, but talk about one thing, you're optimistic about. As you look to the future, I will start with joy Ellen. We are so looking forward to having people in our studios again the thought
on the hugging people that come in our door in a brand talked about, be like you, you know your clients names. You know their family members, you ask how they are. You give him a hug and there's. We cannot wait for that to happen. So I am optimistic about Our ability to really make this. This change a mere diet. I do think it in some aspects of the virtual platform is going to be here to stay for us and what is the price me? So much is our ability to have shifted and to be able to take yoga teachers who are so accustomed to teaching people in class too
not only teach virtually but right now because of our restrictions there not only teaching virtually but their teaching virtually with a mask on and their teaching too. You know ten people in a room that typically holds fifty five. So I am optimistic that we are an incredibly resilient group of people, not just in my studio but other small business owners. They ran in the community like the ten thousand small business community. I've seen such an outcome, carrying out support for each other. the essential resiliency just to be able to say no to go forward. I think we're all really looking forward to opening up our businesses again and welcoming people in our doors, maybe a while, before its fifty people and a real but will be really grateful and we can have twenty or twenty five, but I am looking forward to the summer and hoping that we will be able to have people in and just so encouraged by my ability. Marston stability, another small business on its ability to pay
and redirect and be resilient great break. What do we do We look forward to this year. Yet. I am really looking forward to the events. No, I just love they cater to seek out the best is online his great and that's wonderful. In an earlier but is are you know where we were used to it now we're didn beyond the glitches enough for those different things, but you know it doesn't glitch humans when we walk contact with each other and it's just a beautiful, sick feeling, tat just papers looking someone's eyes see there. Smile he now I miss smile You know I've amiss just give it. People been were I hate has again what I you know. I miss that at the beauty of our food and need our wine, so we do barbecue and we do so food beauty of solving it makes ships I'll answer
rob the style is just a disgrace, so excited about bottom excitement. You know were heavily Bob an estate bear take those between the huge legs and I'm just really optimistic that this year will be able to at least the people's social. This seen in areas with a vacant actually take the basque dolphin taking big bites. Leg, that's disturbed, Rob I'm excited about I'm ready for you know. I can't wait. See. I can't wait to see aisles Walking around again. That's that's. The big big public boards are bred, meter, Thank you so much for giving us law rejecting war optimism in thanks for joining us today, joy and bread and job anti Semites. Thank you He ravenous. That includes this episode
James Goldman Sachs. Thank you very much for listening and if your joy, the show you hope to subscribe, an apple podcast, liberating comment. This podcast was recorded on February twenty seconds in the year two thousand and twenty one. Thanks for listening all price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced in whole or in part the information contained in this package, does not constitute research or recommendation from any Goldman Sachs Entity to the listener. Neither Goldman Sachs
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Transcript generated on 2021-07-01.