Small Businesses are Dying
It’s an understatement to say the SARS-CoV-2 viral pandemic has caused massive disruption in the lives of people around the world. The illness, popularly referred to as COVID-19 in reference to its December 2019 emergence in Wuhan China, has dramatically and permanently altered our daily realities. It happened with shocking abruptness.
Now, nearly a year into the onslaught of a disease that has claimed 1.09 million lives at the time of this writing, things have settled a bit from the frightening initial emergency stage to a distinctly unsettling “new normal” phase. But for one unfortunate group of COVID-19 victims, this new phase is not only far from normal, it might best be described as terminal.
Small businesses in the U.S. and around the world have been dealt a brutal blow, in many cases a death blow, by the effects of COVID-19. Shut downs, lockdowns, damaged supply chains, fear and illness among staff, and poor economic conditions plaguing customers are just a few of the most obvious factors that have had a disproportionate impact on local small businesses everywhere.
At the end of March 2020, just as the full implications of the pandemic were becoming clearly visible, a group of academics from New York’s Columbia University set out to evaluate the impact COVID-19 was having on small businesses.
The researchers partnered with Alignable, a network-based platform designed to help businesses share knowledge and interact with one another. Alignable currently has a network of 4.6 million small businesses across North America, and the company regularly polls platform users on matters of interest and concern to the small business sector.
The research project was based on a 43-question survey of 5,843 U.S. businesses with fewer than 500 employees. About 64 percent of the businesses in the sample had fewer than five employees; another 18 percent had between five and nine employees.
At the time of the study, the U.S. government had begun considering a first round of coronavirus relief in the form of the CARES Act (Coronavirus Aid, Relief, and Economic Security). It was a period of substantial policy uncertainty and no federal response had yet been enacted. The research results painted a grim picture showing that COVID-19 is far more likely to be fatal to small businesses than it is to healthy individuals:
- The pandemic had already caused massive dislocation among small businesses just a few weeks into the crisis; mass closures and layoffs had already occurred.
- Across the full sample, 43 percent of businesses had temporarily closed because of COVID-19. Reductions in demand, employee health concerns, and supply chain disruptions were given as the reasons for closure.
- A majority of businesses planned to seek funding through the CARES Act. However, many anticipated encountering bureaucratic hassles and difficulties establishing eligibility when attempting to access the program.
- Business owners’ beliefs about the likely duration of the crisis varied widely, but in the proposed scenario of a crisis lasting 4 months, only 47 percent of businesses expected to still be open in December 2020.
- The researchers estimated that closures alone might lead to 32.7 million job losses if the crisis lasted for 4 months, and 35.1 million job losses if it lasted for 6 months. These projections suggest a scale of job dislocation larger than anything America has experienced since the Great Depression and larger than the impact of the 1918 influenza epidemic.
- The fate of the 48 percent of American workers who work in small businesses is closely tied to the resilience of the small business ecosystem in the face of massive economic disruption caused by the pandemic.
The COVID-19 pandemic could strip the American small business landscape bare, leaving only the corporate giants standing. We face the loss of all the invaluable macro-level economic and social benefits provided by small businesses along with the shopping variety and many inimitable unique attributes they offer consumers.
It is already an established fact on the ground that the independent bar and restaurant scene in New York and other major cities has been gutted. Folks are also finding their favorite small shops closed and many personal service providers gone. Unless people step up with a clear commitment to take rescue action, we are going to see a critical component of our communities destroyed.
Let’s Rescue Local Small Businesses
It’s certainly true that very many of us are reeling from our own pandemic-related financial injuries. This may not seem to be an optimal time to think about trying to save others. Still, even folks who are barely staying afloat must still do some small amount of shopping and spending just to cover the daily necessities. While they may seem like mostly insignificant transactions when viewed in isolation, if correctly targeted, our daily individual choices and actions can multiply into outsized benefits to support local small businesses. Consider some of these options:
Order To Go – We all know that restaurants have been hit hard by this disaster. Many people have seen their long-time local favorites disappear. For most of us, closures have shown what it would be like if establishments we have always enjoyed were gone. If you are in a position to afford it, call in for takeout or use a food delivery app to order from an independent local restaurant instead of pulling into the drive through at one of the big chains. This is a way to support small business owners so they can continue to provide jobs to your neighbors.
