As Madison businesses brace for economic impact, city officials and experts strive to provide answers and resources to business owners during the COVID-19 pandemic.
Across the nation, business owners and employees are scrambling to adapt to the ever-changing circumstances brought on by the COVID-19 outbreak. In Madison, many local businesses are already feeling the economic pressure following the strict COVID-19 restrictions put in place, leaving many businesses grappling for aid, according to multiple statements released by Mayor Satya Rhodes-Conway and the City of Madison.
Marketing Director of Madison’s Ian’s Pizza Zachary Chapman said the popular pizza chain is facing economic fallout in all three of its Madison locations. Chapman said the hardest hit location is on North Frances Street, which predominantly relies on the University of Wisconsin student population for business.
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“Throughout the week, [sales] were changing daily, if not hourly,” Chapman said. “The large majority of our customer base is students and then staff and faculty who work at the university … with spring break leading into the campus being closed, there’s not a lot of students in the area and that location doesn’t deliver, so there’s not that to fall back on.”
Chapman said the new restrictions caused Ian’s Pizza to take action by reducing staffing and hours, decreasing inventory orders and limiting different menu options for the different locations. Chapman said the student population’s absence combined with the closing of many bars eliminated the night crowd, creating new staffing questions that are now taken into account on a daily basis.
Chapman said the main thing the business can do is keep a close eye on its expenses and hope the orders keep coming in from the community. Chapman also said whatever the government can do to provide options to small businesses during this time would be helpful moving forward.
“I just encourage state officials to think about small business owners because this really hits hard,” Chapman said. “We have so many employees that are not working right now, and one thing we are focusing on when things get back to normal is to get our employees back and working.”
According to an analysis by the Wisconsin Policy Forum, Wisconsin is better equipped to handle the COVID-19 economic turmoil to come than it was for the Great Recession. Still, the state still falls short in many areas and will need financial aid from the federal government to survive its massive emergency spending.
While Congress recently reached a deal for the largest economic relief package in U.S. history, Business Development Specialist for the Madison Economic Development Division Ruth Rohlich said the state and local governments will be distributing the federal funds as efficiently as possible while trying to provide immediate relief.
“This is all happening in real time,” Rohlich said. “The state and the federal government are working to really provide a lot of financial resources to businesses throughout the country right now, and each state is really looking at how they might deploy some of that support as broadly as possible.”
While many of these resources are still in the works, Rohlich said Madison businesses are already seeing the effects of the “dramatic and painful losses” in just the first few weeks of the financial fallout, especially for local retail businesses and restaurants. Rohlich said the city is working on providing access to resources and loans that may come quicker than state or federal aid.
Through work with the Greater Madison Chamber of Commerce and other partners, Rohlich said the city is putting together access to emergency relief aid through zero-interest loan options to help lessen the blow of COVID-19. Rohlich said Kiva Greater Madison, an international city lending network, is one of many options for businesses to pursue quick financial assistance.
“Right now, [Kiva] provides a six-month grace period,” Rohlich explained. “So it is a no fee, no interest loan up to $15,000 for businesses, and the lenders are in the community … We’re really encouraging businesses to use this fast way to get zero-interest loans.”
Rohlich said updated information for businesses is available through a website application called SLI.DO — businesses can upload questions that will be answered by the Greater Madison Chamber of Commerce in coordination with public health officials. Given many relief programs are coming out rapidly, Rohlich said streamlining all the info to one place will be key in helping businesses through this period.
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UW Economics Professor and Director for the Center of Research on the Wisconsin Economy Noah Williams said education is one of the key ways to help struggling business owners during this time. Williams said while the total revenue for some restaurants and other businesses is down by over 90%, suspending operations is feasible for businesses with the aid provided, and businesses should ideally be able to restart when restrictions are lifted.
“There hasn’t been a recession to my knowledge that has been driven by something like this,” Williams said. “Most of these businesses are healthy, they’re just being forced to suspend operations.”
Williams said one key building block to restart the economy is dealing with unemployment issues. Wisconsin’s unemployment claims have skyrocketed since stricter COVID-19 restrictions went into place, according to Williams. Williams said providing some sort of income for people who are out of work is something the state and federal government should be focused on to stimulate the economy.
Whether payments are taxable or universal, Williams said people making unemployment claims need options such as increased payments or loosened restrictions on unemployment insurance for the time being to provide immediate temporary relief. If laid-off workers receive assistance now, Williams said the ability to restart the economy will go more smoothly.
“Ideally when there are layoffs, the hope is that these are temporary layoffs,” Williams said. “Hopefully the workers still stay attached to the businesses so that when the economy essentially restarts they’ll be able to ramp production back up.”
StartingBlock Madison Director Chandra Miller Fienen works with entrepreneurs, business startups and investors in the Madison area. Miller Fienen said current startups and new small businesses looking for support during the COVID-19 pandemic could be key in providing much needed employment options in the future.
Miller Fienen said while much of the aid is being put towards brick-and-mortar local businesses and the hospitality sector, not much relief is being provided for smaller startups and younger businesses who may play a key role in rebuilding the economy.
“We know that new business startups, those that are less than five years old, are responsible for all new net job creation,” Miller Fienen said. “If we kill off or slow down the growth of our startups that we have now that are in that one to five year period, where they should be starting to gain traction and then scale up, we are going to see a slow down in job creation and economic activity.”
Chapman and Rohlich both emphasized the importance of supporting small businesses during this time.
Ian’s Pizza has served Madison for 19 years and Chapman said service will not stop now.
“We are still here for our community,” Chapman said. “While things are tough, we still have the best customers and the best employees. We are going to keep a good positive attitude because we know without a positive attitude, you can’t have positive results.”