Small Businesses vs. The Pandemic

Hey, this is Tim. We're on vacation this week, but the Crash Course team wanted to reair an episode we had fun making about a small business in my hometown. We published this episode around the third anniversary of the initial COVID nineteen lockdowns back in March, but the holiday season is the most important time of year for small businesses, so it feels fitting to share this episode again. Now, thanks for listening, and happy holidays. We'll see you next year.

And you just dip it in. You just don't want it to get like too much of a globby math, so you just sort of like there and.

One of these called strawberry sprinkle donuts.

Strawberry sprinkle donuts.

Amazing, Okay, I'm now I'm gonna dip a bunch of donuts into strawberry glaze and then put sprinkles on.

Top of it.

That's my duty for today. However much I enjoyed my brief internship as a baker with Amy. That wasn't the main event for me. I was there to talk to the bakery's owner, Rachel Wyman, and she came bearing treats.

You want to be ruined for the rest of your life?

Yeahs ruined me for the rest of my life. Oh gosh, a hot blazed donut.

Wow.

I have literally a hot glazed donut that was just put in my palm on a piece of wax paper that looks like Nirvana. And I'm gonna go ruin myself for a minute because Rachel invited me to do that, and I'm gonna have this donnu. Welcome to Crash Course, a podcast about business, political, and social disruption and what we can learn from it. I'm Tim O'Brien. Today's Crash

COVID nineteen can be characterized as a pandemic.

All but promises that the coronavirus will spread. Here today, I am officially declaring a national emergency.

Only essential businesses will be functioning.

All businesses will need to shut down.

Remember when practically overnight it seemed that every shop closed its doors. You remember how all of those small businesses you might have taken for granted, the ones that gave life and an identity to your community, suddenly felt essential to you. I sure do. Montclair Bread Company was one of those shops. For me. It's souredaugh bread was a staple on my family's dinner table, and it's maple bacon donuts are the best in the world. As I watched lots of small businesses in my small town in New

You know. I've been thinking about this so much recently because you know, we're coming up on the anniversary of that, and all these pictures are popping up from February twenty twenty, like me and the kids, and it's like, God, we had no idea, we had no clue what was going to happen in just a couple weeks.

When you're looking at those pictures, are you looking at like the faces of people on the deck of the Titanic?

Yes, yeah, exactly, I am. And I think, you know, I still think that I suffer like PTSD from that from twenty twenty, and I just can't let go of a lot of things that happened during that year. As you know, an essential service worker. It's been really hard for me to go back to you know, status quo.

Before we hop back in time to the early days of the pandemic, we should probably hop a little further back in Rachel's story so you can understand how much was on the line for her. She's earned everything she has. Rachel grew up with little money in rural Maryland, worked her way through school, and fell in love with bread and pastries. After a state in France, she went to the Culinary Institute of America, baked with some of the biggest names in the bread business, and then decided to

I pitched it to the moms who had been picking up bread at my apartment, and they gave me the money that I needed to get going.

So your seed capital were your moms, Yeah, yeah, moms who were coming off for bread exactly?

And how much did you raise for me?

Yeah?

I was gonna say, when we're talking about seed capital, forty thousand dollars total is what.

I had on day one.

This was back in twenty twelve, she juggled launching her own shop while still working for another bread company full time.

So the only day of the week that I had to focus on my bakery was Sunday, and that's when I would like test recipes and try out new things and make food for the staff.

And we made donuts one day.

And they were gone in a second, and we did a light bulb go off. Well yeah kind of, I'm like, wow, that's great, Let's do it again next week. And so every Sunday we made donuts and the lines got longer and longer and longer.

And then it became a thing. Then it was a thing. Yeah, I mean the donuts saved the business.

Rachel was on the map. It was time to cut the parachute strings. After two years, she quit her other job and went all in at Montclair Bread Company. She had found her place in the world doing what she loved, and she was good at it, like really good. And others began paying attention.

The town starts noticing, the press starts noticing, I'm getting all of these accolades, get to go on a food network and in the New York Times, And the better it gets.

On the outside the harder it gets.

At home, she was consumed with self doubt.

So even though everyone else thinks that I'm this like rock star, I think I'm like the worst mother in the world.

And you know that I can't run this business, and that I've you know.

Ruined our family life and had all of these things, and it was awful.

It was awful.

