How long can Sacramento businesses survive a coronavirus shutdown? Here’s what they say

Sheri Brunquell, who owns a boutique and events space in Roseville, went from eking out a small profit to losing all her income.

Lauren Lundsten was left with $50,000 worth of Hawaiian shirts and other inventory at his midtown Sacramento shop. Dan Elliott, owner of a Roseville music shop, was stuck with rent he couldn’t afford and thousands of dollars worth of just-delivered violins and cellos he couldn’t pay for.

This is the Sacramento business community, scrambling for survival, in just the second week of what could be a lengthy statewide shutdown ordered by Gov. Gavin Newsom to slow the spread of the novel coronavirus. Medical experts say these orders are necessary to protect public health, despite the collateral damage of mass layoffs and economic havoc they produce.

But the widespread lockdown has left many Sacramento businesses questioning their own survival. How long can they stay on hold? Weeks? Months?

While the governor’s “stay at home” order exempts plenty of businesses, from hardware stores to auto-repair shops to pharmacies, it has left thousands of others out in the cold. Whether they own health clubs or jewelry stores or day spas, entrepreneurs are learning instantly painful lessons in financial triage as they figure out which bills get paid and which don’t.

“I’m going to pay people first, and then pay my rent and then insurance,” said Jeff Simons, owner of Watermelon Music in Davis, which sells and rents instruments. “I can sustain this for a period of time. If it’s months that we’re supposed to do this, I don’t know.” His expenses run to more than $35,000 a month, including payroll.

For all the pain they’re enduring, business owners harbor split opinions on President Donald Trump’s idea, floated this week, of reopening America for business by Easter in mid-April. The president suggested that a “recession or depression” from the widespread shutdowns could lead to deaths from “suicides by the thousands” and societal instability.

For some Sacramento business people, the choice is easy.

“We need to solve the (health) problem first,” said Penny Pellum, owner of the All Seasons Day Spa in midtown. “If we don’t have a cure yet, how can you start things back to normal? He needs to listen to the health people.”

But Steve Buzzard, a Sacramento-area self-employed disc jockey, said the economy can’t stay in a deep freeze for too much longer. If precautions are taken, the president’s idea might work.

“We can’t shut down forever. Somehow we’ve got to get back on our feet,” said Buzzard, whose business is called Buzzardball DJ Entertainment.

Missed rent, skipped payments, fewer hours

Just about every darkened storefront in greater Sacramento tells a scary story.

Terri Rehg, owner of the Art of Toys store in midtown, was already struggling with a 40 percent increase in rent and a steady slump in sales, like many in the brick-and-mortar retail business.

“Then this happened,” she said. “When I closed my doors, I had yet to make rent for the month.”

Staying away is hard, even if the business is closed. “I come down, do a little bit of work, get stuff done,” said Mark Just, owner of Tower Pipes & Cigars in the Tower Theatre building in Sacramento.

Elliott, owner of the Strum Shop musical-instruments store in Roseville, said he’s already started postponing payments. He had to tell his landlord the $3,500 rent check would have to wait. The same with suppliers who had just shipped him $3,900 worth of violins, cellos and other goods. He’s pared back employees’ hours, particularly his roster of music instructors.

“They were cooperative, they were understanding,” he said.

For some, it’s the frustration of having to slam the brakes just as the business was starting to take off.

“We were just starting our fourth year,” said Brunquell, owner of an events-space business called Time & Space. “We were just starting to get over the hump to the point where things were running smoothly, and we were making a little bit of a profit.’

Brunquell, whose business leases out a boutique in downtown Roseville for bridal showers and networking events, said she’s just had to postpone about $2,000 worth of events. Her $2,000 monthly rent is coming up, and she hasn’t reached out to her landlord yet for relief.

“We have basically no income right now,” she said.

Some are avoiding layoffs, for now

Economic pain is a certainty. Tens of thousands of Californians have already filed initial claims for unemployment in the past week. Some business owners are trying to avoid letting people go, even firms that have shuttered completely or have cut operations to the bone.

“We’ve been around a long time, and we’ve weathered a lot of storms,” said Greg Turner, owner of JS Canvas Awnings, a midtown Sacramento manufacturer that got its start making tents for the Army in World War II. “You accumulate money and you try to make the right choices and put money back into the company.”

But while Turner is confident JS Canvas can survive the economic effects of COVID-19, it’s not as if he’s immune to what’s going on. The shutdown is costing him more than $4,000 a day in revenue. He plans to pay his workers for two weeks, perhaps three — a decision that will cost more than $7,000 a week.

He said he’s determined to hang onto his workforce as long as he can. “The people I have are high-quality, loyal people,” he said.

Sean Covell had plenty of savings, too, saying he was prepared for an economic downturn that he felt was looming long before the pandemic started.

