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Editorial

 

Way back in mid-March of 2020, as the state was shutting down due to COVID-19, we wrote about the great resiliency of this region’s business community and how it would be sternly tested because this was the greatest challenge anyone in business had ever faced.

Little did we know then just how stern this test was going to be and how long it would last. But 18 months later, not only do the challenges remain, but they have in many ways multiplied. Thus, a time that many thought would be normal — meaning what we knew in the fall of 2019, or at least something approximating it — is nothing like we imagined.

Indeed, this was expected by many to be a time when most of the hard decisions would be behind us. Decisions about whether to lay off or furlough people. Decisions about whether to forge ahead with programs and events that would bring people together in large numbers. Even decisions about whether to stay in business — or certain kinds of business.

As summer comes to a close and a fall shrouded by question marks looms, we’re facing some of those decisions again (or still) — and some new ones as well.

Some businesses may be forced to look again at mask mandates or at requiring proof of vaccination before one can enter an establishment or even a college campus. Others have already made vaccination a requirement for employment, and many others are contemplating whether to go this same route.

These are hard decisions that often put employers at odds with their customers and employees at a time when they simply don’t need to be alienating either constituency.

All of this makes it clear that the fight against this pandemic is far — as in far — from over.

Indeed, just as those who went home in March 2020 thinking it would be for just a few weeks soon learned how wrong those projections were, we’re all now forced to recalibrate, again, just how long we’ll be battling this pandemic and how heavy the fight will get.

What is clear is that the victory celebrations, if we can call them that, from just before Memorial Day, when the governor removed all remaining restrictions on businesses, were certainly premature.

Meanwhile, there are new challenges, from shortages of needed goods and raw materials to escalating prices and hard choices about if and how to pass them on to customers who are finally coming back in large numbers. Then, there’s a workforce crisis that has impacted almost every business sector and forced several types of businesses to reduce hours of operation, curtail services, or both.

There is hope that, with the end this month of the federal bonus being paid to those receiving unemployment benefits, things will improve on this front. But those hopes are countered by the reality that this problem is deep-rooted, and it may be some time before there is real relief.

And there are still more hard choices about whether, when, and how to bring workers back to the office, decisions now made even more difficult by the Delta variant and the great uncertainty about what this fall will be like.

Going back to what we wrote in March 2020 … this region’s business community is, indeed, resilient. And it needs to be. Because, contrary to what we were all hoping, it isn’t any easier being in business now than it was then. And in many ways, it’s even harder.

 

Accounting and Tax Planning Special Coverage

Doing the Math

 

Joe Bova compared the past 18 months in the accounting profession

Joe Bova compared the past 18 months in the accounting profession to “trying to sail a ship while you’re building that ship.”

For accountants, the past 18 months have been a time of change, challenge, and adapting to everything from new ways of doing business to new responsibilities with clients to ever-changing tax laws. Looking forward, they note that many of these changes are permanent in nature.

It’s been called the ‘never-ending tax season.’

That’s just one of the many colorful ways those in the accounting sector have chosen to describe the past 18 months or so, a time of change, challenge, learning, and adapting — for them and for their clients.

Indeed, this time of COVID-19 has been marked by everything from changing tax laws to fluid filing deadlines; from new responsibilities, such as helping clients handle PPP and SBA loan paperwork, to changes when it comes to where and how work gets done; from a greater reliance on technology to the acceleration of a shift in accounting toward a more advisory role as opposed to merely adding up numbers.

Summing it all up, Joseph Bova, CPA, CVA, CGMA, a partner with Northampton-based Bova Harrington & Associates, said navigating all this has been “like trying to sail a ship while you’re building the ship.”

Nick Lapier, CPA, a partner with West Springfield-based LaPier Dillon, used phraseology from sports (sort of), but more from politics.

“It’s very hard for us to focus on our work when the government kept moving the goalposts.”

“It’s very hard for us to focus on our work when the government kept moving the goalposts,” he said, referring to the many changes in tax laws — some coming in the middle of tax season — and moving of filing deadlines. “For some people who filed their tax returns early, we then found ourselves amending those returns because they changed some of the rules. And some we didn’t file because we hoped they would change the rules.

“The end zone kept moving,” he went on. “We’d be on the 10-yard line, work really hard, and still be on the 10-yard line. There are 50 sovereign states that have the right to tax, so if you have clients filing tax returns in multiple states, each state was also possibly changing their laws and moving the goalposts.”

As the calendar turns to August, those we spoke with said this has been a time for many at area firms to catch their breath and take some of the vacation days they didn’t take last year or earlier this year. It’s also a time to reflect on what has transpired and what likely lies ahead in terms of the lessons learned and which of the changes seen over the past year and half are more permanent than temporary in nature.

Nick Lapier

Nick Lapier says a taxing period for all accountants was exacerbated by the federal and state governments constantly “moving the goalposts.”

Julie Quink, CPA, CFE, managing partner of West Springfield-based Burkhart Pizzanelli, P.C., said her firm, like most others, is not simply turning back the clock to late 2019 when it comes to returning to something approaching normal, especially when it comes to how and where business is conducted. She said most employees have returned to the office, but moving forward, there will be even more flexibility when it comes to schedules and working remotely because of what’s been learned over the past 18 months.

“We’re not going to dial back to everyone needing to be here those static hours of 8:30 to 5,” she noted. “I’m a glass-half-full person, and if there is a positive from the past 16 or 17 months that we’ve been dealing with, it’s taught us that we need to be more flexible, more mobile, and more adaptable — and understand that people don’t have to be actually sitting in their offices to get their job done.”

Meanwhile, Lapier told BusinessWest that many accountants, himself included, spent far less time meeting face-to-face with clients in 2020 and early 2021, and he expects that trend to continue.

“This current generation lives in the digital world; they don’t need to see people — they transact their personal and their business life electronically,” he explained. “What has changed because of COVID is that all the prior generations have adopted that same mentality — not 100%, but a heck of a lot more than before the pandemic.”

Howard Cheney, CPA, MST, a partner at Holyoke-based Meyers Brothers Kalicka, P.C. and director of the firm’s Audit and Accounting Services, agreed, while noting, as others did, that the pandemic in many ways accelerated a trend within the industry toward accountants shifting to roles that are more advisory in nature, with a greater focus on the future than the numbers from the past quarter or two.

“I’m a glass-half-full person, and if there is a positive from the past 16 or 17 months that we’ve been dealing with, it’s taught us that we need to be more flexible, more mobile, and more adaptable — and understand that people don’t have to be actually sitting in their offices to get their job done.”

“Accounting has for many years been an historical-look-back kind of thing,” said Cheney, part of an executive committee now managing the firm. “With the speed that people can now get data, they don’t need us to tell them about what happened six months ago; they need us to tell them what’s going to happen six months from now and help them interpret that.”

For this issue and its focus on accounting and tax planning, BusinessWest talked with several CPAs about the never-ending tax season, which still hasn’t ended — many are still dealing with a large number of extensions, many of them resulting from changing tax laws — and what will come next in a sector that has been taxed (yes, that’s an industry term) by this pandemic, and in all kinds of ways.

 

A Taxing Time

Chris Nadeau, CMA, CPA, CVA said he spent most of the past April — the height of tax season — in Florida. And hardly any of his clients knew he was working and handling their needs from more than 1,000 miles away.

Julie Quink

Among the many lessons learned from COVID, Julie Quink says, is the need for more flexibility in when and where people work.

“No one would have known unless I told them,” said Nadeau, a director with Hartford-based Whittlesey, which has offices locally in Holyoke, adding that he would never have considered such a working arrangement prior to the pandemic, but COVID provided ample proof that a CPA doesn’t have to share an area with a client to get the work done.

This anecdote speaks volumes about just how profoundly the landscape has changed in the accounting and tax-planning world over the past year and a half. There have been a number of seismic shifts, and where people work is just one of them, said Nadeau, who has come to his office on Bobala Road in Holyoke only a few times since St. Patrick’s Day of 2020 and was in on this day only to meet with BusinessWest.

Others we spoke with told of similar learning experiences during what has been a year and a half of acting and reacting to everything that has been thrown at them since those days in mid-March of last year when everyone — well, almost everyone — packed up and went home for what they thought would be a few weeks.

As everyone knows, that certainly wasn’t the case, and thus accountants, like all those in business, had to adjust to a new playing field, finding new and sometimes better ways to do things and communicate with clients and fellow team members alike.

“We had to reinvent our processes — how we communicated with the team and how we shared information back and forth, especially when working remotely,” said Lapier of those early days, noting that a three-month extension of the traditional April 15 filing deadline helped spread the work out and was a saving grace.

Bova agreed, noting that his firm of nine employees adjusted to the new landscape out of necessity, with investments in technology, a move to a paperless work process, Zoom meetings between employees and with clients, visits by appointment only, and other steps.

Moving forward, many of these new ways of doing things will continue, with perhaps the biggest being where people work. Indeed, most of the firms we spoke with said some variation of hybrid schedules will become the norm for at least some employees .

“In the future, there will be more hybrid work models, where people work in the office, but they do some work at home — I can see some real potential for that,” said Bova, adding that not all workers have returned to the office, and he’s not sure when they will. “We’re going to explore our options with this; there’s no need to deal with it in the summer — it will be more of a fall issue.”

Howard Cheney says the pandemic

Howard Cheney says the pandemic may have accelerated, or amplified, a shift within accounting to an advisory role, with more emphasis on the future than the past.

Cheney agreed. “We’ve been really flexible as a business with not requiring people to come back just yet,” he said, adding that most at the company have returned to their offices in the PeoplesBank building, but some are still working remotely. “The likelihood is that some kind of hybrid work schedule will be the future for our business.”

Whittlesey recently adopted a hybrid work policy, one that enables people to work “from wherever they will be most efficient,” said Nadeau, adding that most are finding it more efficient to work remotely, and they will continue to do so in the future.

“Some people are not coming in at all, and some are coming in a day or two a week,” he explained. “It’s ‘work where you need to for that day.’ Some employees have actually moved away to another state during COVID, so you could definitely call them ‘remote.’ And it’s been pretty seamless — and flawless.”

And this shift brings a number of benefits for the company, including a possible reduction of its physical footprint, he said, adding that it is likely that the firm will be able to downsize in Holyoke. “At some point down the road, we’ll see what kind of space we’ll need.”