Rachel decided she wanted a divorce, but had a hard time actually leaving her husband. Her landlord also kicked her out of her bakery, and then she got into a bike accident while training for an iron Man triathlon, shattering her pelvis.

It was always something like that, anytime we got a little bit ahead, there'd be.

Something like that that would pop up.

That would you know, And yet you overcame all those yeah, yeah, yeah.

Rachel found a new home and finally left her husband. She was a single mother working crazy hours, but Montclair Bread was able to move to a bigger, nicer building around the corner, a renovated industrial space full of big windows and spectacular brickwork, and of course, there was a smell of baking bread. In addition to finding a new home for her business, Rachel's body healed, though doctors told her she would never be able to run again. She clocked her best marathon time ever in the fall of

At the beginning, I believed it was only going to be two weeks.

Think all of us did, remember fifteen days to slow the spread. Now I think, how were we so naive? While other businesses were closing shop, Rachel was determined to stay open, even if she was the only one there. She'd been forced to lay off twenty of her employees, and without that extra help, she had to work around the clock.

I worked eighteen hours. I went home, I slept in the clothes that I worked in. I got up and I did it again. And it's the same time that people are on social media talking about how they make their partner who works at a hospital, you know, leave their clothes in the garage and come it. And I'm like, I haven't changed my clothes and days.

Rachel lost big orders and had to cut lucrative items from her menu, but she was also scrappy and got creative. She sold groceries and meal kits and diy baking packages out of the store, and the community rallied around her.

I baked and sold more bread than I've ever baked and sold in my career because people couldn't get it at the grocery stores, so they actually bought bread from me.

So you sort of had a little boomlet early on. Definitely, Definitely she kept going, but it was a lot.

I really didn't think that I could sustain it.

Did you think it was going to kill you? Did you think the pandemic was going to kill you?

Yeah?

I did. I just reached my breaking point so many times, and I just would sit there and not know how to do it again tomorrow.

She wound up doing what more than five million other small businesses did. She looked to the federal government for help. You know, everybody winds about government spending until they need help when there's a hurricane or of flood. Who you going to call when there's a massive economic contraction like there was in two thousand and eight. Who you going to call when there's an unprecedented economic meltdown combined with the historic public health crisis? Who you going to call? Yeah? Washington.

So what did the federal government do? The federal government acted quickly, and it made a program which put cash into the hands of small business owners.

That's Karen Mills, President Obama's first leader of the Small Business Administration. She's describing how the Trump and Biden Whitehouses ultimately channeled nearly one trillion dollars to small businesses. The main program was an essential, well intentioned, yet chaotic scramble known as the Paycheck Protection Program.

I never thought i'd see the day where three hundred and fifty million dollars was in the same paragraph as the word SBA. But that's how much money was in the first trash of PPP that lasted about two and a half weeks.

That time, and funding went by in a flash, especially for people like Rachel.

Of course, at the time, we didn't know there was going to be a second round of funding, so the funding was gone, and how did that feel?

Defeating oversight and management of the PPP effort was slipshot. Treasury Secretary Steve Manuchin, who engineered the effort, was reluctant to be transparent about the process, even when he was specifically asked about it during a Senate hearing in May of twenty twenty nearly two months after the legislation providing for PPP was passed. Here's Senator John Tester of Montana.

When can we see full information about who's getting the dollars?

Well, let me just comment. When we negotiated this bipartisan deal, we agreed to unprecedented transparency, So we agree to release things that are not required by thirteen to three. So I don't know why you haven't seen that. We've everything's posted on our website or the Fed's website.

They went back and forth a few times. Are you sure the information is there? Yep? It's there. Are you sure yep? The Tester wasn't buying it.

I look forward to seeing that list, by the way, Secretary Mansion, and I'm going to go online and I'm going to search it because I'm going to tell you that as much transparency as you said, are with this program, as a center from Montana, as a member of the Banking Committee, I'm not seeing any of it.

Quite frankly, it wasn't clear exactly who was getting the funding or how it was being used. Rachel couldn't get PPP money the time it was offered, and she watched her application stall online. She ended up applying for a loan four times before she finally got some money one hundred and five thousand dollars. It saved her business and then some.

For the first time in history.

January twenty twenty one, we officially were one hundred percent debt free Love Her Bread Company. We paid off all of our investors, We paid off any debts that we had. You know, we got a good staff and everything. It was just like, all right, We're never going back there. We will never be back in this place again where we have so much debt on the business. Like it feels too good to get ahead. What do we have to do to stay here?

