Las Vegas area small businesses short on cash, staff as virus spreads
Many small businesses lack the cash reserves and credit typically available to larger firms, making them more vulnerable to unexpected setbacks.
Updated March 23, 2020 - 8:36 am
Salt Room Las Vegas founder Ava Mucikyan said she can handle the temporary shutdown of her spa business, at least for now.
“I spent about 24 hours stressing over it,” she said. “I am taking it day by day. I’m just going to enjoy my quiet time, because clearly when my mind is on (the business) it doesn’t change anything.”
Mucikyan and many other owners of once-thriving Southern Nevada businesses are feeling helpless as the coronavirus outbreak has put them at risk for financial ruin.
Gov. Steve Sisolak mandated Friday that nonessential businesses like the Salt Room close for 30 days in an effort to curb the spread of the virus.
Many small businesses lack the cash reserves and credit typically available to larger firms, making them more vulnerable to unexpected setbacks like the COVID-19 pandemic. And some will probably not survive.
It is estimated that 170,000 to 200,000 small companies failed during the Great Recession.
Randi Thompson, Nevada state director for the National Federation of Independent Business, said she understands Sisolak’s intentions, but a 30-day closure will be devastating for small businesses.
“I’ve already gotten several text and emails from some of our members saying he’s killing our industry, he is throwing Nevada into a recession and immediately unemploying thousands of Nevadans,” she said.
A report by the U.S. Small Business Administration found there were 270,079 small businesses in Nevada with a combined 487,407 employees in 2018. In the U.S., there were nearly 31 million small businesses ranging from florists and nail salons to small factories.
Mary Beth Sewald, president and CEO of the Vegas Chamber, said when it hosted a conference call last week with the SBA about a newly available disaster loan, roughly 650 businesses joined the call.
“It was the biggest call-in we’ve ever done,” she said. “When you think about some of the challenges for businesses, whose livelihoods depend on their jobs and so forth, there will be some hardships. It’s a scary time.”
Last week the SBA announced a low-interest Economic Injury Disaster Loan program providing up to $2 million for small businesses and nonprofit organizations financially impacted by the coronavirus.
Mucikyan said she’s filling out an application.
Wicked Creative owner Stephanie Wilson said she already applied.
Wilson’s public relations firm mainly focuses on the tourism and restaurant sector, and she said her clients are struggling.
“By the time all is said and done, I’m going to go from 17 down to five employees and then hope we can see this through the next few months,” she said. She and the employees she retained took a pay cut.
Wilson said she has already aggressively trimmed operating expenses. She even reached out to her landlords about her leases at the company’s offices in Las Vegas and San Diego in an effort to keep as many employees as she could.
‘Just a huge ripple’
Brian Chapin, founder and chief executive of events company Production Theory, also had to make cuts after postponing the Great Vegas Festival of Beer from April to the summer.
“The first move we had to do was let people go … so that is tough,” Chapin said. “And (then) reach out to multiple constituents — our team, our sponsors, our vendors, our guests, the municipality, all of our vendors that we hire to do this event. It’s just a huge ripple. You think about it for a minute and think, ‘Wow, everybody is going through this.’ ”
Business owners don’t often have the luxury to build rainy-day funds, since cash flow funnels to payroll and other costs, such as renovations and expansions.
Wilson and Mucikyan both said revenue was healthy enough that they felt confident to invest in their businesses within the past year.
For Mucikyan, that meant spending more on marketing and hiring a new company to help send mobile promotions.
“I worked very hard to make it thrive again, and here we are one year and three months later,” she said. “And we were doing so good.”
Contact Subrina Hudson at firstname.lastname@example.org or 702-383-0340. Follow @SubrinaH on Twitter. The Associated Press contributed to this report.