It also means more and better opportunities to recruit top talent to the company because such employees will be able to work from anywhere, including another state, as Nadeau did earlier this year.

“It’s incredibly challenging to recruit people — I think there are fewer accounting students graduating now, and a lot of the people who do graduate end up going to Boston or New York to work for the Big Four firms,” he explained. “So having a remote-work or hybrid-work policy is an added benefit that we can offer, and one that firms are probably going to have to offer if they want to attract top talent.”

As for interaction and communication with clients, while all those we spoke with said face-to-face is still the preferred option, COVID has shown that Zoom and even the telephone work well — and, as with working arrangements, when it comes to interacting with clients, flexibility is the new watchword.

“As we’re talking with our clients, we’re seeing a combination of the two, in-person meetings and those by Zoom and phone — some want meetings in person, and other times, a Zoom meeting or phone call is sufficient,” said Nadeau, noting, as others did, a significant time savings from not physically traveling to see clients, so those at the firm are able to do more with the hours in the day.

Cheney agreed, to some extent, but noted there will always be plenty of room for, and need for, in-person service to clients.

“You don’t want to lose sight of that personal-touch aspect,” he told BusinessWest. “You don’t want to do everything remotely — I don’t think clients want to do everything remotely. But they’re OK with some level [of remote interaction] because we’ve gotten used to it, and they see the efficiency, too.”

 

Crunching the Numbers

As he tried to put all the changes to tax laws — and changes to the changes — into perspective, Joe Bova recalled the communication he received from the U.S. Small Business Administration concerning PPP loans that came with the header “Interim Final Rules.”

This oxymoron was just one of many challenging measures and changes that CPAs had to make sense of over the past 18 months, a time that Bova described as “a shooting gallery.”

“What’s been different during these past two seasons is that tax-law changes have been happening during tax season,” he told BusinessWest. “And when the PPP loans first came out … the SBA and the Treasury were updating their websites almost daily, and there was a lot of ambiguity in the definitions. We [accountants] were kind of on the front lines because people were calling us, even the banks.

“We all had the same information, which wasn’t clear, so people were calling us to help them interpret these changes,” he went on. “You were in the water on the boat, but you were still building the boat.”

In addition to coping with new legislation and changing rules, there was simply more work to do, said those we spoke with.

“Our workload has gone up probably a good 20% without adding a single client,” said Lapier, listing PPP applications, forgiveness, and audit work, as well as helping companies with SBA loans and the unemployment-tax credit as just some of the additional assignments.

Indeed, on top of all that, there was simply more consulting work to do as companies, especially smaller ones, leaned on their accountants as perhaps never before to help them make what were often very difficult decisions during truly unprecedented times.

Now, with the pandemic easing in some respects, the nature of some of this advisory work is changing, said Quink, noting that many business owners are now able to focus more on the future instead of being consumed by the present.

“We’re seeing a lot of clients that are buying and selling businesses, which is a good sign,” she noted. “And overall, people are starting to think forward now; they were in survival mode for a period of time, and now they’re starting to think forward from a business perspective.”

And there is a lot to think about, she went on, noting that what she and others at her firm are advising clients on is how to adapt to change and navigate challenge — such as a global pandemic.

“We’re talking to our clients that we see as potentially at risk because they don’t have the ability to adapt or they’re not identifying how to adapt,” she explained. “We know that things can change in the blink of an eye; we’ve seen a client, a third-generation business, close because it wasn’t able to look forward and move in a way that still made them competitive. You can’t rest on what you have — you have to be always looking forward, and that’s a hard thing for some of our more mature clients and businesses who have done things they’ve always done, and it’s worked.”

This additional advisory work, as Cheney noted earlier, is merely an acceleration of a trend that has been ongoing for many years now when it comes to clients and what they want and need from their accounting firm, with the accent on the future and how to be prepared for it.

Quink agreed that this shift, if that’s the proper term, has been ongoing for some time now as technology has enabled clients of all kinds to access data more quickly and more easily than ever before.

“We see robots in all aspects of life, and our profession is going to go that way as well,” she explained. “We’re using technology to do the things we’ve always done by hand; we’re now going to have programs that run that data for us. What we’re seeing and what we’re preparing people in our profession for is a shift to more of an advisory-slash-consulting role.”

 

Bottom Line

For several years now, Quink told BusinessWest, Burkhart Pizzanelli has closed its doors on Fridays. Historically, those Fridays between Memorial Day and Labor Day have served as comp time for those who logged considerable overtime during tax time, and it’s been a time to recharge the batteries.

This year, staff members have needed those Fridays off more than ever, she said, adding that, for many reasons — from all the additional work detailed above to the vacations that haven’t been taken over the past 18 months — there have been many signs of fatigue.

It’s certainly understandable. Indeed, while every business sector has been impacted by COVID, those in accounting were affected in different ways, with more work to do, different work to take on, and learning curves when it came to new and different ways of doing business.

They don’t call it the ‘never-ending tax season’ for nothing. It’s far from over, but in many ways, things are … well, less taxing.

 

George O’Brien can be reached at [email protected]

Modern Office Special Coverage

Getting Up Off the Floor

For those in the office furniture and design sector, the past 18 months have been a long and extremely challenging stretch. Looking ahead, while the pandemic has eased to some extent, new challenges and question marks loom. The questions concern everything from how many people will return to the office to whether they will have their own space if and when they return. And the challenges involve everything from long wait times for ordered products to the specter of skyrocketing prices and the impact they will have on business.

Mark Proshan says a combination of factors

Mark Proshan says a combination of factors makes it difficult to project what will come next for this industry.

Mark Proshan says the e-mail found its way into his inbox earlier that morning. It was short and to the point, but it clearly articulated one of the many challenges still facing those in the office furniture and design business.

“‘I’m in the process of closing my office and moving employees to fully remote work,’” wrote the business owner and client that Proshan, president of the West Springfield-based Lexington Group, opted not to name. “‘I have a lot of office furniture I’m looking to sell.”

As he commented on what he was reading, Proshan started with that last bit of news. He said there are a number of business owners and managers looking to unload unneeded office furniture these days. They should know first that there is already a glut, and, second, that the price they have in the back of their mind is not likely to be the price they’re going to get for what they’re looking to sell. “With the massive amounts of furniture now on the market, selling furniture isn’t something that’s going to realize an amazing return on the investment.”

But that’s just a small part of the story now unfolding, said Proshan, noting that, while this particular business owner knows just what he’s doing with his office, many do not.

Indeed, a full 18 months after the term ‘COVID’ entered the lexicon, there is a great deal of uncertainty regarding what will happen at many offices, colleges, hospitals, and other kinds of businesses moving forward. Proshan has his theories, and we’ll get to some of them later, but he and others believe there will certainly be some downsizing, some hybrid work schedules for many employees, and more of the outright closures and conversion to remote working described in that e-mail.

But at the same time, some businesses and institutions that are waking up (for lack of a better phrase) from COVID are ready to advance plans for new furniture and accommodations.

And they are running into strong headwinds in the form of supply shortages, long wait times for desired items, and, almost certainly, higher prices in a nod to the laws of supply and demand — and the skyrocketing cost of shipping items from abroad.

“We can’t get the products out of where we need to get them from,” said Fran Arnold, owner of Holyoke-based Conklin Office Furniture, which, in addition to selling new and used furniture, manufactures its own lines of products overseas and remanufactures used furniture here. “Every manufacturer in the country is seeing huge delays when it comes to delivering furniture.

At Conklin Office, co-owned by Fran and Rosemary Arnold

At Conklin Office, co-owned by Fran and Rosemary Arnold, new challenges include supply-chain issues, soaring shipping costs, and long wait times for ordered products.

“On the import side, we’re running with massive delays in shipping and huge increases in the cost of shipping,” he went on, with some noticeable exasperation in his voice. “Our shipping costs have gone from $3,500 to $5,000 per container all the way to $23,500 per container. That’s a massive increase for freight; it’s now costing us more money to get the stuff here than to manufacture it over there.”

Proshan agreed.

“Because most of the manufacturers have employee shortages and raw-goods shortages, everyone’s lead times have been drastically pushed out,” he noted. “You try to stock up on what you think might make the most sense for when the floodgates open, but you just don’t know, and it’s going to be a difficult situation when people want products from you and manufacturers aren’t able to deliver them to you until much later than your customer is hoping to receive them.”

Overall, while the worst of the storm might be past for those in this sector — that’s might — there is still considerable cloudiness and general uncertainty about the forecast, and challenges ranging from those inventory issues to simply finding people to drive delivery trucks, to a huge merger in the industry between manufacturers Herman Miller and Knoll, which only leads to more question marks.

Indeed, what happens next is anyone’s guess, as BusinessWest learned as it talked with Proshan and Arnold about has transpired and what is likely on the horizon.

 

Measures on the Table

As he walked and talked with BusinessWest in his huge showroom, Proshan noted that he’s selling a number of items to be used by people working at home, especially chairs — “they want good seating, but they don’t want to spend a lot for it” — and sit/stand desks, because they’re smaller and also because many people want the option of sitting or standing.

Meanwhile, he said he’s also been selling more large conference-room tables — those for 12 to 20 people — than would be considered normal.

When asked why, he gave a quick and definitive “I don’t know, exactly, but we are,” before joking that companies might need bigger tables for all those meetings that will decide what they’re going to do next.

Overall, this interest in large conference-room tables and the possible reasons behind it comprise just one of the many unknowns for this industry. What is known is that the past 18 months have been an extremely difficult time, and the challenges are far from over.

They may just be different challenges.

“Every manufacturer in the country is seeing huge delays when it comes to delivering furniture.”

Looking back, Arnold said Conklin, like all businesses in this sector, saw business evaporate early on during the pandemic as businesses shut down and then hunkered down, with buying new or used office furniture, or redesigning their space, the last thing on their minds.

“We were flying just before COVID, and then we just hit a wall,” he explained, adding that, through a number of efficiency and austerity measures — including a four-day work week for all employees — the company managed to slash expenses to an extent that it was nearly as profitable in 2020 as it was in 2019.

Elaborating, he said that, in hindsight, the timing could not have been better for the company to consolidate operations and move into new facilities on Appleton Street in Holyoke in late 2019.