She started off January twenty twenty one on a new foot, and there were reasons to think the end of the pandemic was in sight.

I got my vaccination on January sixth, twenty twenty one. I was one of the first because at the time there was a windowwhere anyone who was working in the service industry in front of people could get in.

Did the vaccines feel like sort of a God send to you when they came along.

Yeah, it definitely just felt like relief because there were just so many unknowns. No one knew when it would end, how it would end. I don't think it has ended, but it just felt like there was progress.

And the vaccines gave you a sense of control over things, or more control.

Than you had I ever feel, yeah, or you know, it's just like that peace of mind from having that PPP loan, you know, sitting in our account as a buffer. I think the vaccine was that same piece of mind, like I guess some level of protection.

That peace of mind was nice while it lasted. When we get back from the break, I'll take you through year two of Rachel's experience during the pandemic twenty twenty one, and the big idea is she had to grow her business. That's next. The story of Rachel's twenty twenty one might actually start back in twenty twenty, when Rachel was so burnt out that she decided to close Montclair Bread for two days and rent an airbnb in New Pulse, New York.

Went up there and I got to run on the trails and have a quiet space. At the time, I couldn't run something that I used to keep my sanity running. Although it's therapeutic, it's not therapy, That's what I've been told.

She rented that airbnb once a month for six months. She went for runs, rested, recharged, and she ended up writing a book in that Airbnb, We'll Run for Donuts, The Montclair Bread Company Cookbook. Rachel eventually decided to rent a cheap studio apartment in New Paults while also keeping her families rental in Montclair. Although she originally sought an escape in New Pults, she eventually found inspiration too, in the form of a new business opportunity. It all started

And if there were donuts left over, I'd pack them up and take them to my climbing friends. So then they started asking for them, then they started ordering them, and then I was in a parking lot and a trailhead with donuts in my trunk, like you know, on Sunday afternoon, handing them out to these climbing friends and friends and friends. And I thought, there's got to be a more reasonable way to do this.

She followed a familiar path. First she gave the donuts away, Then she found a farmer's market.

We set up at the farmer's market. In the first week, there's like couple people in line three. There's a line all the way across the parking lot and down the block waiting for the donuts.

Then she opened a new shop in New Pults in the fall of twenty twenty one, and she felt really embraced by the community there.

The first weekend I was open. It was a soft opening. I never publicized it, and I had every member of the town council come and introduce themselves and give me their phone numbers in case I needed anything.

This was all going on around the time a new COVID nineteen variant Delta was making its rounds. Even though infection surged, Rachel was feeling good about the state of her business until the holiday season came around and pushed Rachel to her brink because the embrace she felt from the New Paltz community was sometimes hard to find in Montclair, and an even more infectious COVID variant Omicron was waiting in the wings. All of this made the holidays more stressful.

You know, we were really short staff on Thanksgiving Day, but we opened to give out orders and for retail, and of course we start selling out because it's Thanksgiving Day and people were just screaming at my staff. Somebody screamed at one of the retail employees because it took three minutes to wait for her coffee.

Second Christmas, a holiday dedicated to salvation.

Christmas Eve was when we got the first call out. We got everything like shuffled around. A couple hours later, somebody else called out, and then I feel like, well do we close for the week.

We can't afford to.

We have to be open at least three days this week for the orders that we've already taken.

Third New Year's Eve, a holiday dedicated to renewal.

New Year's Eve, we get the first baker call out, so we had six people out and two people pending tests, and we decided to close on the first and second.

So for two weeks ends in a row, we were closed.

Montclair Bread needed twelve people to open its doors every day any less, and they were facing major inefficiencies. Orders wouldn't come out on time. With twenty people on staff and only twelve who were full time employees, that left little wiggle room for Omicron infections, so they decided to close shop for a whole week. Rachel committed to paying anyone on her staff who was scheduled to work, but no new money was coming in.

The two weeks that we had to close days the weekends would have been our busiest weeks of the year, and they were the worst that.

We've had on record for December.

So normally that would give us a buffer to get through January and February where sales are always low.

We always cut hours.

And January and February, but there's no buffer, like there's nothing.

To get us through.

Suddenly, Rachel was at the end of her rope because Omicron had spent weeks stating her bakery's business. The peace of mind and protection she felt like she had at the beginning of twenty twenty one was gone.

