NEW YORK — The vending machine outside Pinch Spice Market dispensing packets of herbs and seasonings isn’t a sales gimmick — it helped cater to customers as the company struggled through the COVID-19 pandemic.Meaghan Thomas, co-owner of the Louisville, Kentucky, firm and her partner, Thomas McGee, never expected a stream of shoppers at their tiny factory during the pandemic. But people were cooking more at home and wanted to support local businesses. They’d show up while the owners, the only employees, were trying to fill online orders. There was little or no time to also take care of in-person customers.“The vending machine gave them a contactless way to shop, and it also attracted new customers who happened to be walking by our factory,” Thomas says.It’s now a permanent addition.“We’re definitely keeping it. In fact, we’re considering making more machines to put in more locations,” Thomas says.The pandemic has changed the way many small businesses operate. Common among many industries is the shift to working from home and hybrid scheduling. And online ordering and curbside pickup are now standard at restaurants and retailers.Many owners also have made very individual adaptations that not only make sense, but may have permanently altered the way they do business and make money. Some owners who have made dramatic changes find they’re much happier running their companies now.When Ashley Greer started her floral design business four years ago, she didn’t want a retail shop. So, Atelier Ashley Flowers created arrangements only for weddings and other events.Greer’s Alexandria, Virginia, business had a full calendar when COVID-19 struck — and every event on it was canceled. Greer consoled herself by designing arrangements and posting them on Instagram, where she has 4,000 local followers.“Slowly, my neighbors around me said, ‘Hey, do you think you could make me a flower arrangement, and make it weekly?’” Greer says. She believes they wanted to support her and were looking to brighten their days.The arrangements brought in money for Greer, who was living off savings. Then she got a surprising number of orders for Mother’s Day. Her retail business took off and, Greer found, was more rewarding. Her new clients were a joy to work with compared to the sometimes demanding and often unappreciative wedding clients.“People are so much happier when they get one flower arrangement. The brides, one in 10 will send a thank you note — it feels so much more transactional when I’m putting my heart and soul into them,” she says.Greer has rebooked canceled weddings and may do more in the future. But she’s thriving on individual arrangements and says, “I have no plans to go back to events only.”Business owners expect to make adjustments to their companies and how they operate. And when there’s an extraordinary event, such as the Great Recession, many companies have to seek out new markets, downsize, and change their mix of products or services. But the pandemic was a situation that no one had ever experienced. It forced change upon businesses and industries that had taken their way of working for granted.Before COVID-19, psychotherapist and business coach Jonathan Alpert did almost all his work in his Manhattan office. The pandemic restricted him to the phone and video. But despite the fact therapy has traditionally been done in person, many clients aren’t interested in returning to his office for in-person sessions.“What started out as a real necessity is now a highly desirable option for people,” Alpert says. “It’s convenient, they don’t have to commute 10, 20, 30 minutes each way.”Remote sessions also give Alpert more flexibility. He finds the dynamics of remote sessions make them less intense than being one-on-one in his office, and he’s less tired by the end of the day.“It allows me to see more people,” he says. That has increased his revenue.Eighty percent of Greenbar Distillery’s revenue came from bar and restaurant sales pre-pandemic, with the rest coming from liquor stores. When state and local governments restricted or shut down indoor dining, “it was like someone turned off the light switch,” co-founder Melkon Khosrovian says.Three months into the pandemic and prospects dim for a return to normal, Khosrovian and business partner and wife Litty Matthew decided to sell their products directly to consumers, They went back to an idea they had tried unsuccessfully in 2019: selling cocktails in cans in grocery stores. With Americans doing more drinking at home, the couple decided to gamble on their idea being more appealing as COVID-19 radically changed lifestyles.Creating a manufacturing operation would take months. The Los Angeles business got a $2 million Small Business Administration loan in September to finance the equipment, and by February was producing canned cocktails that sell in grocery stores including Whole Foods — companies that are largely pandemic-proof.“Supermarkets have the most latitude to serve the public and stay open,” Khosrovian says.The company’s restaurant and bar business picked up again the last two months. But Khosrovian believes that long-term, the canned cocktail business will grow to the point where it accounts 80% of Greenbar’s revenue.The pandemic forced owner Mel Stutzman to shut down the showroom at Countryside Amish Furniture — as it turns out, much to the benefit of the Arthur, Illinois, manufacturer.Stutzman realized the showroom, which drew many visiting tourists but few buyers, took staffers away from working with serious shoppers online and on the phone. It took being closed and having more time for customers with questions about Stutzman’s custom-made products for him to see that.“We had to decide, who are we, where do we want to go?” Stutzman says. He closed the showroom permanently.The decision, which came as Americans invested more in their homes, paid off. Stutzman’s 2020 sales were up 65% over 2019, and he’s been able to hire two people, bringing his staff to eight. He now has someone evenings and weekends helping customers with questions about wood finishes, fabric and leather.And if someone wants to visit the showroom?“We have to take the position that we don’t go to the door,” Stutzman says.