“We’re able to do more with fewer people,” he explained. “We’re much better organized, and we’re not so spread out. We’re much more efficient.”

Now, as it emerges from those very difficult times, there are new and different challenges to face, including supply-chain issues and a lack of inventory, just as some larger corporations are in a “panic mode,” a phrase he used a few times, to move on from the pandemic themselves.

“These corporations are working our sales teams to the limit,” he explained. “They want numbers, they want to know when things can be delivered … and a lot of the news we have to give them is not good; prices are going up, and deliveries are being postponed.”

Overall, Arnold said, inflation and the skyrocketing cost of shipping product are just starting to impact prices within the industry.

“We’ve just had our first price increase on our imported products; we just couldn’t hold it where it was any longer,” he explained, adding that, as the cost of shipping continues to escalate, more price hikes are likely. “It’s been quite an experience, and I don’t know how it will all play out; it’s a perfect storm that’s developing, and where it will go, I don’t know.”

 

Looking ahead and projecting what might come next, Proshan said this assignment is difficult because many companies are still very much trying to decide what they’re going to do.

“At the moment, business leaders are trying to figure out what their employees want, and employees are trying to figure out what their employers are going to be expecting,” he explained. “With all of that taking place, not a whole lot has happened yet. People have been talking about business getting back up to speed in the spring, and then the fall, which is not here yet, and then, the first of the year. We still have those mileage markers out there in front of us, so there’s a whole lot more that’s unknown than known.”

Proshan theorizes that many companies will create more space for each employee in efforts to create safer environments, and that, in all likelihood, there will be fewer people working in the office and more in remote settings.

“Every time you have a space that was occupied by three people, that had three work environments, they might cut that back to two to create a bigger gap between people,” he explained. “So now you have a work environment that’s going to be for sale or is going to become surplus; that’s one of the things we’re seeing.

“It’s going to be a difficult situation when people want products from you and manufacturers aren’t able to deliver them to you until much later than your customer is hoping to receive them.”

“And I think that when it gets sorted out as to who’s going back and who’s not, and how often they’re going back,” he went on, “I think a lot of personal space is going to disappear. If you work at home, you’re going to have your own workspace; when you go to the office, you may or may not have your own workspace. It may be a space that’s occupied by someone else on the days you’re not there.”

 

Bottom Line

Proshan, who does a good bit of sailing when he’s not working, made a number of comparisons between what’s happening in his industry and what transpires on the water.

Specifically, he talked about wind.

“You can’t see wind,” he told BusinessWest. “What people experience as wind is what they see as the result of wind and its impact on objects. When you see wind blowing through the trees, you don’t see the wind, you see the result of the wind. When you’re on a boat and there’s no wind, if you look at the water and see it start to ripple, you know that wind is approaching you, and it can either knock you over or make you go faster, or help you determine which direction to go in.

“It’s almost as if we’re sailing,” he said of the current conditions in his business, “and not able to see the wind in the trees.”

That was Proshan’s way of saying that an industry that has been blown about for the past 18 months, and not in a good way, is still very much in the dark about what will happen next.

The mission, he said, is to be as prepared as possible, even with all those unknowns.

“If you don’t pay attention to the possibilities,” he said in conclusion, “you’re going to be too late.”

 

George O’Brien can be reached at [email protected]

Special Coverage Technology

Making Connections

After a chaotic start, the pandemic has proven to be good for business in the IT world, where professionals were deluged with requests from clients to set up remote networks for their employees, not to mention a flood of new clients seeking network services for the first time. More than perhaps anyone, these IT pros have seen first-hand how COVID-19 has changed the way companies are doing business. And some of the changes, they say, may be here for the long term.

 

By Mark Morris

As the world begins to emerge from the pandemic, many businesses that survived are trying to understand what the new landscape will look like.

Right now, many business owners are trying to figure out when and if their employees should return to the office or continue to work from home. Either way, access to technology plays an increasing role in getting the job done.

For example, said Delcie Bean, CEO of Paragus Strategic IT, before the pandemic, many businesses were getting by with outdated communication and collaborative tools and depended on e-mail and phones to support their working environment.

“When the pandemic hit, they had to suddenly adopt new technologies like Zoom, Microsoft Teams, or other virtual platforms to keep doing business. Almost overnight, we had to set up about 4,000 people to work remotely who weren’t previously set up to do so.”

“When the pandemic hit, they had to suddenly adopt new technologies like Zoom, Microsoft Teams, or other virtual platforms to keep doing business,” Bean said, noting that, as employees in many industries were sent home to work remotely, local IT firms saw a huge influx of work. “Almost overnight, we had to set up about 4,000 people to work remotely who weren’t previously set up to do so.”

Delcie Bean

Delcie Bean

Sean Hogan, president of Hogan Communications, said the last time businesses experienced this much disruption was October 2011, when a surprise snowstorm knocked out power for thousands across the region. This time, the disruption has had a more profound and lasting impact.

“The pandemic woke up a lot of people and forced them to understand they’ve got to change the way they do business,” Hogan said, explaining that, while the pre-Halloween storm a decade ago encouraged investments in backup generators, the pandemic has shown many the importance of storing data in a remote data center, commonly known as the ‘cloud.’

In Bean’s estimation, the idea of a business keeping a server at its facility to host its network is already a legacy model that was on its way to being phased out in the next five years.

“COVID dumped gasoline on that timetable and made converting to the cloud a much higher priority,” he said. With cloud-based technology, employees can more easily access their company’s network from multiple locations and devices.

Resistance to change comes natural to New England business owners as many prefer to keep their data on a server in their office. Hogan often explains to these reluctant clients that cloud-based data centers have spent millions of dollars to make sure there is a disaster recovery set up, as well as backup systems for power, internet and HVAC.

“The average business owner couldn’t afford to make that type of investment to keep their data safe,” Hogan said. “So when people say they don’t trust the cloud we point out how much more reliable it is compared to their office.”

BusinessWest spoke with a number of local IT providers about what several of them called the ‘roller-coaster year’ we’ve just had and what’s on the horizon. As business owners themselves, they, like their clients, have had to figure out how to keep things running during a pandemic and anticipate what that means in the long term.

“I’m looking at the service tickets we’re completing while working remote, and they are right on par with where they were when we were in the office. In fact, we might be a little more efficient.”

As an IT-services vendor, Bean believes firms like his should be a little ahead of the curve so they can test new technologies before they recommend them to clients. For example, Paragus employees have been on the cloud and set up to work from anywhere since June 2019.

“So when the pandemic struck, moving our staff remotely was pretty seamless,” Bean said. “About 80% of our people work remotely, and 15% to 20% come into the office on any given day.”

Jeremiah Beaudry, owner of Bloo Solutions, said his employees are working so well from home, it’s not necessary to come into the office. He noted that productivity has not suffered, and employees have less stress.

Jeremiah Beaudry

Jeremiah Beaudry

“I’m looking at the service tickets we’re completing while working remote, and they are right on par with where they were when we were in the office,” Beaudry said. “In fact, we might be a little more efficient.”

One important thing businesses have learned from the pandemic, according to Charlie Christianson, president of CMD Solutions, is that it’s OK to work from home.

“We can do a lot more than we thought we could outside of the office,” he said. “People are far more open to remote work, and there’s no mystery to it anymore.”

 

Change of Scenery

While some of Hogan’s employees have always worked remotely, the percentage has grown, and their efficiency allows them to escape the daily commute. “They don’t need to be behind a windshield for an hour and a half each day just getting to and from work,” he said.

When companies first sent workers home, IT providers spent most of their time helping clients integrate employees into their respective networks. While they suddenly had a huge amount of work, IT professionals did not see much revenue because many clients had contracts to cover this extra work. Increased revenue soon followed, however, as many new clients sought these services.

“We signed more new customers in 2020 than the previous two years combined,” Bean said, adding that much of the new business came from companies that found their dependence on technology had suddenly increased and their IT capabilities couldn’t meet these new demands.

In addition to new clients coming on board, Christianson explained that many of his current clients, who at first only wanted a “down-and-dirty” setup for remote access, were now looking for a more permanent solution for their network.

“We can do a lot more than we thought we could outside of the office. People are far more open to remote work, and there’s no mystery to it anymore.”

“Those of us in the IT industry are very fortunate,” he said. “We have done well during this time and were not hit hard like so many other industries were.”

With the end of COVID in sight, businesses have begun looking at what comes next. Those we spoke with agree on one thing: it will not be business like it was before or even during the pandemic.

“Most of our clients want some hybrid between those two options, where there is more in-person interaction than during the pandemic, but probably not as much as there was before,” Bean said. Once people started learning videoconferencing and Microsoft 365, he noted, they saw how helpful these tools can be even when everyone is in the office.

As IT providers continue to transition their clients from premise-based servers to the data cloud, they also predict other big shifts on the horizon. For example, with so many companies using smartphones and laptop computers to make calls, the company phone system may soon be a thing of the past.

“A few years from now, the idea of having both a computer and a phone on your desk at work is going to be a very strange concept,” Bean said, especially when companies consider the economics of supporting two systems that make phone calls.

While the demise of the office phone seems inevitable, office space itself could be in for a big reduction, Christianson added. “We’ve seen a lot of instances where people are moving from bigger spaces to smaller ones. They are making the calculation that some people are not coming back.”

Charlie Christianson

Charlie Christianson

Even if it’s in a smaller space, Hogan asserted that an office presence is still vital. “I don’t think we’ll go back to the way it was before, but many people still want to return to their offices, even if only for collaboration and camaraderie.”

Because Zoom and other virtual platforms make it easy to meet with people anywhere, companies have begun to look more closely at their business travel budgets, too. CEO clients have told Beaudry they will not eliminate business travel, but will look to reduce it to only what is necessary.

“One CEO who used to travel 40% of the year said he plans to move most of his meetings to virtual platforms,” he said. “He figures to be 10 times more efficient and save his energy from traveling all over the country.”

As much as Bean would like to see some of the fatigue and expense of travel go away, he also admits that important interactions happen in person that just don’t occur in a virtual setting. He gave an example of logging on to hear a keynote speaker versus attending the event in-person.

“Oftentimes, the person sitting at my table is more valuable to me than the keynote speaker,” he said. “That person might lead to a great networking opportunity where they need my services, or maybe they have a service I need.”