There was definitely a time in my life where I would have opened at any cost, even if it was just me. But by December twenty twenty one, I'm like closed the door, Just lock the door.

Rachel sent an email to Montclair Bread's customers right after the new year, with the subject line SOOS, she wrote that she was waving her white flag. When my wife received that email, I worried a closed sign might appear in Rachel's window soon, so I dropped by to check in on her. The pandemic was starting to take its toll on Rachel, on her staff, her customers, everyone.

Two years ago, at the beginning of this, you had this incredible community support because we were open when no one else was.

But now.

There's just, you know, overall, a lack of empathy for what small businesses were going through and enduring. The big thing that they don't appreciate is that we're not making up the rules. There's no playbook for us, and there's no centralized agency either local, state.

Federal, that's giving us any source of information about how we're supposed to handle it. Like we're deciding the fate of everything.

Just like three of us who don't have medical backgrounds, don't have science backgrounds. We just bake Brett and we're like trying to make all of these decisions.

In her SOS email, Rachel asked her customers to contact their local elected leaders. Montclair's mayor and town councilors, New Jersey's governor. She didn't feel like local officials were providing her with clarity or guidance about steps she needed to take to respond to the crisis, and when she tried reaching out to them for help, she didn't have much luck. I tried to interview Montclair's mayor and the town's top administrative official about their responses to COVID, but they wouldn't

Rachel was the one who set the light bulb off for me.

Now, why didn't that happen earlier? Why didn't that happen in mid twenty twenty? Just too many balls in the air, or just a general lack of clarity.

Yeah, I think a little bit of who's going to do it too, writ whose responsibility as the CDC, the federal government stake.

There to make that call, to make that call.

Right in government, we have a tendency to start with experts and start with people at the top and let a cascade and filter through. We should start with the small business owner. We should start with the homeowner, asking them what's going to be easier for you, what's going to show up better for you?

And I had heard other things from other entrepren that there were just these little tweaks the township could have done that would have made their lives easier as business people. Is that a legit criticism and has that been addressed?

If it is, it's a completely legitimate criticism, I personally am trying to address it. I do feel like David and Goliath when it comes to some of this stuff. I think we've got really entrenched ways of doing things and not a lot of open mindedness and willingness to be dynamic and to try new things and to be innovative.

Entrepreneurs are forced to be dynamic and innovative in order to survive, but they also need help, because tending to the needs of small business isn't an abstraction. At the end of twenty twenty one beginning of twenty twenty two, Rachel wasn't sure what she was going to do next in any part of her life. Her children were struggling in school, and she felt local educators were letting her down. She felt the town it turned its back on her, and she wasn't sure if Montclair Bread Company was going

Yeah, arts, culture, identity.

I mean, well the place becomes a diamond does you could be anywhere USA.

This is Jason Gleeson, head of the Montclair Center Business Improvement District. The BID is a nonprofit that manages one of the shopping districts in town. It helps new businesses get settled in and older ones up their marketing games while trying to make it easier for both to flourish, and it plants flowers. Basically, the BID.

Is there to make sure that downtown Montclair is awesome.

So Jason is helping the little shop around the corner survive. Why.

I mean, they're the life's blood, right, I mean, it's the heartbeat of the town.

What do they bring to the community that's unique from your perspective, that would be lost if they weren't there.

I mean, honestly, it's such a simple answer, and it probably is going to sound like such a cop out, But like themselves.

It's about individuality and how that distinguishes small businesses from the giants of corporate America.

You know what Apple is, right, it has a shape and a color and a feeling.

There's the product, right, you know, it's Apple.

You could probably be blindfolded and someone could hand you a laptop and you could feel it for a second, be like, that's probably an Apple laptop.

Right through all their branding and.

Their marketing exercises and all that, and they spent a great deal of money doing that.

But it's not a person. It's not a hug and a handshake. And I woke up.

At four o'clock in the morning to bake this for you, or, in the case of some of our retailers, like I spent the last three months visiting artisans upstate to curate these products for your home, because I understand you as my consumer.

That's why so much was at stake for small businesses when the pandemic hit.

Their hopes, their dreams, their families, their college tuitions they're saving for.

All of that was on the line when they were told to shut down for COVID. Now, as I've told you all along, and as her journey proves, Rachel Wyman is a survivor. But even she has had to weigh whether it's worth fighting. We're throwing in the towel because COVID nineteen has been an unrelenting opponent.

