2008 Was Bad. But Many Small Businesses Won't Even Survive Coronavirus | Opinion

The other day, my wife, Rachel, and I went to one of our favorite local restaurants. I expected the place to be less busy than usual, but I was surprised when I saw only one other couple.

I asked the owners, Francesco and Manuela, to estimate how much business they'd lost to the coronavirus that night. They told me that on a normal night they'd have had at least 90 reservations, whereas now they had—well, we could see for ourselves. Leaving the restaurant, I took one last look around. Nothing summarizes the plight of small businesses in the era of the coronavirus better than that sea of empty chairs.

While, naturally, many of us are comparing this situation to the 2008 recession, the truth is that, for small businesses, it's much more life-threatening. I've been an entrepreneur for over 20 years and have faced a multitude of crises during that time. Nothing quite compares to the coronavirus.

Here are four reasons why.

1. Hustling and Creativity Are Largely Off the Table

During the recession, consumers were spending less, but the fact that small businesses remained open meant they could hustle and get creative about trying to encourage customers to spend more.

Fast-forward to today. In my home state of California, bars and nightclubs have been closed by government edict. Many restaurants remain open but must operate on takeout-only capacity.

For these small businesses and many more, hustling and creativity are moot points. If the government tells you to close, you close, but you still have to pay your bills. You immediately start hemorrhaging cash, and the end is near. Half of all small businesses hold a cash buffer of less than one month, according to a study by the JPMorgan Chase Institute.

2. Many Businesses Can't Operate at Reduced Capacity

Another big difference is between having reduced opportunity versus no opportunity at all. Let's say you're an events company, and your primary source of revenue comes through business conferences. Those revenues are now getting canceled left and right.

I know a guy who gets 90 percent of his annual revenues from one big event. If that goes kaput, he'll experience the equivalent of going 365 days without earning a dime. During the financial crisis, he may have taken a hit, but it's highly unlikely that it would have been catastrophic.

Many concert halls and other event spaces are also being forced to cancel all events. For them, it's all or nothing.

3. All Customers Are Affected

The financial crisis was universally felt, but it wasn't as universally damaging as the coronavirus. In 2008, if you didn't own a home, you weren't suddenly burdened with a house worth way less than what you paid for it, for example.

With the virus, everyone's affected. Everyone's vulnerable. Even though younger people are less likely to experience severe symptoms, no one wants to endanger their parents, grandparents, elderly neighbors or other at-risk groups. Retail stores reliant on brick-and-mortar locations are already suffering greatly, as people are staying home.

4. Going to Work Is a Health Risk

Finally, with the financial crisis, small business owners had their livelihoods on the line, but not their lives. They didn't run the risk that every time they headed into their store, someone might walk in and expose them to the coronavirus.

Owners have to feel the stress of not only running a small business at one of the most precarious moments in recent history but also trying to stay healthy and hoping their loved ones and employees do the same.

They have to follow the strictures that their neighbors are following, but they don't have a boss who can tell them it's all right to work from home. They don't have paid sick or vacation days stored up that will allow them a little financial breathing room.

empty restaurant
People are reflected in the window of an empty restaurant, which remains for business, on March 15, in Los Angeles. Mario Tama/Getty

It's an exceedingly tough time to be an entrepreneur. And a similarity between 2008 and now is that there is no known end date. During the recession, prognosticators couldn't agree on how long it would drag on and how long the economy would suffer. Similarly, no one knows how long it will take for the virus to run its course, nor how deep and severe the consequences will be in terms of lives and economics.

Another commonality is that small businesses simply must try to adapt, regardless of how difficult it is, and don't be shy about reaching out to customers for support.

Francesco and Manuela have started asking people to order takeout and purchase gift certificates to help keep the restaurant afloat. Consumers are going to spend more cautiously because of the coronavirus, but it's that spending that will get us through.

Levi King is the co-founder and executive chairman of Nav, a fintech company that matches business owners with their best financing options for free. King is a self-taught, serial entrepreneur who has started eight different small businesses in the last 20 years.

The views expressed in this article are the writer's own.