 

Safe at Home

While working at home can provide many benefits for employees and their companies, IT providers say it comes with a whole new array of challenges. Looking at a business with 30 employees, Beaudry gave an example of how quickly technology issues change when working remotely.

“If half the employees work from home,” he said, “the company has gone from managing one network to dealing with the struggles of 15 home networks.”

Common issues when working at home include internet signal strength and the different types and capacities of home modems. Topping all those concerns, however, is the increased vulnerability to a company network getting hacked.

All it takes is one employee to click an attachment in a suspicious e-mail, and the whole network can be damaged by a cyberattack. When working from home, Beaudry said, employees are less likely to ask the simple questions when they confront something that looks suspect.

“You don’t have someone turning to their co-worker, saying, ‘hey, did you get this e-mail? It looks weird,’” he said, adding that he encourages his clients to call whenever they see anything suspicious. “If you take 30 seconds to call and ask, it can save you a week of losing your computer.”

Christianson said cybersecurity is a never-ending battle. “Hackers are always looking for ways into your network. They only have to be right once; we have to be right all the time.”

That’s where IT service providers come in. While today’s technology tools are better than ever, Bean said IT pros can set up a company’s system to make it work best for its needs and stay current on all the security threats.

Beaudry compares his work to that of a plumber. “People need computers for business just like they need water in their home and business,” he said.

And, just like plumbing, if security on a computer network isn’t handled properly, you can have a real mess on your hands.

Hampshire County Special Coverage

Uncertainty on the Menu

Fred Gohr says Fitzwilly’s shifted gears in a few ways last year, from expanded takeout service to outdoor dining under a large tent.

Fred Gohr says Fitzwilly’s shifted gears in a few ways last year, from expanded takeout service to outdoor dining under a large tent.

The weekend before March 17, Fitzwilly’s was gearing up for a great St. Patrick’s Day. That’s the day the Northampton St. Patrick’s Assoc. gathers for its annual breakfast, and then about 200 of them march on down to Fitzwilly’s and spend most of the day there.

“We have Irish bands, and we were sitting on 20 kegs of Guinness beer and a couple cases of Jameson’s Irish whiskey for a great big party — and it got pulled right out from under us,” owner Fred Gohr said.

Remember March 16? That’s the day restaurants — and most other businesses in the Commonwealth — were forced to shut down, on just two days notice, by order of Gov. Charlie Baker.

“It was awful,” Gohr went on. “We had a staff of about 75 people, and I had to tell them all, ‘we’re closed, and you guys have to go on unemployment for a while, and we’ll see what happens.’”

What happened, all across Hampshire County’s robust dining scene, has been a series of starts and stops, hope and despair, and especially two themes that kept coming up as BusinessWest sat with area proprietors: uncertainty, but also evolution.

“We were closed completely for a month or so, then we opened and started doing a little bit of curbside,” Gohr said. “And, honestly, when that’s all you’re doing — at least for us — it’s not very profitable.”

But takeout service, never a major factor in the business, has since morphed into a significant part of the model, accounting for about 25% of sales. Other restaurants have relied even more on pick-up service, because they don’t have the interior space or outdoor-dining opportunities that Fitzwilly’s has (more on those later).

“Last year, it felt like you were opening a new restaurant every single week. You had no historical data to compare; you couldn’t look at sales and ask, ‘how did we do this last time?’”

“It’s been such a whirlwind for small businesses the past 10 months, trying to get our bearings with all the changes,” said Alex Washut, who owns two Jake’s restaurants in Northampton and Amherst. “Last year, it felt like you were opening a new restaurant every single week. You had no historical data to compare; you couldn’t look at sales and ask, ‘how did we do this last time?’

That’s because there was no ‘last time’ — no comparable pandemic in the past century, anyway. “Everything was out the window,” Washut said. “We asked, ‘who are we going to be this week?’ Then there was a bunch of changes, and we had to conform to those, and then it was a new restaurant the next week.”

Like Fitzwilly’s, evolving to a takeout model early on was new territory for Jake’s. “We were never a takeout restaurant; maybe 3% of our gross was takeout food,” he said. “So we had no system for it.”

The various systems that area eateries developed, in the weeks last spring when takeout was the only option, involved details ranging from what containers to use to how to present food attractively and, for restaurants that opted for delivery, how to keep it warm in transit.

Casey Douglass

Casey Douglass with some of the supplies used in Galaxy’s takeout business, which has been its dominant model for almost a year.

“We were able to pivot quickly,” Washut noted. “From there, we moved to outdoor dining when that was allowed, but we had never had outdoor dining before” — and questions had to be answered regarding permitting, staffing, health and safety factors.

The positive, he noted, is that, if 2021 follows a similarly bumpy trajectory, “we know what’s expected, and we know how we’ll react in the spring, how we’ll react in the summer, and how we’ll react once the fall and winter come along.”

Indeed, the establishments that survived last year’s storm are, if not stronger for the experience, at least a little wiser, even as many are barely hanging on. The hope, of course, is that 2021 is nothing like 2020. But in this industry, so critical to the economy and cultural life of Hampshire County, nothing is certain.

 

Survival of the Fittest

“We’ve evolved a lot.”

Those were Casey Douglass’ first words when asked what this year has been like at Galaxy, the restaurant he’s operated in downtown Easthampton for the past five years.
The first evolution had to do with meeting customer needs. “We’re part of the food chain,” he said. “We have a lot of customers who don’t go to the supermarket. And we were like, ‘they’re going to be putting themselves at risk going to the supermarket as opposed to getting to-go.’

“So we went to the radio station and created an ad talking about ‘Casey’s comfort food,’” he went on. “And we switched to all a la carte, basic stuff — mac and cheese, mashed potatoes, roasted chicken, meatloaf — and we were cranking.”

So much that, when he secured a Paycheck Protection Program (PPP) loan, he first thought he wouldn’t need it. “Then a couple weeks went by, and we said, ‘thank goodness we got that.’ It changed so quickly.”

Sales dropped to about 45% of what they once were, but he kept 70% of the labor on board, because that’s the main purpose of the PPP program. That money got Galaxy through the end of June. Then things got rough.

Jake’s owner Alex Washut

Jake’s owner Alex Washut says it might be a while before his two locations (this one in Amherst) are packed with patrons again.

After losing a couple of cooks to unemployment, the restaurant cut back from five days a week to four, and when summer rolled around, fewer customers wanted takeout, but outdoor dining wasn’t a draw, either.

Fall brought a reprieve of sorts, with the milder, less-humid weather boosting outdoor dining, but the winter has been exceptionally tricky. Indoor dining didn’t prove to be a workable option; in a space that seats fewer than 50, the governor’s current 25% capacity mandate is especially onerous, and Douglass and his team also felt indoor dining might not be safe — or, at least, feel safe — for a clientele that skews older than some restaurants.

So as winter wears on, Douglass is pressing on with takeout only — now a hybrid of the comfort-food concept and the creative American meals he’s known for — a bank loan, and plenty of grit.

“We’re just looking at survival at this point,” he said, noting that costs like food, loan interest, utilities, and equipment leases don’t just go away when sales are down. “We’re efficient at what we do, but we’re losing about $15,000 a month. And that’s not going to be able to continue.”

However, he insisted, “I do think the spring will increase sales a couple thousand dollars a week, and that’s all it takes. We’ll be fine.”

Evolving to a takeout model was jarring at first to Washut, especially since his two locations — an 1800s-era building in Northampton and a new, modern structure in North Amherst’s Mill District — are so different, with a different set of clientele, and not cookie-cutter businesses like quick-service chains.

“We’re just looking at survival at this point. We’re efficient at what we do, but we’re losing about $15,000 a month. And that’s not going to be able to continue.”

“We didn’t know how to be a takeout restaurant. We were making $50 in sales a day — we were in shock,” he recalled. So he shut things down completely through April, secured a PPP loan and other grant funds, and reopened for takeout in early May, then outdoor seating a couple months later. Armed with the PPP, he was able to bring back the whole staff, and the breakfast-and-lunch establishment added dinners to generate more business. When funds ran dry, dinner went away.

These days, with takeout and limited indoor seating, Washut is bringing in about 30% of typical sales, and the combined staff is down from close to 50 to around 15.

Throughout all the changes, he has prioritized safety. Even if the governor’s 25% seating rule changes tomorrow, he said, “I’m not going to increase my dining room beyond 25%; my staff and I don’t feel that’s appropriate right now. There may be things we’re allowed to do but, in reality, we choose not to do.”

Gohr had a few advantages last year when it came to keeping people safe while generating business. One was a large parking lot next to Fitzwilly’s that he rented from its owner for tented outdoor dining. He could seat 70 there, while the city of Northampton’s decision to turn parking spaces on Main Street into dining space added about eight more tables to the restaurant’s existing sidewalk seating.

“We really had a great summer,” he told BusinessWest. “Through the summer, we had a capacity of 100-plus guests, the majority of them outdoors.”

Gohr’s other advantage is a large indoor space with a normal capacity of 280. The 25% mandate has hurt this winter, for sure, as did Baker’s 9:30 p.m. curfew, which was only recently lifted. But seating 70 — separated by plexiglass barriers — is better than seating a dozen.

“We’re very fortunate to have a lot of room in here, and we’re able to distance people. These places that have even 50 seats — and there’s a lot of places in town with just six tables — but even the ones with 50 seats, now you’re down to letting 12 people in. You can’t survive. So we’re fortunate given the size we have. Seventy people gets us by. We can survive on that if it doesn’t change.”

Casey Douglass is confident Galaxy will return

Casey Douglass is confident Galaxy will return to its go-to dining status in Easthampton once it’s safe to eat out again.

A mild winter, weather-wise, helps as well. “If you start getting snowstorms on weekends on top of all the other stuff, then we’d be in trouble. But we’ve had pretty good weekends.”

A PPP loan and other grants also helped, and he’s applied for a second PPP loan, with this round capping the disbursement for certain hard-hit industries, including restaurants, higher than the first, so he’s hopeful for another influx to carry him to the spring. He’s already in talks about renting the parking lot again, and the city has discussed moving outdoor seating into Main Street again as well.