I can't keep fighting by myself anymore. I just I don't know if it's worth it anymore. I mean, like last week I updated my resume. Do you know how long it's been since I updated my resume? Like that's that's the kind of place I'm in.

That was Rachel at the beginning of twenty twenty two, and then she just decided to start over.

I've said it so many times, I think everybody here has heard me say it at least once. If I had it to do all over again, I would just do donuts.

Donuts made sense to Rachel, and.

Then I'm realizing, Wow, the ingredients take up so much less space, and I can get up at five in the morning and still have donuts at eight in the morning because it takes that much less time to do the donut work, and I can do it with like me and one other person.

In donuts cost less to make them bread, So even though they sold for less, they were more profitable, and the woman whose identity was wrapped up in bread and baking shifted gears. Montclair Bread Company was no more. Rachel became the owner of two storefronts with a new name, Rabble Rise Donuts. Are you surprised that the bread woman has become the donut woman?

No, I think this transition to Rabble Rized donuts really, Like for a while, I fought it and I was kind of mad at it, you know that, like I'm this great bread baker, and you know, people only want the donuts. But then I decided to embrace it because, like I said, what do I do better than anyone else? I make donuts better than anyone else, And I just really wanted to embrace that. So now we're a donut shop.

Rachel had barely made the transition into donut maestro before a whole new series of challenges emerged. Supply chain disruptions and soaring inflation made her so to run a simple donut shop suddenly complex. The hardships of twenty twenty two spilled over into the beginning of twenty twenty three. When I sat down with her again to talk.

I can't even get eggs, like I'm buying them at the grocery store right now because I can't get eggs from my vendors. Why is that because they're out They're out of stock and eggs go in donuts.

The prices of eggs, flour, and sugar have all soared, and obviously that's going to have an effect on her bottom line.

I mean, at the end of the year, I would be lucky to have like three percent, you know margin, like the great thing used to be. You know, you can make a donut for fourteenth cents and then it's all the stuff that goes on top that costs the money. And that's why we charge what we charge now. It's like it costs me a dollar donut before you put anything on it.

So she's had to raise the price of each donut from around two between three point fifty to five dollars. But guess what, when your donuts are really good, people will keep buying them. That's allowed Rachel to dig out from some of her lingering financial problems. And by the way, she hasn't totally gotten rid of some of the stuff I love. When I told her how I missed her sourdough bread, she let me in on a secret. If you ask, they'll bake bread to order.

It's kind of like a teenager that gets grounded, where you take away all of their things and then slowly you can start giving them back as they like earn your respect and trust. So that's what happened. We took it all away, and then as our staff and systems became more and more efficient, we've been able to add some of the parts back.

So are you telling me actually that those sourdough lows are still gettible?

Yeah, they're still gettable. In fact, there might be one out there right now.

Now that I'm going to try to lay claim to that bread.

Yeah, yeah, exactly. And you know, I think having a whole bread program is, you know, costly if you're not a wholesale business, if you're not doing volume and bread, it's costly. But doing what we do, it's nice because all of the bakers on my team enjoy baking bread, and so it's kind of fun for us to do it once a week.

And I would imagine it's this sort of spiritual and creative connection for you to the roots of why you started things here.

Oh absolutely, yeah, absolutely.

Even so, Rachel the survivor and Rachel the marathon runner, Rachel the mom, and Rachel the small business owner isn't the same person she was when I first met her three years ago. COVID rocked her world, It rocked everyone's world. But the Rachel who got to this side of COVID isn't sure she'd do it all over again.

I would never tell a friend to go into this business.

And if you had to walk away from it, how would.

That feel like a huge weight was lifted off of my shoulders?

So it would no longer feel like a sense of loss?

No, no, it wouldn't.

So you're staying in it now out of a sense of duty and obligation rather than joy and fulfillment.

Correct, yes, that is one hundred percent accurate.

Does it surprise you that that's where you are with it now?

I thought that the rebranding would rejuvenate it enough to keep my heart and soul fulfilled, but it didn't really work.

I can't tell you how deflating that feels. Rachel was sort of a COVID north star for me. The business woman I thought of is unbeatable. While she's not down, COVID took a lot away from her that she knows she's not getting back to be sure. She has a lot of joy in her personal life, her kids, a happier life in New Pauls and a new marriage, But on the business side of the ledger, she's also considering a career change, one that will leave her lesson involved