Harsh winter puts small businesses out in the cold
- Article by: JOYCE M. ROSENBERG
- Associated Press
- February 19, 2014 - 12:11 PM
NEW YORK — When the wind chill in Chicago hit minus 40 on Jan. 6, Dogs Deserve It shut down. It was too cold outside for the dog walking service's four-legged clients and its employees.
Owner Lauren Pietrocarlo estimates this winter's harsh weather will cost her small business between $10,000 and $18,000.
"We can't afford to hire or give raises. Bonuses are being deferred for a couple of months," Pietrocarlo says. "It's a huge thing losing that much."
Small businesses have suffered this winter with heavy snow, ice and freezing temperatures. Revenue at stores and restaurants plunged as customers stayed home, hurting cash flows that often are tighter at smaller businesses than larger companies. In some areas, the weather has been unusually severe, worsening its toll.
This has been the snowiest winter nationally in four years and the coldest in three years, costing businesses of all sizes and their employees an estimated $15 billion that can't be made up, according to research from Planalytics, which analyzes the economic impact of weather. That includes money for restaurant meals and entertainment, employee wages and canceled trips. It is a small amount compared to the gross domestic product of $16 trillion, but it's significant for companies hurt by the weather, says Evan Gold, a senior vice president at Planalytics.
"We are really talking about a fraction of a percentage point, but in the current environment, every dollar counts," Gold says.
Even Pietrocarlo, who is used to rough winters, is hurting. Closing Dogs Deserve It for one day cost her about $4,000. On other frigid days, customers opted for shorter, less expensive walks. She dipped into company savings to meet payroll and pay other bills, is paying herself less and plans to hold off on new hires, raises and bonuses.
Two storms in Atlanta forced Shaun Curtis to close Buffalo's Cafe for four days. It was too dangerous for his customers or employees to venture to his suburban Loganville restaurant, which serves chicken wings, burgers and salads.
The first storm couldn't have come at a worse time: Super Bowl week.
"This is our Holy Grail, our top sales week," Curtis says. "To lose two days in the middle of the week like that — it's frustrating."
He lost $11,500 in revenue and $1,500 for food that had to be discarded. Curtis, whose annual revenue about $1.6 million, is making up the losses out of the restaurant's savings.
Revenue is down as much as 30 percent this winter at Alternative Bodyworks, an acupuncture, yoga and massage salon in Bloomfield, N.J. A series of storms dumped more than 58 inches of snow in the area, compared to an average 28.5 inches a year the past three decades, according to the National Weather Service. Clients canceled as each storm approached, says owner Frank Giordano.
The cancellations hurt cash flow although most customers rescheduled. He applied for a loan, but the terms were too stringent.
"I'm going to cut back on whatever expenses I can," he says.
But sales aren't the only victim of the bitter weather. Severe cold and snow is ruining or delaying shipments.
Jenny Brown was stunned when bottles holding her non-alcoholic beer for dogs shattered. Brown, whose company 3 Busy Dogs is in Seattle, has Bowser Beer shipped from Florida by truck. A rare southern freeze cost her about $1,000.
"It doesn't sound like much money," Brown says. "But for a small business, it is."
Glenn Gross can relate.
Bad weather has cut revenue at his Fat Jack's BBQ restaurants near Philadelphia and in Ithaca, N.Y. by 25 percent, he says. On top of that, deliveries were delayed, sending Gross to stores like Sam's Club for ribs and chicken that cost 20 percent more than wholesale. The storms also slowed construction on three new restaurants, which means it will take longer for them to open and start bringing in revenue.
"We're at the mercy of the weather," Gross says. "It just plays so much havoc with what we do."
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