 

Pressing Through

Still, Gohr, like every other restaurant owner, knows 2021 could be another year of upheaval. “We’re hoping everyone gets the vaccine and we get back to normal. But I don’t think it’s going to be real quick.”

He’s appreciative of customers eating in the restaurant, and said gift-card sales were strong over the holidays, although not to the level of a typical year, when more people are out shopping. And he does believe outdoor dining will be a hit again. But it’s harder to pin down when customers will flock to restaurants at pre-2020 levels.

“My gut tells me it’s not going to be in the spring; it’ll be late summer or fall before we get to that point,” he said. “The mindset that I see in the public is all over the place. I know people — friends and some of my regular customers — that have not been anywhere since March. And then there are others, the minute we opened the doors, they were back. Everybody’s obviously more careful, but everyone’s comfort level is completely different. It’s a wide spectrum.”

Douglass senses real community support for Galaxy, noting that some regulars stop by three times a week, and others drop big tips and cheerlead for the establishment among their peers.

“I feel like, at least in this community, [the pandemic] hasn’t hurt on a big scale economically,” he said. “We haven’t had factories shut down. I’ve heard people are paying their rents. And I think, come the spring, people are going to be pouring out. As much as people are still nervous, if the service staff has been vaccinated, if a majority of customers have been vaccinated, people will be coming out in droves. I think people are going to hunker down all February, and then in March, with the outdoor dining, people are going to be like, ‘sign me up.’”

If that’s especially optimistic, Douglass balances the thought by saying he’s had some dark days as well, wondering if it’s worth the effort to stay open right now, and fretting over the possibility of a snowy weekend that could wipe out almost an entire week’s worth of revenues. It’s his staff who have been most enthusiastic about staying open, believing it’s important to stay in the public eye, so that Galaxy is a go-to destination when people start emerging from winter hibernation.

Still, he said, “everyone wants to go back to what normal is, but if this goes on long enough, does normal shift?”

It’s a good question, and one Washut asks himself as well. “Every day, I’m thinking about my business, trying to find that crystal ball,” he said, meaning no one really knows how 2021 will go. But he’s hopeful.

“Once it gets warm again, once the outdoor dining opens up for food-service establishments, I think the initial rush of business will be great. Unfortunately, with restaurants, it’s really hard to be proactive; we’re constantly in a reactive mode.”

Specifically, it’s tough to staff up for a rush that might be around the corner, but restaurants also don’t want to be caught flat-footed if things pick up quickly. And things might not pick up much at all in 2021.

“This will be with us for a lot longer than we want to tell ourselves, and at some level, we have to come to terms with that,” he said. “I don’t think we’ll be hosting 60 to 80 people in our dining rooms this year; we won’t have that level of business for a while.”

Yes, the combination of warm weather — and outdoor dining — come spring, and the prospect of rising herd immunity from the vaccines, might inject some life into the industry, but next winter could be just as difficult as this one, depending on how the pandemic’s endgame goes — if an endgame even materializes in 2021.

Meanwhile, Washut appreciates any community support he gets. “If you only come in for gift cards, awesome. If you only get takeout, awesome. Maybe we’re not in a financial position to pass that goodwill on in an equal manner, but I’ll be damned if we won’t later on. If we all keep that attitude in every level of our life, we’ll get through this for sure.”

 

Joseph Bednar can be reached at [email protected]

Coronavirus Law

A Stern Test

By Marylou Fabbo

With schools reopening, parents and employers will be in a difficult boat together as they attempt to juggle parenting with personal and professional responsibilities.

Parents are understandably anxious about how they will meet their obligations to both their children and their employers. Several school districts have announced hybrid returns with students alternating between attending school and remote learning. Some jobs just can’t be done from home, and some parents who would otherwise be able to work at home will be needed to help their children with remote learning (or breaking up arguments).

To make matters worse, schools that are already back in session have shown us that, despite precautions that are being taken, school-based COVID-19 outbreaks are a real concern.

Employment-law Compliance

There is no question that many parents will be working from home in some capacity once the school year starts. Businesses should keep in mind that laws that are applicable in the workplace don’t go out the door simply because the workplace has moved to an employee’s home.

Marylou Fabbo

Marylou Fabbo

“Does workers’ compensation insurance apply when an employee trips over a toy during the workday and fractures her ankle?”

For instance, Massachusetts employers must continue to make sure their employees take their 30-minute meal break and keep records of all hours worked, which may not look like the normal 9-to-5 workday. State and federal laws that require employers to provide a reasonable accommodation to disabled employees in the workplace apply to remote employees as well.

To meet these requirements, employers may need to do things such as make adjustments to equipment or the manner in which work is completed. Notices that must be posted in the workplace should be electronically distributed or mailed to an employee.

Still, there are many unanswered questions, and businesses are advised to consult with legal counsel before taking any risky actions. For example, employers are required to reimburse employees for required business-related expenses, but what does that mean when employees use their own laptops and internet for at-home work?

Does workers’ compensation insurance apply when an employee trips over a toy during the workday and fractures her ankle? How does an employer prevent and address sexual harassment in the remote workplace? Is it discriminatory to distribute extra or different tasks that can’t be done at home to older employees who no longer have kids at home? All these issues should be discussed with your employment-law advisors.

Job-protected, Paid Time Off

Not all employees will be able to work when their children are taking classes from home. Employers should be prepared to work with a reduced staff for the foreseeable future. Federal laws will provide many parents with job-protected time off when school is closed, which includes situations where some or all instruction is being provided through distance learning.

The Families First Coronavirus Response Act (FFCRA) generally requires employers to provide paid time off to employees who cannot work (or telework) because their child’s school is closed. However, it’s not enough that a child is attending class remotely. The parent must be needed to care for the child, and the child must be under 14 absent special circumstances.

Still, the FFCRA does not cover all employees or all employers. Employers with 500 or more employees are not covered by the law, while small employers and healthcare providers may be exempt from certain requirements. Also, employees who have been employed for less than a month are only eligible for a maximum of two weeks of ‘emergency sick’ leave, while employees who have been employed for at least 30 days may be able to take up to an additional 12 weeks of expanded family and medical leave (EFML), including on an intermittent basis, assuming that the leave hasn’t already been taken for other permissible purposes.

Eligible employees can earn up to $200 per day when taking childcare EFML, subject to certain maximum dollar amounts. Lawmakers in several states, including Massachusetts, are considering legislation that would fill the gaps in the FFCRA’s paid-leave provisions, and several states have already extended virus-specific paid leave. Employers whose employees aren’t eligible for protected leave will have to decide whether to allow job-protected leave or lay off or otherwise separate with the employee.

School-related Exposure

Unpredictable, illness-related absences can pose another challenge for employers and employees. Children may be exposed at school and bring the virus home.

Employees may be needed to care for their children who are ill and may even test positive themselves. The FFCRA provides up to two weeks paid time off for COVID-related illnesses. The Massachusetts paid-sick-leave statute and the FMLA may also provide employees with paid time off. Employees may also be able to take protected time off (or time at home) as a reasonable accommodation for the employee’s own disability that makes it risky for the employee to go into the office.

Plan Ahead

There’s never been a return to school quite like 2020. The only certainty is that employers could not possibly plan for all potential scenarios. Businesses should make sure they have effective remote-work policies, practices, and procedures in place, be prepared to operate with fewer employees on an intermittent and possibly long-term basis, and designate one or more people within the organization to whom management and employees can direct their questions.

Marylou Fabbo is a partner with Springfield-based Skoler, Abbott & Presser, P.C., a law firm that exclusively practices labor and employment law. She specializes in employment litigation, immigration, wage-and-hour compliance, and leaves of absence. She devotes much of her practice to defending employers in state and federal courts and administrative agencies. She also regularly assists her clients with day-to-day employment issues, including disciplinary matters, leave management, and compliance; (413) 737-4753 ; [email protected]

Coronavirus

Pandemic Poses Challenges, Opportunities for Flooring Company

Doug Mercier, right, with brother and partner Chuck

Doug Mercier, right, with brother and partner Chuck, says that, while business is off because of the pandemic, the crisis has led to some opportunities on the commercial and residential sides of the ledger.

Doug Mercier was talking about how sales for March, April, and May are off probably 30% from what they were a year ago at the flooring company started by his parents a half-century ago.

And while that’s certainly not what he had in mind for quarters one and two, he quickly put those numbers in perspective.

“Look at restaurants,” said Mercier, president of the company that bears the family name. “Many of them are down … 100%; they’re not seeing any business. This has hit us hard, certainly, but it’s actually created a few opportunities as well.”

Indeed, some institutions and businesses — from area colleges to some of those aforementioned restaurants, most already in the portfolio of clients, but some others as recent additions — have taken advantage of unwanted time and a closed building to do some work on those properties, including new flooring.

“We’ve done work for a number of restaurants in this area,” said Mercier, listing projects in several area communities. “They were sitting idle; the business was empty. Then they started cleaning and painting, and realized that the flooring really needed to be replaced.”

Meanwhile, several medical facilities have been forced to renovate or repurpose space, creating other opportunities, and on the residential side, time at home has convinced people that they need to move ahead with some planned projects, said Mercier, adding that, at this time, there are a good number of projects (again, not as many as in a typical year, but a good number) in the proverbial pipeline.

“Residential clients are calling — they’re trying to see what we can do to enable them to see samples online,” he said, noting another change in how business is being done as fewer people are willing or able to visit the showroom on Riverdale Street. “With people spending more time at home, they’re paying more attention to those jobs that need to be done.”

“We’ve done work for a number of restaurants in this area. They were sitting idle; the business was empty. Then they started cleaning and painting, and realized that the flooring really needed to be replaced.”

But, as noted, there have been a number of challenges to contend with, including the matter of taking on these commercial and residential assignments while keeping crew members safe, Mercier told BusinessWest, adding that social-distancing requirements necessitated some adjustments when it comes to when and especially how work is done.

There is also the matter of keeping those trained installers — valued employees that were a challenge to find and retain before the pandemic hit — on the payroll.

“We don’t want to lose installers,” said Mercier, noting that, thanks to a Paycheck Protection Program loan secured early last month, the company has been able to rotate crews in and out — as a safety measure, but also because there is less work overall — but still manage to pay everyone. “We’ve been doing a ‘week on, week off’ kind of thing and have kept everyone on.”