NEW YORK — Small businesses that endured shutdowns and lower revenue during the COVID-19 outbreak now must contend with another crisis: spiking prices for goods and services that squeeze profits and force many owners to pass the increases along to customers.Mickey Luongo’s company, Total Home Supply, is paying as much as 15% more than it paid pre-pandemic for the air conditioning and heating equipment it sells to other businesses and consumers. His suppliers have raised their prices because they’re paying more for raw materials, components and shipping. Luongo says some of his customers have pushed back on higher prices.“We had one contractor who totally understood the price increase and was OK with it while other consumers get mad at us and think the increases are our fault,” says Luongo, co-owner of the Fairfield, New Jersey-based company.Surging demand from consumers for a wide range of products during the pandemic has driven up prices for finished goods as well as raw materials, supplies and equipment. Product shortages and bottlenecks in supply chains have added to the costs.Prices for materials and components used in construction spiked 4% in May from April and were up over 17% from a year earlier, according to the Labor Department. Manufacturers paid 2% more last month for materials than they did in April and 21% more than in May 2020. Also in the mix: intense competition for workers that has some companies paying more to attract new hires and retain current staffers.While inflation affects all companies, small businesses struggle more than their larger counterparts. Big corporations have greater negotiating power because they buy goods and services in bulk and have much larger revenue streams to absorb higher costs. These factors make it easier for big companies to avoid passing increases along to their customers.Barry Levine is holding off for the time being on price increases for the security and body temperature cameras his company makes although his expenses are up 12%, largely because of higher rates for air freight. Levine doesn’t want to lose business to his competitors.“We feel that it is a difficult market right now and we do not want to do anything to hurt sales of our products,” says Levine, whose company, Sperry West, is located in San Diego.So Levine is finding ways to cut overhead. He schedules employees according to how many orders the company has from its distributors; they’ve been able to get unemployment benefits to make up for the time they’ve lost.Still, Levine says, at some point he expects he’ll need to pass along some of his added costs.“I would like to say, we’re going to hold our prices forever, but that’s not going to happen,” he says.Some of the price increases may roll back, economist Ray Keating says.“The best case scenario on the recent move up in inflation is that it is temporary, as the recovering economy struggles to get production, operations, supply chains and employees back to something close to normal,” says Keating, chief economist with the advocacy group Small Business & Entrepreneurship Council.Costs that are most likely to come down are energy-related, as the price of gasoline and other fuels tends to fluctuate. And if supply chain bottlenecks ease, shippers are likely to lower their rates.But, Keating says, “the second scenario is that inflation takes hold, and as the old saying goes, once the inflation genie is let out of the bottle, it’s not easy to get back in.”Luongo has found that just about everything that goes into making and shipping an air conditioner or heating unit costs more.“Copper prices gone through the roof — there’s copper in every air conditioning product and lots of it,” he says. And Luongo’s suppliers are paying more for shipping containers that are in high demand; one manufacturer told Luongo that it only finds out how much it has to pay for a container on the day the ship carrying its products sets sail.Total Home Supply is more likely to pass along an increase to a general contractor building homes than to consumers who can go to chain stores for air conditioners. “We very carefully weigh pricing decisions for each item and do our best to stay competitive while trying to maintain a profit margin we can live on,” Luongo says.Service providers are equally pinched by higher inflation. With more homeowners remodeling since the start of the pandemic, supplies of paint, lumber and other materials have fallen and their prices have soared, forcing general contractor Victoria Staten to change her pricing policies.“We’ve gone from guaranteeing estimates for 30 days to just five days,” says Staten, owner of The Upside Chicago. Staten is also pricing labor and materials separately, rather than providing an all-inclusive estimate as she did pre-pandemic.The scarcity of materials is also adding to Staten’s costs — it can take several days to find items like crown moldings that used to be found easily. She’s been absorbing the labor costs involved in these shopping trips but is considering adding staffers’ extra time to her invoices.Manny Balani’s vitamin and supplement business is paying dramatically higher prices for shipping, packaging and ingredients. Miami-based A1 Supplements can pay $10,000 for space on a container ship, compared with $2,000 before the pandemic, and $400 for a kilogram of protein or other ingredients, up from $50.Balani has to pass increases along to customers, but instead of raising prices across the board, he’s taking a product-by-product approach. He’s boosted prices on some items as much as 30%, matching the manufacturers’ price hikes. Now he’s watching to see if customers keep buying at the higher price tags.“We take it day by day,” Balani says. “The market will dictate whether those numbers are bearable.”