Small business on the brink: Alaska faces a ‘generational loss’ as owners throw in the towel

Downtown Anchorage has been quiet since mid-March, when many businesses had to close or reduce operations during the COVID-19 pandemic. (Abbey Collins/Alaska Public Media)

It’s the closing of neighborhood favorites that are the most obvious. Momma O’s – a Spenard restaurant known for its halibut. The Last Frontier Bar in East Anchorage. In Fairbanks, the Marlin, a music venue. In Juneau, a camera shop that was a fixture downtown.

The coronavirus is pushing local businesses to the brink, and some are calling it quits. That’s despite unprecedented sums in government aid that are pouring into the state to help small businesses.

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More than a third of Anchorage business owners said COVID-19 put their enterprises in danger of permanent closure, or were unsure if they would remain open, according to an April survey by the Anchorage Economic Development Corp.

Jonathan White sits on the Anchorage Economic Resiliency Task Force, but don’t look to him to paint a rosy picture. White said the business model for retail, food and customer service has to change so dramatically that “a lot of businesses are asking if it’s even worth it.”

“It’s not hard to predict there’ll be a generational loss of small businesses in the state, you know, in the next four to six months,” he said.

White owns SteamDot Coffee in Anchorage. He’s taking a phased approach to re-opening.

SteamDot is one of more than 7,000 Alaska businesses that got a Paycheck Protection Program loan. That’s the kind that converts to a grant if it’s spent on eight weeks of payroll and a few other allowable expenses. White says there’s a giant reckoning coming in about six weeks, when businesses that got those loans will have exhausted the proceeds. 

 “I think now there’s been $1.3 billion of PPP loans that have come to Alaska. And what’s so striking is, that is a ton of money,” he said. “And it still feels like it’s not nearly enough.”

White says businesses must be nimble. The ones that are thriving now are those that fill a unique need. Any public-facing business needs to figure out how to keep employees and customers safe, and White said they should also reveal what they’re doing to stay safe.

Business advocates were buoyed this week when the governor and legislators agreed to distribute $290 million in federal assistance as grants to small enterprise. Still, only a fraction of Alaska companies will get any of the government coronavirus loans and grants, and they’re only expected to be a short-term fix.

Thor Stacey, Alaska director of the  National Federation of Independent Business, said what entrepreneurs really need to be viable is a healthy economy.

In Alaska, with low oil prices and the loss of summer tourism, “It’s incredibly grim,” Stacey said.

What business owners can draw on, he said, is their entrepreneurial spirit.

Thor Stacey is Alaska director of the
National Federation of Independent Business (Photo: NFIB)

“One of the beautiful things about small business is that, as challenging as things get, innovation is driven from individual entrepreneurs and folks that want to figure out a way to keep a business intact and seize whatever opportunity comes out of a difficult time,” he said.

Seizing opportunity – that describes Theresa Brown. You could say coronavirus killed her Anchorage businesses. She used to run a daycare and an Airbnb out of her Airport Heights home. Then, in mid-March, even before government mandates, Brown said realized she couldn’t guarantee the continued safety of her kids and guests.

“It was very easy for me to make the decision to close down,” she said. “I just adapted overnight.”

If she couldn’t raise children, she would raise plants. That very day, Brown said, she started growing organic vegetables, herbs and microgreens. 

“Room by room by room, I turned my entire house into a greenhouse,” she said. “With grow lights and everything.”

Every step she’s made since closing involved sleepless nights, stress and sometimes even terror. Brown decided to view her discomfort as a sign that she’s charting a good course through unknown territory.

Now she’s all about community gardens, neighborhood garden coaching and compost networks. For cash, Brown said she plans to sell her produce at farmers markets, or maybe just in her front yard. She expects to sell vegetable soup, too.

“It’s not just soup,” she said. “It’s an immune-building soup.”

Many businesses will die in this pandemic. Others will be born.