Meanwhile, Mercier, like many service businesses of this kind that are sending crews into the field, started offering employees hazard pay, an additional expense largely covered by the PPP loan funds.

Mercier was quick to note that a number of projects planned by commercial clients were shut down as the pandemic hit, including some at colleges and prep schools in this area and just outside it — Assumption College in Worcester, for example, as well as a large job at a housing project. And they are being handled now, creating more work for crews.

Meanwhile, new projects are coming into the pipeline, many in response to the pandemic itself. Indeed, he cited the example of a cafeteria in one of the area hospitals.

“They’re trying to rework the space so it will be more conducive to halting the spread of disease and bacteria,” he explained. “So they’re taking out the carpeting and putting in a more resilient surface. The pandemic has created some business for us.”

Looking ahead, Mercier sounded an optimistic note when he said he expects a relatively steady supply of work in the pipeline. He said the company recently took a few residential orders, and some on the commercial side as well.

“Since these businesses have been sitting idle, a lot of plans and blueprints have been worked on, and, looking forward, it seems like there will be an uptick in projects,” he said, adding quickly that there are number of question marks concerning the longer term, especially when it comes to the colleges.

Perhaps the best sign that better times are ahead comes in the form of the delivery trucks pulling in almost daily at the company’s storefront and showroom.

“They’re coming in fuller, and we know that’s a good sign with what’s going on with the economy,” Mercier told BusinessWest, referring to vehicles that would make several stops on a route delivering product that’s been ordered. “When the trucks arrive and there’s very little in them, you know no one is ordering. But when you see the trucks stacked pretty full … that’s a good sign.”

—George O’Brien

Coronavirus

Coping with a Changed Landscape

Kate Phelon says she misses her members.

Claudia Pazmany recalls the early days of this crisis, when she was bought to tears on an almost daily basis by the stories related to her by devastated business owners.

Nancy Creed says it’s become her mission to provide members with comprehensive and reliable information as they try to navigate their way through a crisis the likes of which they’ve never seen before.

Collectively, these chamber of commerce directors — Phelon in Westfield, Pazmany in Amherst, and Creed with the Springfield Regional Chamber — spoke not only for each other, but for colleagues across the country as chambers confront COVID-19.

And ‘confront’ is certainly the right word.

Indeed, as individual chambers work to keep members informed and assist them with the task of keeping the doors to their businesses open (figuratively if not literally — many of them have been ordered closed), they are in what amounts to survival mode themselves, especially since they are not at present eligible for federal stimulus money, though they’re lobbying to be included in the next stage of funding. And some of them may not, in fact, survive.

“I was on a call recently with our national association,” Creed recalled. “And they were saying that they expect 25% of the chambers not to survive this.”

The reasons for such dire predictions are obvious. Indeed, to serve their members, chambers rely on revenue from two primary sources — membership fees and events. And both are imperiled in some ways, the latter far more than the former, although overall membership and simply collecting fees that are due are certain to be impacted by this crisis.

Nancy Creed

Nancy Creed

“I was on a call recently with our national association. And they were saying that they expect 25% of the chambers not to survive this.”

As for those events, they range from the small — monthly after-5s, for example — to the large — the annual golf tournament in Westfield or Amherst’s Margarita Madness are in that category — to those in between, like regular breakfasts and legislative luncheons. Some events have been rescheduled for later in the year, but others have simply been lost, like Westfield’s popular St. Patrick’s Day breakfast — the first time it hasn’t been held in 40 years.

“At the same time as we’re worried about our members, we’re also worried about our chambers,” Phelon said. “There’s a huge concern for the chambers — we’re not having our events, which generate much of our revenue, and many of our members are really struggling.”

On March 6, the Springfield Regional Chamber staged its annual Outlook lunch at the MassMutual Center in downtown Springfield. For many business leaders in the Pioneer Valley, that was the last large gathering they attended. Everything since has been wiped off the calendar; BusinessWest has no need to publish its Chamber Corners section dedicated to listing upcoming chamber events because there are none for at least several more weeks.

But while chambers work to maintain their own bottom lines, their primary function of late has been a conduit of information to members who desperately need it.

They’re doing it through their websites and webinars, through polls — the Springfield Regional Chamber has conducted a number of them — and through conference calls with state and national leaders, during which they relay questions from their members, such as a Tele-Town Hall with U.S. Rep. Richard Neal, staged by the Springfield Regional Chamber on April 7.

Kate Phelon

Kate Phelon

“At the same time as we’re worried about our members, we’re also worried about our chambers. There’s a huge concern for the chambers — we’re not having our events, which generate much of our revenue, and many of our members are really struggling.”

Phelon said she and other chamber leaders have taken part in regular conference calls with Lt. Gov. Karyn Polito; Mike Kennealy, secretary of Housing and Economic Development; and a host of other officials. It started with one call a week, and now there are two, she noted, adding that such sessions have not only provided information to the chamber leaders, but provided them a chance to convey what’s on their members’ minds.

“They want to hear from us — they want to know what the issues are,” she said. “They take all our questions, and it’s been very helpful for us.”

Meanwhile, chamber leaders have been doing a lot of listening — and that in itself has been hard.

Pazmany said Amherst, a college town with no college students and restaurants, taverns, and museums that can’t open, has been particularly hard hit.

“It’s like summer here — only it’s far, far worse than summer,” she said. “No one needed for summer to arrive this soon; many businesses in this community have been just devastated by this.”

Overall, most chambers are experiencing what their members are experiencing — an ultra-challenging time dominated by questions that are often difficult to answer.

Plain Speaking

Since the pandemic fully arrived in Western Mass., and especially since the governor ordered all non-essential businesses to close, the primary function for area chambers has been to act as a combination sounding board and conduit for information.

And the emphasis has always been on providing information that is accurate and reliable, said those we spoke with, adding that there is plenty of news, if it can be called that, which does not fall into that category.

Claudia Pazmany

Claudia Pazmany

“It’s like summer here — only it’s far, far worse than summer. No one needed for summer to arrive this soon; many businesses in this community have been just devastated by this.”

“We’re trying, on a daily basis, to grab credible sources, and we really rely on the administration, because that takes rumor out of it — it comes straight from the horse’s mouth,” said Creed. “Our polls are just to get a pulse of the community so we can see what’s going on and pivot as we need to and gauge the sentiment of the business community — so it’s by no means scientific.”

Elaborating, she said her chamber has been partnering with other groups, such as the Employers Assoc. of the NorthEast, in an effort to inform business owners, but without overwhelming them.

“If there are other subject-matter experts out there, we want to partner with them instead of recreating the wheel,” she explained, “because there’s so much information, so much activity, that we certainly don’t want to overwhelm members — they already have enough on their plates.”

Pazmany said her chamber has created a ‘Resources for Business’ page on its website that is updated daily in an effort to help keep members informed at a time when they cannot gather in a room for a breakfast or educational seminar.

Phelon said her chamber, like all others, has been focused on providing information and connecting members to resources, which is what it has always done, except now it’s doing more of it, and that role has perhaps never been more important.

“Some chambers are putting information out daily, and we’re doing it at least weekly,” she said, adding that chambers are doing all this under unique circumstances.

“Most of us are dealing with reduced staff, some of us are working at home, some of us are in the office,” Phelon went on, noting that chambers are considered ‘essential.’ She does go into the office, but remains at least six feet away from her assistant and sanitizes the space on a daily basis.

Pazmany said her chamber, located on Main Street in downtown Amherst, has closed that office and has staffers working at home, in a nod to edicts concerning social distancing.

“We have a very small space, and we’re used to getting a lot of people in the door, and we thought that keeping the office open wasn’t the right thing to do given the circumstances,” she explained. “We like to say that, while the door may be locked, we’re open for business.”

While life has changed for chambers, it has for their members as well, certainly, and chambers are adjusting as these members struggle to keep their own doors open.

“We’re giving our members options on payments, and we’re even deferring it for 60 days,” Phelon explained, noting that many chambers are doing the same. “We understand the impact this is having on their business, and we want to be sympathetic.”

She noted that one additional challenge for chambers is that the needs of the members vary, generally with the size of the venture, and there isn’t a one-size-fits-all formula for providing assistance.

“We’ve got our very small micro-businesses that really need the help — it’s overwhelming for them; they’re struggling, and they don’t know if they’re going to make it,” she explained. “We also have major corporations that have an HR department and have significant resources, and everything in between. So it’s challenging.”

Lost Days

Beyond providing information, the other major role for chambers, historically, has been to provide networking opportunities for members. And it is this role that has been most impacted by the pandemic.

Indeed, gatherings of more than 10 people have been banned, which effectively eliminates after-5s, breakfasts, tabletop events, golf tournaments, annual meetings, legislative luncheons, and more — events staged to inform, bring members together, and generate revenue.

While some events have been pushed back or canceled altogether (like the St. Patrick’s Day breakfast in Westfield), chambers are looking to create what are being called ‘virtual networking events.’

They’re not exactly like the real thing, said those we spoke with, but they do enable people to see one another and interact, even if it’s on a computer screen, rather than in a local restaurant, golf course, banquet hall, or the showroom at Mercedes-Benz of Springfield. That was the site of a large after-5 involving a number of chambers early in March, said Pazmany, adding that, in a number of ways, that seems like a long time ago.

“We had 300 people there — it was a great event,” she recalled. “Who could believe that we’re now all sequestered in our homes?”

While looking to stage some events virtually, chambers are pushing their spring events further back into the calendar year. Phelon had a legislative luncheon slated for later this month and is now eyeing June. Meanwhile, her golf tournament, that chamber’s largest fundraiser, slated for East Mountain Country Club, was set for May, but it’s now rescheduled for June 22, with the hope that this is far enough out.

Pazmany said all of her chamber’s events into June have been canceled or moved back. Margarita Madness has been rescheduled for Sept. 24, but she’s not sure if that will work.

“We thought it was a safe date, but you just don’t know,” she said. “Every day I look at all the statistics, and I can’t tell you that date is safe.”

Creed told BusinessWest that the Springfield Regional Chamber is fortunate in several respects. For starters, it was able to stage perhaps its largest fundraiser of the year, the Outlook event, before the ban on large gatherings was put in place. Also, the chamber has reserves that it has not had to tap into as yet, and it has been able to “repurpose” staff members — its events coordinator has been shifted to member-engagement duties, for example — rather than lay them off, as some chambers have.

