Many small businesses never will return from the economic shutdown tied to the COVID-19 pandemic. Some had no chance of surviving a sharp business downturn. But others will fall victim to inflexible government restrictions.
A tale of two N.C. business owners helps illustrate government’s ability to thwart entrepreneurial innovation.
Ron Joyce serves as president and CEO of Joyce Farms in Forsyth County. Steve Pinkerton owns Vitality Fitness in Concord. Both took part in an online forum May 4 sponsored by the John Locke Foundation. The COVID-19 shutdown affected them in different ways.
Working with small farmers, Joyce’s business usually focuses on supplying beef, poultry, and pork to restaurant chefs. Distribution ranges from New England to the Caribbean and as far west as St. Louis.
The pandemic hit Joyce Farms hard. “What we saw within about a 36-hour period of time … is our business ground to a halt,” Joyce said. “Ninety-six percent of our customers basically were shut down.”
Like other business owners facing such a major shock, Joyce scrambled to adapt. Work with a northern distributor led to a major shift: smaller, retail-sized packaging for the meat. Within two weeks, that distributor pivoted from wholesale restaurant delivery to home delivery. Several weeks later, the distributor’s business with Joyce Farms had returned close to pre-COVID-19 levels.
That’s not the only change. “Our web business has gone through the roof,” Joyce said.
With new consumer-sized packaging, Joyce Farms started selling directly from its plants. Another adaptation involved a new program called Chef’s Market. “A lot of these restaurants have reopened doing pick-up or takeout only,” Joyce explained. “But that’s severely cut into their revenue. So now that we have these nice retail-size packages … the chefs have started selling those retail packages to their customers.”
“That’s another business model we’d never considered before, but we’re looking at everything every day,” he added. “It keeps our farmers going. It keeps us as a company going. It keeps our employees employed.” It also provides revenue for restaurants. Joyce hopes to keep those restaurants’ chefs in his customer base once government permits in-person dining again.
Some observers have called Joyce Farms’ quick transformation “amazing.” “I say you’d be amazed by how much of a motivator fear can be,” Joyce responded. Without adaptation, Joyce feared for the future of his 58-year-old, third-generation, family-owned business.
Working with the food supply, Joyce has enjoyed freedom to adapt and innovate. Pinkerton hasn’t had the same chance.
His fitness center is one type of business specifically targeted for shutdown in connection with the pandemic. But Pinkerton hoped that innovative safety measures might help him keep his doors open. He developed an appeal for the N.C. Revenue Department.
“We provided as thorough a plan as I could put in place,” Pinkerton explained during the JLF forum. “It covered everything from taking people’s temperature when they come in, having a log that I could submit that tracks symptoms.”
The plan documented the fitness center’s relationship with a company located in the same business complex. That neighbor specializes in disinfecting buildings. “They agreed to provide a weekly service,” Pinkerton said. “”We got this entire protocol that they do. We went above and beyond.”
Pinkerton was willing to take on substantial cleaning costs. “We just wanted to say, ‘OK, we’re going to go ahead and bite this off,’” he said. “We’ll do it on a weekly basis. We’ll get our doors back open.”
The four-and-a-half-page plan made little difference to Revenue Department regulators. “I got the cookie-cutter response that said we are not deemed essential,” Pinkerton said.
“Oh, by the way, the ABC liquor store down the road — they’re essential,” he added. “It’s a frustrating thing when it’s just so obvious … the double standard.”
There’s something curious about government shuttering fitness centers during a time of increased concern about public health. “If we’re not going to give people this outlet, we’re not going to provide them this ability, they’re going to go find another way to cope with this,” Pinkerton said. “There’s a lot worse ways — whether it’s alcohol or medicine or pills.”
Pinkerton pointed to Joyce Farms’ ability to adapt. “It’s a perfect scenario,” Pinkerton said. “You take someone who is an entrepreneur. … He was given a set of parameters, and he was able to adjust to those and do the best he can with the cards that he was given.”
“All I was asking for was: You can put whatever stipulations you want on me, but allow me to open my business,” he added. “Then I will be creative. These entrepreneurs, these small business owners … I think we’re really good problem solvers. But you’ve got to give us the ability to open up and be able to solve the problem.”
“We’re just not getting that opportunity.”
More N.C. business owners will have the opportunity to be creative with reopening as state and local governments relax COVID-19 restrictions. But it’s a shame that relaxation will come too late for many. Rather than have freedom to solve the problems presented by COVID-19, they will shut their doors permanently.
That means new problems for those hoping to revive the state’s economy. Government dictates are unlikely to offer a solution.
Mitch Kokai is senior political analyst for the John Locke Foundation.