Small Businesses and COVID-19

After the COVID-19 virus began to spread around the U.S., Alan Sereboff spent hours driving to Home Depots in search of virucide to wipe down workout machines at his Los Angeles gym—Mindset Strength & Conditioning. Discovering the chemical agent that destroys viruses, he said, was like finding gold.

Then scientists concluded that the virus could spread from droplets in the air. Gathering indoors was dangerous. Applying virucide was like corking a hole in the hull of the Titanic.

So, he decided to personally build pods out of PVC pipe and shower curtains. Each one cost $150 to $200.

“That doesn’t sound expensive but there were eight of them,” said Sereboff, who opened Mindset Strength & Conditioning in 2015. “When you are a gym that’s losing members like leaves off a tree during fall, it becomes terrifying.”

With membership plummeting and rent still due, the state banned indoor gyms from operating at all. Sereboff hit the wall. He had to shut down completely.

One year into the COVID-19 pandemic, vaccines are circulating and a return to something resembling normalcy is imaginable. However, it is a new world dictated by adversity and forced innovation that will have lasting impacts. For three Los Angeles businesses, the pandemic has been a mother of re-invention.

Necessity

The strict and often inconsistent COVID-19 restrictions on local businesses heightened the economic toll of the pandemic, according to Albert Napoli, a Senior Lecturer of Entrepreneurship at USC.

As of September 2020, 15,000 businesses in the Los Angeles metro area had permanently or temporarily closed since the start of the pandemic. And Los Angeles saw the most business closures of any American city, according to a Yelp economic report. Many more business owners have given up since.

When updated state guidelines allowed for small outdoor workouts in the fall, Sereboff lugged barbells and dumbbells everyday from his indoor gym to the parking lot to hold workouts.

But calls from members were piling up. Most of them, he said, started the same way: ‘Man, I hate to do this, but I just cannot afford the membership anymore.’ And at the same time, he himself was facing a “crisis of conscience” because he was charging full price while watching his members working out in a dirty parking lot.

“Enough is enough,” he decided. “I decided not to be reactive, I decided to be proactive.”

He found a better outdoor space, moved his gym and brought in a COVID-19 physician to give his expertise on the safety of the new setup. The set up was good enough that it gave the owner of the land an idea. A month and a half later, Sereboff had to move so that the owner could place his own gym there, leaving Sereboff to scramble in search of a solution in the midst of a pandemic.

Changing Faces

Olga Lorencin Skin Care, a Los Angeles-based skin care clinic and product line, also had to shut down the largest part of its business due to state health and safety guidelines. Having no choice but to close her clinic, Olga Lorencin dived into the branding and marketing of her products. Stuck at home and without the responsibility of managing a team of estheticians, Lorencin spent every day in the first few months of the pandemic on Zoom with her employees. Those meetings were used to plan marketing strategies for her products. She saw immediate results.

“Our sales were up, people were at home and for the first-time people could actually say, ‘Wow, I really need a facial in a box,’” Lorencin said. Her Red Carpet Facial in a Box—one of her three clinic-style facials that customers can do themselves at home—has been sold out for months.

Transitioning away from in-person services towards selling products had been Lorencin’s long-term goal when she sold her 13-year-old skin care clinic to open a smaller clinic almost three years ago. Lorencin always expected that transition to take years, but she ended up making it happen in a matter of months.

Her products, she said, were previously shoved in the corner and only addressed when she had time. “All of a sudden when I paid more attention to them, they started to flourish,” she said. “And I made the decision I am never going back.”

Napoli says that many businesses experienced an accelerated transition during the pandemic. “What would have taken maybe five or 10 years to adapt to, had to be done in nine months or [businesses] were going to face going out of business,” he said.

Widening the Lens

We Make Movies transformed from an artist community that offered basic production services into a full-fledged film production company, bringing in outside clients. Already on this path before the pandemic, the shutdown of the film industry in California required the company to become hyper-focused on adapting its business model.

In that time, We Make Movies, which used to focus almost exclusively on collaborative workshops for its community, added pre-production, production, post-production and distribution services to its company and threw itself into a branding effort that included a completely new website and a focus on social media. The company’s reach and ability to serve clients grew exponentially.

“The amount of stuff we did since COVID happened probably would have taken us another year,” said Chief of Production at We Make Movies, Eric Michael Kochmer.

And the necessity of holding events virtually during the pandemic opened up a world of expansion. All of its workshops and classes, which are usually held in a small Los Angeles studio, went virtual, making it possible for hundreds to take part. As a result, artists anywhere could participate, and membership grew around the country and globe. We Make Movies’ 2020 summer film festival also went virtual, meaning its usual two-day festival turned into four full days of screening that featured almost 100 films from around the world.

“We were already international the year before, but it’s so much different when you can sit in the Q&A with people from England or Italy and you can actually meet everyone who is involved [in the films],” Kochmer said. “It actually helped us to see we can be partnering with more people outside of L.A.”

Napoli believes that technology will be key in the future for any business wanting to expand, and the realization of this during the pandemic sped up global expansion.

Meanwhile, for Lorencin, seeing her products thrive without the services during the pandemic altered her assumption that the business' success was synonymous with a service-based business.

Now, she is fully committed to her products. She is changing the design of her bottles from plastic to glass, moving her fulfillment house and manufacturing from California to Utah and hiring employees to focus on her brand.

“If it wasn’t for the pandemic,” Lorencin said, “I think I would still be bogged-down by doing treatments or managing a team of estheticians, which I really did not want to do.”

For We Make Movies, its growing membership during the pandemic has already cultivated new partnerships and expansion opportunities. Kochmer himself is considering relocating to San Francisco for a few months to grow the We Make Movies community and jump start the productions of films there to get a foothold in another major city on the West Coast. The company is planning on continuing virtual workshops all over the country.

“Just trying to be resourceful, having a curious mind and being a problem solver is vital,” Napoli said. “It has always been vital to an entrepreneur, but even more so during this pandemic.”

It all came together for Sereboff when he found an outdoor space that had just what he was looking for logistically. It is a large space, fenced in and has turf—something he had always wanted for members to be able to push weight sleds during workouts. It also provided opportunity for Sereboff to grow the community aspect of the gym after the pandemic.

There is a spot for a food truck to pull up for post-workout mingling once the pandemic is over and a spot where he hopes to put a fireplace to host movie nights in the future.

Now, in his new outdoor space, Sereboff is holding workouts and declares Mindset Strength & Conditioning is totally an outdoor gym from this point forward. The company’s rent is thousands of dollars a month cheaper and membership has grown significantly since the move.

"This is the best place we have ever been," he said. "As a matter of fact, I wish we would have set up like this from day one."

But amid Sereboff’s newfound optimism is an equal acknowledgment of the perils of innovation during a pandemic.

“I look back at this time and you start to feel like you are running a ship in the middle of a sea of icebergs,” Sereboff said. “If you don’t change its course appropriately, you are going to hit an iceberg and you are going to sink.”