ST. GEORGE — With the economic health of small businesses being the lifeblood of every community across the nation – especially in Utah where they make up more than 80,000 brick and mortar establishments – state officials believe there is a light at the end of the COVID-19 tunnel. But some businesses will not make it.
Val Hale, executive director of the Utah Governor’s Office of Economic Development, spoke with St. George News about the present challenges for small businesses with fewer than 100 employees and their future.
Sustaining small businesses moving forward, regardless of what happens with COVID-19, is key to economic health, Hale said.
“Hopefully if we can get through this, the initial phase of opening up, we can sustain ourselves,” he said. “The big thing that can derail (a recovery) is if we have a re-occurrence and people don’t take precautions. This could put a crimp in everything.”
Although the state’s businesses are beginning to open, Hale urges people to maintain social distancing and wear masks if possible. By taking proper precautions, small businesses have hope.
“Utah is in a great position to come out of this, because the underlying economy is sound,” he said. “Unfortunately, there will be casualties. We’ve already had businesses that haven’t survived and will never be able to come back.”
While economists agree that recent federal stimulus checks and small business loans and grants have helped in the short term, looking into the future there needs to be a permanent best-practice strategy in place to respond to a community’s needs when a catastrophe strikes or for struggles through normal business fluctuations.
Even in the best of times, economists say, the first five years for any business is challenging, and the majority do not survive to see their sixth anniversary.
Providing sustainable assistance to small businesses is a philosophical debate, Hale said, and something that has to be tackled by state legislators and federal politicians, who are all over the map on their answers.
“There are some who think the federal government has gone way too far and that the markets do what they do, letting businesses go under, and then others think we ought to do more and spend more money to help all businesses,” Hale said.
Support of a market-driven, survival-of-the-fittest approach, Hale added, is cold comfort to mom and pop businesses that go under for no fault of their own. He said if the government issues an edict for a forced closure, such as has been seen during the current pandemic, many businesses will struggle and ultimately have to shut down.
“This adds an element to the discussion – (namely) if the government is obligated to help you get back on your feet.”
Along with impacts on the restaurant industry, as the weather warms in Southern Utah, there could be collateral damage on businesses that support tourist locations such as Zion National Park.
On Friday, a television broadcast showed the New Jersey Boardwalk, where the stores were closed and a handful of people were taking a stroll. Normally, the boardwalk would have been packed with visitors and tourists this time of year.
Hale said he wonders if the same can happen at shops in Springdale near Zion or hotels near Bryce Canyon National Park.
“Tourism and people in the hospitality industry have been decimated more than anyone else,” he said. “People are just not traveling and probably won’t travel. Who knows? Businesses that rely on tourism have a bit of a hard road to go before we see things return to 2019 numbers.”
According to Utah Public Radio, each year tourists that come into Utah infuse about $9.5 billion into the state’s economy, which provides each household in the state $1,286 of tax relief. The restrictions due to COVID-19 could affect this number in 2020.
The virus has already started to affect the tourism peak season, which runs from May through October. People are canceling their trips to Southern Utah.
Hale said the next step is to ramp up the national and international tourist markets as the country emerges from COVID-19.
“If we can get through the next three- or four-month period, I’m hoping we can get back to start seeing things recover,” he said. “Understandably right now it’s depressing to watch the news and the endless cycle that goes on, but I was more fearful during the Great Recession than I am right now.”
Hale said that, compared to the decisions made that led to the Great Recession, he believes the current economy is in a much better state to weather the pandemic.
“During the Great Recession, there were structural problems that caused the collapse,” Hale said. “This time we have a crazy disease that has caused all of this. If we can mitigate this issue and get the disease under control I think the economy is structurally sound and will come back a lot quicker than what we went through a decade ago.”
America will make it, Hale added. Some businesses will fail, while many others survive. For those who can hold on, there is light at the end of the tunnel.
“We have to keep our chin up and keep fighting,” he said. “I see light at the end of the tunnel. We just have to get to that light.”
Don Willie, president and CEO of the St. George Area Chamber of Commerce said that although the southern part of the state has so far fared better than the north in terms of COVID-19 cases, businesses in Southern Utah have been hit just as hard – if not harder – with the largest impact on tourism and hospitality.
“Just outside Zion National Park, this has just crippled businesses,” Willie said. “We’ve also seen this in St. George, but our proximity to Interstate 15 has helped our city. Still, our dependence on tourism has really hurt us.”
Willie echoed Hale’s comments that Southern Utah will see business close as a result of the pandemic.
“At the end of the day if a business isn’t able to quickly adapt, pivot, identify new sales opportunities, new customers, and a new vertical (sales approach) there is a good chance they will not make it through this if they didn’t have a good nest egg to begin with.”
Willie said that while the private sector “loves certainty,” currently it is uncertainty that is acting as a significant economic driver.
“However, the chambers teach and encourage our members to always be entrepreneurial both in mind and in action,” he said. “They need to be able to pivot, change and adapt at any time, or they may not survive.”
It’s good to have plan A, Willie added, but you have to have plans B through Z as well.
Along with being president and CEO of the area chamber of commerce, Willie was invited by Gov. Gary Herbert to be a member of Utah’s Economic Response Task Force.
The goal of the task force is focused on the economic resiliency of the state.
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