While the Outlook lunch went on as scheduled, the Springfield Regional Chamber has been forced to move its Fire & Ice signature cocktail event, which gave area bars and restaurants a chance to shine, said Creed, noting that it was scheduled for March. The next large fundraiser is the Super 60 event, which is scheduled for mid-fall and thus has not been impacted yet.

“Our events are so diversified that, if we lost one, we would still be in good shape,” she noted.

It remains to be seen if other chambers can say the same.

Spreading the Word

Summing up the situation for the business community and the chambers serving it, Phelon again spoke for all her colleagues.

“We’re all feeling … I wish I knew the right word; we’re all feeling the pressure and the concern,” she told BusinessWest. “We’re trying to stay positive, too, thinking ‘this will pass.’ But there are so many unknowns. This is unprecedented.”

It is, and for chambers, it’s an extreme challenge that comes when they already had their full share of challenges.

Like their members, to come out on the other side, they’re going to have to be resourceful, persistent, and willing and able to find new ways to do business.

George O’Brien can be reached at [email protected]

Coronavirus Cover Story

On the Home Front

On one hand, it’s good to be working — many people during the COVID-19 crisis have lost their jobs. However, those who continue to clock in every day, only from home, often face challenges they never had to contend with before, from balancing work with their kids’ education to the anxiety and loneliness that can accompany a lack of face-to-face contact. But that’s today’s new normal, and no one can predict for sure when people might start heading back to the office.

As the office manager at Architecture EL in East Longmeadow, Allison Lapierre-Houle has plenty to do, but enough time to do it. Usually.

“I handle all the administrative tasks — anything HR-related, financial-related, pretty much everything outside what the architects do,” she said, adding that she’s never had to work outside her set hours — until recently.

“Now, I’ve been working on weekends a little bit, at night a little bit, because I have to take constant breaks in between for homeschooling, and all of the distractions that come with running a house and doing my job at the same time.”

Like so many others right now, Lapierre-Houle is still doing that job, only she’s doing it from home — as a single mother of a first-grader and a third-grader, ages 6 and 9.

While the school provides a remote learning plan that students are expected to follow, and daily assignments to complete every day using Chromebooks and Google software — as well as Zoom meetings with classmates — children that young aren’t exactly self-directed, she noted.

“If they were in high school, it would be completely different. In first grade, she literally just learned to read, and now she’s expected to go on the Chromebook and complete assignments. So I do lot of side-by-side work with the kids, while also trying to manage the eight employees for the company, who are all working remotely as well. That’s been the biggest challenge.”

Allison Lapierre-Houle to balance working at home

It’s challenging for Allison Lapierre-Houle to balance working at home with two young kids — but at least they can help take a photo for BusinessWest.

David Griffin Jr., vice president of the Dowd Insurance Agencies in Holyoke, is able to split the child-tending duties with his wife, who works for Travelers in Hartford. They’re both home these days, juggling their jobs and home responsibilities as parents of two young ones, ages 2 and 3.

“We’re making the most of it,” Griffin said. “She has a more set schedule than me. Obviously, I have clients calling me, and I can’t plan when the client calls me with questions I have to go through. I get as much done as I can in the morning and late at night, and answer calls and help customers throughout the day. Right now is their greatest time of need, so I have to make myself available and be there for them to lend an ear and give some advice.”

Jim Martin knows that feeling — of working from home at a time when customers have more pressing needs than perhaps ever before. As a partner at Robinson Donovan specializing in corporate law and commercial real estate, he’s been working with clients on their submissions for the Paycheck Protection Program, deciphering the regulations and grappling with an ongoing series of often-confounding changes to them. “My clients need straightforward legal advice on what needs to be included,” he told BusinessWest.

“I do lot of side-by-side work with the kids, while also trying to manage the eight employees for the company, who are all working remotely as well. That’s been the biggest challenge.”

He’s providing that advice — and much more — largely from home, as the firm’s Springfield office is maintaining the core minimum of personnel needed to connect everyone else during a trying time.

“We were well-prepared for this; we had anticipated this may be necessary, so we had a network in place that allowed people to remotely access their desktops from home,” he explained. We got everyone equipped, so when someone comes in with mail, it’s scanned and distributed to every lawyer and the support staff. And we have remote dictation, so I can dictate right to my adminstrative assistant from home. We feel we were pretty well-prepared to make the transition to working remotely.”

While Martin doesn’t have children at home, he empathizes with those who do, as day cares are closed and people generally can’t come by to babysit.

He does, however, sometimes have to vie for the landline with his wife, a clinical doctor of psychology who continues to see patients, who are dealing with all sorts of issues, from depression to anxiety to domestic violence, all of which can be exacerbated by the current health and economic crises.

“People who need therapy, they need it more now,” he said. “She fortunately has access to certified confidential means of communication, video communication and things, but sometimes it’s over the phone if folks don’t have technology. So, I’m in one room, she’s in another, and sometimes it’s stressful in the house.”

Workers from most sectors are dealing with the same situation — doing their part to keep their companies afloat while often keeping a household together. But they’re recognizing something else as well — a general patience and understanding among those they deal with, and a recognition that we’re all in this together, even as people grow more anxious to get back to their old routines.

Alone Time

Before COVID-19, Seth Kaye, a Chicopee-based photographer, would get up each morning and go to his office to work and have meetings with clients.

“For me, that’s the biggest difference right now, just not being around people at all,” he said. “I would routinely have coffee breaks or lunch with friends and colleagues; that’s how meetings would be done, face to face. Right now, everything’s over Zoom, which has been fantastic, but nothing face to face.”

Seth Kaye

Seth Kaye is among many professionals who miss face-to-face interaction with clients.

He brought his entire workstation home, so he’s able to stay in contact with clients and even book new work.

“In terms of contracts, there’s nothing for me to photograph right now, as the commercial events have all been canceled for the foreseeable future. Weddings are the lion’s share of what I do, and people are postponing those to later this year or 2021. But business is still going on. People are still getting engaged. I’m still booking new couples to 2021. The world hasn’t stopped, and people are still planning for the future. That gives me an enormous amount of optimism.”

And also a chance to pivot to other business needs, Kaye added. “I’m trying to take the to work on my marketing and work on personal projects and try new things.”

Griffin said the team at Dowd is pivoting in other ways. “We have five offices and 47 employees, and we’ve been able to get everyone up and running from home; we’re still at full capacity. Of course, the insurance industry is considered an essential business.

“Everyone wants to make this work, but it’s been tricky to say the least,” he added, noting that technology has been a huge help. Because the company uses an internet-based telephone system, everyone was able to take their phones home and plug them into their computers.

“Our receptionist is working from home, and she answers live and transfers the calls,” he said. “And most of the staff have two computer screens in the office, and they brought one of the screens home. So it’s funny — if you go into the office and see all the desks with nothing on them, it looks like we’ve been robbed, but that’s not the case.”

Lawyers are as busy as insurance agents these days, and Martin is a good example, whether it’s helping small businesses with federal stimulus programs or assisting companies scrambling to prepare for all contingencies during the pandemic.

“I spent some time over the last two weeks dealing with transfer ownership issues between shareholders and and/or partners, so if people own a company, either shares or in a partnership, they are now feeling it’s important to establish and confirm in writing how the shares will be transferred … and what the conditions are,” he explained.

Meanwhile, employment laywers are dealing with unemployment and leave issues, while real-estate attorneys grapple with pending projects held up by wholesale postponements of meetings with planning and zoning officials, and estate planners see an uptick in business from families getting their affairs in order (see story on page 24).

The list goes on — and most of the work is being done remotely.

“It is a challenge, if you haven’t worked from home before,” Martin said. “I know some people work from home regularly, but for those of us who haven’t, it’s a big adjustment period. At least it is for me.”

It certainly has been for Lapierre-Houle, and also her kids.

“I definitely find myself, especially in the evening, saying to them, ‘it’s a school night,’” she said. “For them, it doesn’t feel like a school night. They think they can get up whenever they want and stay up as late as they want, but I’m trying to keep us on schedule — they get up like for school, and I sign on to work at 8.”

Convincing students to treat these days like regular school days is undoubtedly something parents of older kids grapple with as well. And kids of all ages are likely tiring of the social isolation.

“They can’t see their friends except behind a computer screen … that’s a significant emotional challenge because they don’t understand the social aspect. But they still have to learn and do their schoolwork,” Lapierre-Houle noted, adding that the warmer weather gives a reprieve in that they can go outside — but also provides an additional distraction because they want to be outside, rather than inside doing schoolwork.

She does appreciate her boss, company president Kevin Rothschild-Shea, who, she says, has always emphasized work-life balance, which has made this transition a little easier for employees. “He’s always been very flexible with families or children, but there’s still pressure to get work done, not to mention all the distractions at home.”

New Routine

Clients have been equally understanding of the current situation, Griffin said. “They’re not giving us a hard time — ‘I need this in two hours.’ Again, turnaround times are out the window, and people have been very accommodating and very understanding of that.”

On a personal level, he does miss meeting clients in person. “There’s nothing like going out and seeing clients face to face and talking with them, trying to see what their energy level is, how business is going … I do miss that. I’ll be excited to get that aspect of things back because it is missed. Now we have to make do with what we have, and everyone is in the same boat together — it’s not like we’re at a competitive disadvantage because of it.”

“It’s funny — if you go into the office and see all the desks with nothing on them, it looks like we’ve been robbed, but that’s not the case.”

Kaye told BusinessWest that’s been a challenge for him as well.

“I would see people regularly, just in passing or at the coffee shop — the day-to-day stuff we take for granted, now that we’re not able to have that routine. The routine now is different,” he said. “Hopefully, it’s a temporary new normal, but that human contact is gone right now.

“I’m taking the quarantine thing seriously, aside from pharmacy drives and having people put food into the trunk of my car when I order it from local farms,” he added. “I haven’t had any face-to-face contact in about three weeks. Some of my friends are doing the same. Some of our parents are not, which is interesting. But the social aspect being gone is definitely challenging.”

As the virus has still not peaked, the next couple weeks will bring more of the same, and though people he talks to are starting to go a bit stir crazy, they’re adapting as best they can, Kaye said.

