Cafe Pamplona on Dec. 26, 2018. The eatery closed during the pandemic after six decades in Harvard Square. (Photo: Cafe Pamplona via Facebook)

It’s becoming harder to own and operate a small business in Cambridge. The Covid pandemic, its resulting restrictions and challenges from e-commerce and seasonal rushes and lulls are all cited as stressors in Cambridge Local First’s first-ever State of Small Business report, released Jan. 29.

The nonprofit, which is dedicated to supporting and promoting the city’s local economy, used survey data from small-business owners to contextualize economic and public health strains and where they stand nearly three years later.

“Almost every single business that is surveyed reported a huge impact from Covid,” said Theodora Skeadas, the executive director of CLF. “Most businesses are concerned about post-pandemic recovery.”

Cafe Pamplona, a Harvard Square restaurant that closed after 61 years in business in June 2020, was cited by Skeadas as a prime example of one shutting down because of low customer turnout from pandemic restrictions.

Chain restaurants such as The Friendly Toast were affected too. A Kendall Square location owned and operated by Eric Goodwin shut down in early 2020 with the intention of a July reopening that never materialized; the chain opted a month later to leave Kendall – though a replacement Harvard Square location is expected to open as soon as April, workers said last year.

Like Cafe Pamplona, The Friendly Toast relied on steady business from Cambridge’s students, a population that plunged in 2020 because of pandemic restrictions.

The State of Small Business report uses CLF’s internal data from member businesses in 2019 and 2021 and secondary sources to assess challenges faced before and during the pandemic, including as some restrictions eased. The report also took findings from a state Commercial District Recovery Plan to amplify solutions that businesses found most effective for navigating the pandemic. Suggestions consisted of increased inter-business communication, streamlined licensing and a cap on third-party restaurant delivery fees.

A survey during the pandemic found 96 percent of Massachusetts businesses saying Covid hurt their business and added considerable financial burdens. Of those, 80 percent of businesses saw decreased revenue in 2020 compared with the previous year, and 55 percent of businesses had to close temporarily or permanently.

Beyond the coronavirus

The number of businesses in the state of Massachusetts shrank by 2.9 percent between January 2020 and February 2021, with an even greater impact in the Boston metropolitan area, which saw a 7 percent decrease in the number of businesses in the same period.

Among Cambridge Local First’s 500-plus members, 89 participated in the 2019 survey and 74 in the 2021 survey. Each group identified similar city-specific and business-oriented threats such as concerns over construction safety, negative seasonal impacts, space rental and leasing, as well as competition with bigger businesses and high employee turnover rates.

“There’s a lot of concern in terms of how [small businesses] are going to be doing long term, especially given certain broader trends like the rising cost of rents and cost of doing business,” said Pooja Paode, the organization’s associate director. “A lot of these struggles were happening before the pandemic as well. These are really broader existential threats to small businesses, not just little things that have happened because of the pandemic and are going to be gone because of the pandemic.”

How to help small business

Helpful steps CLF could take included social media amplification and matching financial aid and grants, the businesses said.

“Our hope is the report can be used to direct policy in Cambridge,” Skeadas said. “We want to elevate understanding of the challenges that businesses are experiencing because of the pandemic and in recovery and we want consumers, people, residents and visitors of Cambridge to understand the role they can play in helping small businesses – how their consumption decisions affect the businesses around them.”

In particular, she discussed CLF’s fight against third-party delivery app fees, which increase prices to an unsustainable level and often discourage customers from buying locally. The organization partnered with other local groups in a day of action in 2020 to lobby legislators to cap the fees.

“We’re really interested in painting a better picture of how these businesses are actually doing with a lot more specificity,” Paode said. “We really want to, hopefully, dive even deeper into Cambridge through our work. It was nice to take a first stab at painting that picture for us and hopefully some of our partners too.”