Buy Local Online – When it’s time to shop for clothing, household goods, or other durable items, make a small sacrifice of time and track down a local source. Skip the one-click on Amazon prime and run some searches or make a few calls to find what you need from a store or other provider in your community. Many operations are putting up online storefronts in response to the lockdowns; others are selling on existing online venues like Facebook Marketplace, Etsy, and local e-classifieds. If you can’t find a company’s website, call the brick-and-mortar location with inquires. Even if a business is not selling online and their doors are temporarily closed, delivery or curb-side pickup options are still likely to be available.
Get Gift Cards – Buying gift cards offered by local enterprises is a way to provide some immediate cash flow to tide them through this rough time. You can always use the goods or services when you need them later, or when things move back closer to normal. Start a pay-it-forward local business gift card chain – give a friend a $10 gift card with the request that they buy a card for someone else.
Don’t Stop the Payments – In a related strategy for providing critical cash flow, consider maintaining any ongoing payments for memberships and services. For example, a local gym, massage therapist, or housecleaning service may rely entirely on clients’ monthly payments for survival. Continue supporting them if it’s possible; consider it a donation or see if you can get vouchers for future services.
Do Unto Others – If you are in business and able to do so, consider arranging discounts or even doing some pro bono work for fellow small business people. You can reduce risk by limiting the offer to specific groups you would like to support (e.g. educators, students, first-responders, colleagues in your field); this way you an have an impact while keeping your own costs reasonable.
Be Flexible with Accounts Payable & Receivable – If you run a business that serves small businesses, look over the accounts they hold with you. Are you in a position to help a struggling small business by extending their payment terms; for example, by billing at net-60 instead of net-30? On the other hand, if you owe money to a local business, try to get them paid ahead of schedule. The accelerated income will be welcome.
Get Organized – Work at what ever level you can to develop organized efforts to help local businesses. Gather friends, relatives, and co-workers to make group commitments to support a few endangered neighborhood enterprises. If you own a business and are lucky enough to be fully operational, make arrangements to use local suppliers and sub-contractors whenever possible. Consider starting an employee rewards program to encourage your staff to buy local when they go out for coffee or lunch. It is all about keeping dollars in the community rather then flowing to the large corporations. They were always far better positioned to ride out this storm and ended up raking in the lion’s share of federal assistance anyway.
Spread the Word – Be generous with social media shoutouts – they’re free. Use social media to report good experiences, recommend businesses in your neighborhood, and encourage others to join the “support local” movement. Spreading the news about sales and bargains, posting reviews, making unboxing videos, commenting, liking, and tagging are all ways to directly help your favorite local small businesses.
Shop Local – It’s More Than Just Hip
COVID-19 has pushed us all into survival mode as fear and threat seems to invade every level of our lives. Our personal safety, the health of our family members, our job security and financial stability; it is suddenly all at great risk and far too many have already learned that the risk is very real. In this pandemic as in any disaster or emergency, only by making the right moves to mitigate risk can we reduce the danger and increase the chances of survival.
We wear masks, wash our hands, and apply social distancing measures as strategic precautions against illness. In the same way, purposive targeted efforts must be made to protect the economic health and vibrancy of our communities. Small businesses are building blocks of healthy communities, and they are well worth our consideration and protection during these hazardous times. So many have already been lost with the advent of the big-box retail era, and now our remaining local businesses face what might be an extinction level event.
Immediate action is imperative. COVID-19 shows every sign of moving from pandemic to endemic. It is not going away any time soon, so we have to get on the defense now. Buy local, farm-to-table, artisanal production – all the conceptual elements of a movement towards community-sourced goods and services have fallen into place in recent years. It is now time to take the trend beyond preference, fashion, and cool to necessity as part of a wholehearted effort to fight the damage COVID-19 has done to our small local businesses. And if you own a small business, contact Wodu Media for innovative digital marketing and ecommerce solutions to help you adapt to the changing times.