From the Advocate

By Tara Lynn Gray 

November 2022

The Importance of Regionalism

Supporting a Resiliency Mindset

A California summer is synonymous with sunshine and skies so blue they break your heart; we had some of those perfect “we’re so lucky to live in California” days in July, but it’s hard to enjoy them like we used to. Now, when the temperature rises, so does our collective anxiety.

As I write this column, my team is monitoring the progress of the McKinney and Oak Fires with thousands of residents evacuated and multiple structures destroyed. It’s the largest incident of this year’s fire season to date and the Governor has declared a state of emergency in Siskiyou and Mariposa counties.

As CalFire, CalOES and local agencies fight to contain the fire, my team is waiting to see if this fire will be the next to reach a significant population center, maybe one where small businesses – a grocery store, a diner, a pharmacy, a gas station – are the lifeline of the local economy. We stand by to provide recovery support so these small businesses can literally keep their communities on the map in the case of a catastrophic event.

Wildfires aren’t the only risk in California, of course: pandemics, earthquakes, oil spills, black and brown-outs, even hacker attacks all constitute potential “business interruptions” in both high-density and rural counties alike. Each geography and each kind of incident represents unique challenges for both disaster preparation and eventual recovery. It’s not pleasant to talk about or even think about. But this is why part of my office’s role is to help small business-owners plan for the worst…and hope for the best, which is something Californians as a population are really good at. Doing both at the same time, however, requires a business-owner’s concentrated effort and careful application of resources and this is the resilient mindset my office works to cultivate.

The Governor is working to lower California’s risks from natural disasters on multiple levels. He’s designated $53.9 billion for the California Climate Commitment to bolster wildfire resilience, address drought needs, protect from extreme heat and the impact of carbon pollution. Some of these investments respond to the long-term threat of climate change and some prepare for the immediate needs of this year’s fire season.

As part of that larger effort, my office is also thinking, and worrying about, disaster relief along three lines: disaster relief, technical assistance for disaster-impacted geographies, and disaster preparedness for long-term resilience.

Disaster Relief Programs

This budget year, my office is still busy administering several

• The $50 million Microbusiness COVID-19 Relief Grant Program administered by local counties;
• An additional $150 million for the Small Business COVID-19 Relief Grant Program; this allocation is going entirely to businesses left wait-listed after the deployment of the original $4 billion in funding;
• The $49.5 million Non-Profit Performing Arts Grants Program for workforce development and to build resiliency;
• $165 million California Venues Grant, which includes an additional $15 million that was recently added to the program;

This year, the Governor is also proposing a $75 million program to distribute drought relief grants, particularly to small farms throughout the state. The guidelines for this newly approved funding haven’t been detailed yet, but there is a clear need to get this money out as quickly as we can.

According to a recent report from researchers at the University of California, Merced, the drought had a $1.1 billion impact on California’s agriculture industry last year. The report says more than 385,000 acres in the Central Valley have already been idled due to the drought. It’s not just the landowners who suffer: these conditions mean the loss of nearly 9,000 jobs across the state, including already disadvantaged immigrant and minority field workers. A $75 million grant program can’t make up for $1.1 billion in industry losses…but it can bring relief to the most fragile small farms and their workers.

Technical Assistance to Disaster-Impacted Communities

After two years of COVID-19 relief efforts, I’m proud to say that my team has gotten really, really good at administering these grant programs.

A challenge that we’re still wrestling with is supporting businesses hit by more localized disasters…especially when they hit rural communities.

In California, many towns are very dependent on individual small businesses; even one restaurant or hotel shutting down can have a disproportionate impact on the entire local economy. When disaster strikes, the future of a town may turn on getting a gas station or a grocery store back open. Even if the residents are all evacuated, the businesses are critical to support the emergency crews because firefighters need to be housed and fed, for example.

At the same time, capacity is usually strained for local government agencies and the population is too small or spread out to support a network of community benefit organizations. There may be too few small businesses to justify a full-time satellite office for a Small Business Development Center (SBDC) or other small business technical assistance providers and in the case of a catastrophic incident, local resources are frequently too overwhelmed to set up services for small business support: helping business-owners apply for disaster relief funds, file insurance claims, figure out how to rebuild while having been evacuated or losing their homes.

a framework modeled by FEMA designed to facilitate problem solving, improve access to resources, and foster coordination among state and federal agencies and non-governmental partners Working with California Office of Emergency Services (CalOES) and dozens of allied agencies, we focus on identifying individual small businesses impacted by a given event and providing both information and the technical assistance resources they need to respond in stressful and logistically challenging circumstances.

Our network of SBDCs is designed to support the needs of all underserved business communities, including those ravaged by wildfire or earthquake. But I have to admit that figuring out how to get technical assistance – most specifically, business counselors – to these areas in the wake of a disaster remains a work in progress. My team is developing new proposals to help our small business support network become more nimble and effective when disaster strikes.

Disaster Preparedness and Resilience Support

The risks associated with climate change are now shared by nearly every business in California in ways large and small: extreme heat and degraded air quality can impact working conditions, increase costs, and further degrade supply chain reliability in geographies far from the flames.

Climate change is impacting businesses in all kinds of ways, even presenting new opportunities; the LA Times has reported that real estate agents, for example, are starting to market expensive air filtration systems as a must-have feature in the luxury housing market.

This is why I say, the primary lesson of the pandemic is the importance of planning for the unexpected. I’m not saying that predicting the future is getting easier; if anything, the current inflation crisis and the market impact of the war in Ukraine serve as good arguments for the opposite.

However, I am saying that small business owners need to analyze the unique risk model of their operations and mitigate every weak point. The technical term for this is “business continuity planning.” It can be as simple as a checklist if your business location is evacuated or can involve multiple scenario strategies including a data backup plan and regularly re-evaluating insurance policies, including business interruption insurance in some situations. The complexity of a business disruption plan is directly tied to your business model. Therefore, I recommend that it be built alongside your business plan itself, including potentially planning for multiple independent revenue streams or sales channels, for example, an e-commerce presence and a storefront.

There is no one-size-fits-all solution here, and don’t get me wrong, it does require real time and effort to develop and maintain an adequate disaster plan. But more importantly, knowing that FEMA reports that 40 percent of businesses do not reopen after a disaster and another 25 percent fail within a year after a disaster, it seems imprudent to not make the investment.

This is why I’m excited that my team is stepping in to work with The California Academy for Economic Development on the Outsmart Disaster program to help California businesses, and nonprofits too, access the resources they need to prepare and recover from all types of disasters. The core of the campaign is currently the Resilient Business Challenge, a virtual, self-guided process composed of five step to assess risks and help your business become more resilient.

We’re just getting started on this project so stay tuned for new developments.

In the meantime, know that my office is here to support you not just when your business is starting out or growing but when that unexpected thing does happen. This is a fundamental part of our mission because we believe that losing a small business is a disaster not just for the owner, but for our communities.

So, let’s work together to anticipate that unexpected event we know can happen one day.