'Scared about the future': Female small-business owners face extra hurdles during pandemic shutdowns

When the coronavirus pandemic hit in March, Lenore Estrada was in the middle of constructing a new kitchen for her bakery, buoyed by demand from Google and Lyft, which served her desserts in their cafeterias.

But when she learned her clients were shuttering their offices – and cutting their food orders – she quickly made the painful decision to lay off most of her staff.

Estrada says she worked many all-nighters to keep her Three Babes Bakeshop afloat, even as she prepared to have her second child in October.

Now with a newborn and a 2-year-old, she’s juggling parenting and keeping her business alive.

“I sometimes get down and I feel really scared about the future,” Estrada, 37, of San Francisco, told USA TODAY, noting that she worries about filing for bankruptcy. “I have had many a tearful day. I don’t have (any) choice but to press forward.”

The pandemic has been tough on women’s careers, with mothers especially stretched thin between work and the strain of child care as the majority of large school districts reopened with remote instruction this fall.

But women who run small businesses face a unique set of stressors as the pandemic continues, threatening the viability of their companies as well as the nation’s economic growth, experts say.

Women hit harder by coronavirus

Women are more likely than men to own businesses in industries that have been hard-hit by the pandemic, like restaurants and retail shops. Women and people of color are also less likely to have the same access to capital as white men, with a recent House report finding the PPP program left behind many minority- and women-owned businesses because banks prioritized lending to their existing customers.

That’s worrying because women-owned businesses have been a driving force in the economy’s growth. About 42% of businesses were owned by women in 2019, compared with about 4% in 1972, according to American Express’ 2019 State of Women-Owned Business report. In the last five years, total employment by women-owned businesses rose 8%, versus an increase of 1.8% for all businesses, the report found.

“Women are disproportionately owners of foot-traffic based companies,” such as salons, spas and retail establishments, says Sarah Gustafson, lead data scientist at Gusto, a company that provides payroll and benefit services to small businesses. “What we saw is that female-owned businesses have had larger net losses in their headcounts than male-owned businesses.”

COVID-19 forces women-owned businesses to cut more jobs

Women-owned businesses cut more workers in April – at the height of the pandemic lockdowns – than male-owned businesses, Gusto’s analysis found. From March through September, male-owned businesses have also had more than double the headcount recovery compared with those owned by women, Gusto says.

Women-owned businesses are less optimistic about the future, according to an August study from the U.S. Chamber of Commerce. It found 36% of male-owned businesses plan to increase staffing in the coming year, but only 24% of female-owned businesses expect to do so.

“That really points to the prolonged negative impact the pandemic can put on women,” says Neil Bradley, the chief policy officer for the Chamber of Commerce.

That lack of optimism among women business owners is “a very real thing,” says Melissa Wirt, the owner of Latched Mama, an online clothing retailer geared to nursing moms based in Midlothian, Virginia. “There are great partners and great men who support their entrepreneurial wives, but at the end of the day, there is so much extra weight on women’s shoulders that can’t even be measured.”

No stimulus check

The next few months could pose new threats for businesses, as coronavirus cases set new records and stimulus negotiations have so far failed to produce a new aid package, experts and business owners say.

“Without stimulus or some sort of relief, there is a strong expectation in the next couple of months that things will turn worse,” says Daniel Sternberg, head of data science at Gusto.

Women business owners say they’re doing everything they can to cope with the devastating hit from the pandemic.

Take Doughp (pronounced “Dope”), a cookie-dough company started in 2017 by Kelsey Moreira. Before the pandemic, her company had more than 20 employees, with most of its revenue coming from its location on the Las Vegas strip.

Moriera, 29, says she started to notice foot traffic falling in January as large businesses postponed conventions due to the spread of the coronavirus.

Now, her retail location is shuttered, and her employee count is down to two: herself and her husband.

“I’m taking it one day at a time,” she says, noting that she’s focusing on pivoting to an online business. “Embracing change is so important.”

Pivoting to new strategies is a familiar theme for the women-owned businesses who spoke with USA TODAY. Estrada, for example, started online pie-making classes geared to corporations that want to provide their at-home workers with a bonding experience.

Wirt of Latched Mama says she switched up everything from her business strategy to her management priorities. Because 95% of her employees are mothers, Wirt – herself the mother of five children – said she focused on supporting her staff. That included adding a remote learning center to their offices, where employees’ children could attend remote school while their parents worked.

PPP loan helps a small business pivot

Wirt was faced with another challenge when flights stopped arriving from China, where her clothing is produced. Instead, she switched to sea freight, which has longer delivery times. A PPP loan helped her company fund that first boat shipment and she hasn’t cut any of her employees, she adds.

“It’s forced us to be more disciplined and forced us to act ahead,” she says. The upside: Higher margins, given that sea freight delivery is cheaper than air freight.

Wirt, who said the PPP funds are long gone, says she worries about the future even though her business is going strong.

“I don't have backers or people who are ready to throw money at me if we get into trouble,” Wirt says. “We are only one devastating event away from disaster.”