We Need Small Businesses – They Need You Back

Small businesses have been decimated and somewhat silently since COVID-19 shutdowns started. The problem is that no one could truly track the carnage. Historically, it’s been difficult to track because small business debt is often low, so closing down can simply mean “stop paying your utility bills” or “lock up the doors.”

Meanwhile, U.S. corporate bankruptcies spiked in May 2020 with a 48 percent surge year over year. U.S. courts recorded 722 businesses nationwide filing for Chapter 11 protection, according to figures from Epiq Global. That’s up from 487 bankruptcies from May 2019.

Who Got Hit Hardest?

Restaurants, retail stores, beauty salons, automotive, and event planners are right at the top of the heap, with a big “miscellaneous” bucket due to the difficulty in tracking. Businesses like this traditionally made up 98 percent of the US economy and 90 percent of the world’s economy – yet if they didn’t carry an essential product like toilet paper or food, they were shut down. Wal-Mart could still play florist, electronics store, and linen shop – while specialty stores like Bed, Bath & Beyond* eventually folded.

What we do know is most everything is local. So while your neighborhood clothing store has gone under, national big box brands kept enjoying the spoils – either because they have an essential grocery section or because they quickly stood up or accelerated their e-commerce capabilities with enticements such as free shipping or same-day delivery to your door.

In other cases, direct-to-consumer (DTC) startups accelerated. Fresh and frozen pet food deliveries from Pet Plate and Ollie, for example, are still showing up at rural front doors with enticing discounts off “coming back” or “your first order” in a monthly subscription box.

The same is true for innovative fitness platforms such as Peloton* delivering not only the home exercise equipment and cycling shoes, but also highly engaging online classes, on-demand yoga, and a big social media component right there on your touchscreen. To make it easier, new payment apps like Affirm and Klarna provided easy credit and fulfillment terms appealing to buyers and businesses alike. 

Yelp has data showing that more than 80,000 businesses permanently shut down from March 1 to July 25, 2020. About 60,000 were local businesses or firms with fewer than five locations. How have they fared?

As a consumer, I both regret and revel in it. While I’ve always preferred giving my business to small, regional brands, these new experiences are compelling and convenient. Peloton at home cuts hours a month in gym travel where I already felt overscheduled.

Freedom of Choice?

But suddenly our freedom of shopping choice dwindled to fewer national brands that I personally don’t care for.

I know I’m not alone. My neighbors always hated pushing “One-Click” on their Amazon account too, yet they were equally thrilled to set up a new GrubHub account for the sole purpose of ordering in local.

That’s not true for everyone, obviously. In the last few quarters, we’ve seen billionaires become trillionaires, including video collaboration technology companies that have exploded. Take Zoom. It’s even a verb now.

Yet, I believe, while the digital acceleration is great overall for innovation, the forced wealth transfer to more capital-rich big companies is having a horrible effect on the U.S. economy short and long-term. And that’s why as a person with 20-plus years of big corporation experience, I’m making it my mission to help small businesses survive and thrive.

Why? The collective impact of individual small business failures is far larger than people realize. Businesses with under 500 employees account for about 44% of all U.S. economic activity, according to a U.S. Small Business Administration report. They employ almost half of American workers.

So when the vaccination shots come in 2021, these small businesses may have lost their shot. They simply won’t be around to welcome employees or customers back. Owners will have either moved on, relocated, or taken a bridge job at a large, more stable firm just to put bread on the table. As we’ve seen so many reports, at least one working parent and especially women have dropped out of the workforce with the uncertainty around school re-openings. Some economists have called it a #SheCession.

We can help change that – one business at a time

Right now, I’m encouraging single owner-operators to think creatively about what they can do to build an online business – whether it’s virtual events, take-out promotions, mobile clinics, pet telehealth visits, or simply updating their LinkedIn profile to connect with new and existing customers with a monthly blog, 15-minute virtual tour or product demo. It’s doesn’t have to be fancy. It just needs to be real. With the level of pandemic isolation, many customers are more interested in trying new experiences before buying new products, such as participating in a virtual wine tasting party or registering for live cooking demonstrations from their favorite local chef. (I’d pay for that!)

So don’t feel like you have to “deliver” your product or service to the home. Instead, think about how you might move some aspects of your business online while following the safety protocols in your area.

Maybe the pandemic is the great equalizer – welcoming laggard industries, education, and mom-and-pop businesses to the Digital Age. But gone unchecked, I fear COVID-19 may create more wage inequality and reduced access to business opportunities.

Small businesses need you. So do the hospitals. So do the classrooms. It’s not philanthropy – but it does require us to volunteer, coach, and mentor our communities on new hardware, software, automation platforms, and apps that they may not have used in the past.

If you are looking for help, or want to help, let’s talk.

Great things are happening. Be part of it.

Contact Me