small business
NorthBay biz has produced the annual Top 500 bonus issue for the past 31 years, featuring the top 500 companies in the region. It’s become a tradition, and we recognize that it takes courage, creativity and hard work to keep a business thriving. But this year’s issue reveals just how devastating the coronavirus and its accompanying economic shutdown has proven to be. We estimate that among this list of 500, total revenue dropped by more than 16% in the last 12 months.
If your company excelled in a high-touch consumer business in 2019, it was pummeled by high tech in 2020. Regrettably, employment powerhouses such as Nelson Staffing—featured in this very column last year and ranked then at No. 25—were among the hardest hit.
As Warren Buffet says, “It’s tough to get rich in a poor market.” That’s never rung so true as it did for employment and staffing companies in 2020. We estimate that Nelson’s revenues dropped more than $140 million, resulting in a 49% decline due to the hiring freeze across nearly every sector of the economy.
Many restaurant businesses—which are run every bit as well as Nelson runs its employment business—suffered just as dramatically. Whether it was Terry and Mark Stark’s collection of dining venues in Sonoma County, or Pete Gillham’s Cattlemens Restaurant chain in Northern California, these fine organizations experienced a considerable drop in revenue.
Local media and entertainment businesses, which count on a thriving local economy, were hobbled by the decline of local retail. Amaturo Sonoma Media Group, the parent company of this magazine, dropped by more than 35% the very moment that retailers, restaurants, casinos and live events were shut down. Country Summer, ASMG’s extremely popular three-day music festival, erased more than $4 million from ASMG’s revenues when it cancelled last July. Untold tens of millions in associated expenditures for lodging, restaurant dining and other tourist-related spending disappeared as well.
Thankfully, five key North Bay business sectors flourished in the midst of the pandemic—accounting, legal, insurance, real estate, and home improvement/home repair. Our review of these industries indicates they remained steady, offering employment in a time when few industries could. Many of the professionals in these fields, however, learned to maintain client contact without an office. Many won’t be returning to an office environment anytime soon, thus wreaking havoc in the office leasing and ownership industry. Once in-demand office buildings are now selling for less than a third of their replacement value. (If your business is currently leasing space, you owe it to yourself to re-visit the terms of your lease!)
The “little guy” sure did take it on the chin last year across dozens of once-thriving business sectors. And as you well know, “Big Tech” is the guy who threw all the punches. Verizon Telecommunication’s free cash flow, the money it can pull out of its coffers and hand to shareholders and its officers, grew 32% last year to more than $24 billion. Google’s parent company—Alphabet—grew revenue by double digits to more than $183 billion. But Amazon was the real victor. Jeff Bezos wacked every local jeweler, bookstore, kitchen store and local clothier you can think of last year. After a 21% sales increase in 2019, the company grew another 38% with nearly $400 billion in sales in 2020. Our downtown retailers will not recover if we, as consumers, don’t give them the opportunity.
As the North Bay gets vaccinated and we continue to adapt and survive during these challenging times, remember the little guy. Please shop local. Those who live and work in the North Bay are your neighbors, and they own, operate and employ other neighbors. As the fog of the pandemic lifts, let’s work together to bring the North Bay back to health, so it can thrive once again.
Please drop me a note at Lawrence@NorthBaybiz.com.