“The people I’ve been speaking with, whether it’s clients not sure what their plans are going to be for 2020 or talking about postponements, they’ve been really nice about it. They have their needs as business owners, and I have my needs and concerns, and so far everyone has been really great.”

That first coffee-shop meeting will still be pretty satisfying, though — whenever that might be.

Joseph Bednar can be reached at [email protected]

Cover Story

A Strained Safety Net

Joan Kagan, president and CEO of Square One

Joan Kagan, president and CEO of Square One

Managing a nonprofit agency has never been easy, but a number of factors, from low unemployment rates and rising employment costs to new labor regulations and immense competition for donor dollars, are making it much more difficult for organizations to carry out their missions.

Joan Kagan compares the effects that unfunded mandates and rising costs have on a nonprofit to a bad tomato season. Well, sort of.

To make that point, she told a story. On a summer day a few years ago, she was informed by the waitress at the restaurant she was patronizing that, if she wanted tomatoes on her sandwich, she would have to pay a surcharge.

“There was a lack of good tomatoes around, so that restaurant owner had to pay a higher price for his tomatoes, and he was passing that cost onto the customer,” said Kagan, president and CEO of early-education provider Square One, adding quickly that the analogy doesn’t exactly work.

That’s because nonprofits are not like restaurants offering tomatoes. They provide vital services, the rates for which are set by the state or federal government, and they can’t simply be raised because the cost of paying employees, providing health insurance, or simply paying the rent, continues to escalate.

And this is the situation that nonprofits, a large and important cog in the regional economy, are facing right now.

Indeed, in June 2018, Massachusetts Gov. Charlie Baker signed a bill that is set to increase the minimum wage gradually every year, until it reaches $15 an hour in 2023. In addition, a payroll tax increase was issued for the new paid family and medical leave program, upping the rate from 0.63% to 0.75%. The state originally planned to begin collecting these taxes on July 1, but due to many companies and organizations expressing confusion on the specifics, the start of the required contributions has been delayed by three months.

“If there is a 5% increase in our health insurance in a year, we have to figure out where that comes from. We can’t just turn around and raise our rates by 5%.”

But the tax hike is coming, and it is one of myriad factors contributing to what are becoming ultra-challenging times for nonprofits, said Kagan.

Katherine Wilson, president and CEO of Behavioral Health Network Inc., which provides a variety of services to individuals with mental health issues, concurred.

“What’s more challenging now for my type of business is that so much of our revenue is established as a rate by somebody else,” said Wilson, who speaks from decades of experience when she says that while running a nonprofit has never been easy, it has perhaps never been more difficult than it is now. “If there is a 5%  increase in our health insurance in a year, we have to figure out where that comes from. We can’t just turn around and raise our rates by 5%.”

Gina Kos, executive director of Sunshine Village in Chicopee, a provider of day services for adults with disabilities, agreed. She told BusinessWest that while demand for the services provided by her agency is increasing, a point she would stress many times, the funding awarded to it for those services has either remained stagnant or decreased, at the same as costs, especially labor costs, are skyrocketing.

And, as noted, matters are about to get a whole lot worse.

“The state tells us how much they’re going to give us for a service, and we figure out how we can create a high-quality, desirable service with the money that they’re giving us,” said Kos, adding that Sunshine Village, along with many other nonprofit organizations, have been able to do this successfully in the past. “Unfortunately, now, it’s getting harder and harder… the regulations are becoming too burdensome.”

Gina Kos

Gina Kos says the measures contained in the so-called ‘grand bargain’ will present a stern test for all nonprofits.

She was referring, of course, to measures contained in the so-called Grand Bargain, the compromise struck between elected officials and the state’s business leaders. They include the minimum-wage increases and paid family leave, the latter of which will bring its own challenges to nonprofits used to running lean.

And these additional expenses come at a time when nonprofits are locked into rates that they can charge for services, with some of these rates badly out of date, said Wilson.

“When the state looks at an organization to come up with its rate, they look at the cost it took to fulfill the service two years ago,” she explained. “They don’t look at the market rate, they look at data that’s two years old … so the rates that they establish are extremely low and keep us as employers of individuals with low hourly rates.

“That makes it very difficult to find a quality staff person to fill our jobs and do good work that we need to be doing for the people that we serve,” she went on, adding that, in this climate, she and all nonprofit managers must be imaginative and persistent as they seek ways to bring more revenue and donations to their organizations.

For this issue and its focus on nonprofits, BusinessWest talked with area industry leaders about the forces contributing to these challenging times and the ways they’re responding to them.

Making Ends Meet

Kos, like other business and nonprofit leaders, said she has real doubts about whether the pending minimum-wage increases will significantly improve quality of life for the employees who receive them.

She believes many businesses and nonprofits will respond to the increases by cutting staffers’ hours, thus keeping payroll levels stagnant. Meanwhile, the minimum-wage hikes may actually hurt some employees because their higher annual salaries will push them over the so-called benefit cliff, meaning they will lose forms of assistance — for housing, food, and other items — previously provided by state and federal agencies because they no longer qualify, income-wise.

“Unfortunately, now, it’s getting harder and harder… the regulations are becoming too burdensome.”

“The goodness of what people want to do to give people a better quality of life through income is not going to be achieved,” said Kos. “And, quite honestly, it might even be reversed.”

Meanwhile, she doesn’t have any doubts that these measures will make it much more difficult for agencies like Sunshine Village, where 75% of the budget goes to wages, to carry out their missions, because they will make it more difficult to properly fund and staff their programs and also attract and retain talent.

Indeed, Kos said Sunshine Village, which has 280 employees, likes to tout itself as an employer of choice, paying employees $2 to $4 over the minimum wage in the past, a practice it will find considerably more challenging in the years to come.

That’s due in part to the compression effect that minimum-wage hikes have on salaries across the board. If an employer raises wages at entry-level positions from $13 to $15, it needs to then move its second-tier employees higher in order to differentiate the positions, and so on, up the ladder.

In short, minimum-wage hikes impact wages throughout an organization, said those we spoke with — and, again, unlike businesses selling sandwiches with tomatoes on them, they can’t simply raise rates to cover them.

Katherine Wilson says nonprofits are being challenged by set rates for services that are often out of step with the cost of providing those services.

Katherine Wilson says nonprofits are being challenged by set rates for services that are often out of step with the cost of providing those services.

Meanwhile, the paid-family-leave measure brings challenges of its own, said Kos. In addition to the tax burden, agencies must be able to provide services and run the organization if people are on leave, a real burden for smaller agencies, especially with programs that require minimum staffing ratios.

“We’ve always been able to find ways that we can do more with less,” said Kos. “And we’ve done that through innovation, through increasing efficiencies, through cost-cutting initiatives, but today, it’s just getting harder.”

Kagan agreed, and noted that, with historically low unemployment rates nationally and even in this region, simply finding staff is difficult, especially when nonprofits are competing with a host of industry sectors, including retail and hospitality, for individuals earning entry-level wages.

Kos concurred, and said payroll is just one of the line items on the budget where the numbers are growing.

“Other costs are rising at a level that our funding levels are not keeping up with,” she said. “And because of that, we’re losing really good staff.”

Mission Control

These new challenges for nonprofits are compounded by growing need within the community for many of the services they provide and demand for greater services, said those we spoke with, making this an even more difficult time for this sector.

“Not only are we dealing with the same type of funding level as we have had five or 10 years ago,” said Kos, “the expectation for the service from the customers that we’re seeing is that they want a better service, and we’re not getting better funding for that service.”

She noted that her agency, like Square One and BHN, is one of the many organizations in what’s known as the ‘safety net’ for Western Mass., and if they are not getting the necessary funding to provide their services to members of the community, the entire business community will be negatively affected.

“If Sunshine Village can’t serve more people coming out of the school system, if Square One isn’t able to serve more kids who need daycare, if Behavioral Health Network isn’t able to provide services for people with substance-abuse issues, their family members aren’t going to be able to go to work, and the business community is going to be hurt,” said Kos. “If their employees don’t have the safety net, their employees aren’t going to be able to go to work.”

In response to these many challenges, nonprofit managers are forced to be more creative with ways to raise additional revenues and become leaner, more efficient organizations, both of which are necessary if they are to continue to carry out their respective missions.

“The vast majority of folks, certainly in the business community, don’t understand that we’re businesses too.”

But most don’t have much flexibility when it comes to their budgets. At BHN, for example, 80% to 83% of the organization’s revenue is related to compensation.

“That doesn’t leave a lot of room to find money when there is something that represents an increase in the cost of paying our employees or supporting them,” Wilson told BusinessWest, adding, as others did, that agencies must think outside the box when it comes to bringing in more revenue in order to keep up with rising regulation costs.

This includes advocating with state representatives, looking for grants, and cutting costs within the organization.

This isn’t easy, said Kagan, adding that another challenge facing nonprofits is that people don’t understand that the same problems facing businesses today — finding and retaining talent, paying for ever-rising health insurance, coping with new state labor and employment laws, and many others — apply to them as well.

“The vast majority of folks, certainly in the business community, don’t understand that we’re businesses too,” said Kagan, adding that this makes it more difficult to generate more donations or other forms of support.

Kos agreed, but noted that, as businesses struggle with the same cost issues, there might be growing awareness of what nonprofits are confronting.

“I think what’s interesting today is that the for-profit business community is starting to struggle with the same things that we as the nonprofit community have been struggling with for decades,” she said.

Kagan agreed, and noted that it’s important for nonprofits to educate the business community — and all their supporters — about just how challenging the current climate is, and will be for years to come.

“You’re not advocating just to bring money into your own organization,” she explained. “You need it so that you can pay fair equitable salaries to your staff and provide a high-quality service to the people that you’re serving.”

Climate Change

All those we spoke with stressed that managing a nonprofit has never been as easy as it might look.

But over the years, said Kos, organizations like Sunshine Village have “managed.”

Indeed, they’ve managed to continuously raise funds vital to their organizations, cope with rising costs and changes in labor and employment laws, and, yes, carry out their important missions.

But it’s a fact that simply ‘managing’ is becoming ever-more difficult.

These new regulations are making it increasingly difficult for nonprofits to keep their heads above water, but that doesn’t stop them from trying.

Kayla Ebner can be reached at [email protected]