That’s enabling him to keep paying the 27 employees of his three Fitness System health clubs in the region. Fitness System has partially reopened for curbside sales of nutrition supplements and CBD products — sales of which have been declared exempt from the shutdown order.

Covell believes a lengthy shutdown of the economy will take its toll, however.

“I can make it probably about three months, and then no,” he said. “I will not come out undamaged from this thing. No business will come out undamaged.”

A libertarian, Covell questions whether the shutdown order is even legal.

“The state is essentially violating the First Amendment to the Constitution, the right to peaceably assemble,” he said. He’s having a lawyer to look into the legality of the governor’s order.

What’s an ‘essential’ business?

Rick Niello of the Niello Co., a chain of Sacramento area dealerships specializing in upscale lines like BMW and Acura, said the early days of the shutdown were confusing. It wasn’t immediately apparent what was considered “essential” and what wasn’t, he said.

But after Newsom released a 14-page list of essential functions, and car sales weren’t on it, Niello said it was time to close up.(Repair service is a different story; it’s clearly exempt).

“Our intent is not to sell cars,” he said. “We’re abiding by the rules.”

Even so, the issue isn’t black and white. The California New Car Dealers Association advised dealers they could operate a skeleton crew in their sales departments to provide cars to customers “in immediate need of transportation,” said the association’s spokeswoman Jenny Dudikoff.

The car dealers association acknowledges it’s pushing the boundaries of Newsom’s order.

“It is a very close call,” its lawyers at the Littler Mendelson law firm wrote in a memo to the dealers association. “A county sheriff might be less persuaded.”

But quite a few have opted to keep their sales offices open. “Come on in, we’re open,” proclaims the website of John L. Sullivan Chevrolet in Roseville. Maita Toyota’s sales department is open; so is Mercedes-Benz of Sacramento’s. Employees at Maita and Mercedes-Benz said business has been slow.

Several used-car dealers are open, too. Mike Stoller, owner of Auto Finance of Sacramento, which sells, finances and repairs used cars on Fulton Avenue, argues that he’s providing a much-needed service.

“We sell basic, reliable transportation … to blue-collar people,” said Mike Stoller, owner of Auto Finance of Sacramento, a used-car lot, finance and repair shop on Fulton Avenue. “I’m not selling Mercedes-Benzes.”

The Joann fabric store on Arden Way also has deemed itself essential and is staying open.

“We do consider Joann as a supplier of essential materials,” said Amanda Hayes, a spokeswoman at Joann’s headquarters in Hudson, Ohio. “Hospitals and volunteers across the nation are coming to us in droves for supplies to make critical items including face masks, shields, scrubs and gowns.” She said Joann has “unfortunately been forced to close some stores to the public by local officials,” although she didn’t identify which stores.

They’re open. But it’s not business as usual

Anthony Chesnut sells food. He owns an Edible Arrangements franchise in Elk Grove, part of a nationwide chain that sells fruit that’s been carved into the shape of flowers. He’s open for business, but the phone calls are becoming less frequent and the “stay at home” order has dried up a good deal of his foot traffic.

The timing couldn’t be worse.

“A lot of the revenue that we generate is around specific holidays and May is right around the corner,” he said, referring to Mother’s Day. “We’ll likely be impacted by that.”

Chesnut has cut hours for his seven employees and is wondering if he should take out a disaster relief loan from the U.S. Small Business Administration. But he isn’t convinced it will help.

“At the end of the day, that’s money that I still owe,” Chesnut said. “Helping me stay open two additional months so I can make payroll and some of the expenses isn’t...going to help this business survive beyond that.”

Dr. Amol Toor, 34, a veterinarian and owner of Stonelake Animal Hospital in Elk Grove, saw his business change in an instant. Although veterinary services are considered essential, clients are canceling appointments for their pets because of the governor’s order.

“It’s slow at this time because no one wants to come out and people are canceling their regular surgeries like spays and neuters,” Toor said. “People want to wait a few weeks to get those done.”

He no longer allows people inside the lobby of his small clinic. Now he comes outside to treat animals. So far he’s kept his three employees on staff but worries about the future.

“It has affected us but not too badly at this point,” he said. “I don’t know what is going to happen.”

Lundsten, owner of Swanberg’s clothing store in midtown, said he and his lone part-time employee doing their best to hang onto the business while the doors stay locked.

“I have $50,000, $55,000 in inventory in the store doing nothing,” said Lundsten, who’s living on his Social Security check while the shutdown continues. “It’s not like you can take it home.”

In one respect, his biggest worry is that the economy won’t snap back quickly once the coronavirus crisis eases.

He expects customers will return to the store in good time, but “it may be just a trickle,” he said.

This story was originally published March 25, 2020 at 5:00 AM.