‘Nonessential’ California small businesses struggle amid changing rules for staying open in the pandemic

The coronavirus pandemic opened up a key economic divide this year for entrepreneurs in California between “essential,” allowed with precautions to stay open, and “nonessential” operations, closed or severely restricted.

Businesses in the latter new sector have endured nine months of frequently changing rules over whether they can remain open and to what degree, resulting in large-scale furloughs and big drops in revenue that are set to stretch into the new year.

In late August, there was another go at reopening the state’s economy, a four-color reopening system for counties, and locally Napa, Lake, Mendocino, Solano and Marin were able to loosen restrictions on some nonessential businesses, such as limited indoor dining in some places, reopening of hair and nail salons, and a return of leisure lodging.

But the latest statewide stay-home order, implemented Dec. 20 in the Bay Area and Dec. 12 in Sonoma County, has reversed that through Jan. 9. And some Bay Area public health officials said the trend in cases may extend that further, according to the San Francisco Chronicle.

“Hit the hardest are independent contractors like hair stylists. They were trying to make up for time lost a few months ago, and now this,” said Mary Cervantes, director of the Napa-Solano Small Business Development Center. “We work with very small businesses that really don’t have the luxury of a support system.”

Funded largely through the U.S. Small Business Administration, her center typically serves entrepreneurs employing fewer than 25, and many have fewer than 10 employees.

In California, 31.1% of small businesses were not operating or had thrown in the towel, Sonoma State University economist Robert Eyler said at a December wine business event, citing figures from TrackTheRecovery.org.

This year, over 800 firms have been helped in the two counties, double the normal pace. Many have come in for help applying for federal payroll and economic injury loans and forgiveness, as well as for grants from local groups and the forthcoming $500 million state program.

But a number need help with forecasting to make it through these uncertain times and with getting their businesses online as quickly as possible, Cervantes said.

“A lot of businesses have pivoted to online and been able to bring in revenue at the same level as before,” she said. “We’re working with businesses on starting to think about planning for the unexpected and having reserves for at least six months.”

That calls for learning cash-flow management and to have conversations with suppliers and customers on how they can work together, Cervantes said.

To rein in the spread of the coronavirus, state and local authorities in mid-March rolled out classifications for activities authorities deemed to be “essential critical infrastructure.” Business operations in this newly defined “essential services sector” — namely, critical health care, grocery, lodging for essential workers, and food production — were allowed to largely remain open with safety modifications such as personal protective equipment, enhanced sanitation and social distancing.

That first statewide lockdown left a number of business types and key parts of local operations in the nonessential category. That list has changed over the year, amid public pressure to reopen wine tasting and hair salons as well as judicial rulings on religious services. Lawsuits are pending from groups such as gyms and breweries forced to close or significantly limit occupancy. There was relaxing of some restrictions in May and June, only to be rolled back in July as COVID-19 cases spiked.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.