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Small Business Saturday is upon us again. In a year that has been anything but normal, so many of us may be thinking long and hard about if and how we will follow the 10-year-old tradition of patronizing local small businesses. How we shop matters greatly. Our country’s economic health, domestically and globally, is based in large part on the health and well-being of our one last, major economic engine: small business.
Small businesses are completely dependent for their survival on incoming revenue. The average small business went into this pandemic with one-to-two months of reserves. Those still hanging on are making do, but they need your revenue to continue. Did you know that 75% of online retailers and brick-and-mortar stores count on the fourth quarter for the highest profits of the year? For many SMBs, Q4 is a make-or-break-the-business quarter.
There’s a saying: As small business goes, so goes the economy
Unfortunately, much of what we read in the news is about publicly traded companies, because their data is easily available. But that’s less than half of the story of what’s going on in our economy. Small, privately held, owner-operated businesses, are an engine of opportunity. small-to-midsized businesses, aka SMBs, represent 99% of all U.S. businesses. They employ half our workforce, provide first and last jobs for most of our population, make up 85% of U.S. exporters, are the source of most innovations and produce half the annual revenue for the U.S. economy. SMB owners are directly engaged with their communities and their employees, building value through sweat equity. Without a healthy, growing small business economy, we all suffer.
This Covid crisis is hitting SMBs is like a neutron bomb
Many SMBs have already closed up for good. If those losses go unchecked, we are likely to see an impact that could last for a generation or more.
In normal years, 42% of SMB failures occur because owners can’t find enough customers. That number will likely be higher this year as customers stay away or shift away from local retailers to buying online from easy-to-use major retailers and ordering platforms. The SMBs that are still open desperately need our support.
Looking for proof of that? Consider the 2008 financial crisis: The brunt of it was limited to banks and other financial institutions, insurance companies, automakers and construction companies. In that cycle, SMB failures outpaced small business starts, and economists at the time wondered, “Have we killed entrepreneurship?” It wasn’t until 2015-2017, seven to nine years later, that we got back on track economically. Comparatively, the Covid crisis is hitting virtually every sector of our SMB economy with more business closings reported daily.
Consider the social upheaval that accompanies a business closing. Suppliers also lose out. For every business that closes up under duress, another three-to-eight businesses are likely to go down with it. An average small business employs four-to-five people, so each closing means another four-to-five people out of work and another four-to-five families who may not be able to pay their mortgage or put food on the table. Local communities report SMB shutdowns to date of anywhere from -18% to -65%, and many are gone for good. Think about that: Half the stores and businesses in your town could end up closed. And might never reopen. Many that continue operating for now do so at a significantly reduced pace, doing their best to hang on as they try to figure out how to pivot to new sources of revenue. And right now we are facing soaring Covid infection rates, with more than half the states reporting spikes two-to-four times as high as they’ve previously experienced. There is no question that this will have an increasing negative impact on small businesses.
Related: 10 Ways for Small Businesses to Dominate Local Markets
I hope I have your attention. So what can you, personally do, to help? A lot!
Buy local. Avoid the temptation to pursue easy online buying with the big retailers and shopping platforms. Instead search out small businesses who produce the goods and services you need and buy from them directly — on Saturday and every day thereafter. Keep revenue, jobs, profits and tax dollars in local communities.
Look for opportunities to spend locally, in whatever amount you can afford (and, of course, while keeping Covid safety precautions in mind). Find a project that needs doing and hire a local architect, engineer and construction firm to do the work. Buy supplies from local stores. Build a barbeque or patio, paint a room or buy new furnishings. Go to the local farmers market. Get a haircut. Hire a limo for a private tour of the holiday lights. Seek out local artists and galleries and buy some artwork to decorate that new home office. Get some new clothes to refresh your work-at-home wardrobe.
When thinking about donations, do more than write a check. Pursue a multiplier effect. Buy goods from a small business to donate — clothing, food, protective gear, pet supplies — and then find a local charity to take those contributions. If you are committed to writing checks, look at crowdfunding gifts and crowdfunding loans.
Organize a get together for small business owners (again, with social distancing and other mitigative measures in place), and bring people together to work through this crisis as a community. Offer part-time work to a neighbor who is out of work. Volunteer your services to help an SMB. Visit local businesses and take the time to get to know the owner. Really talk about what’s going on. So often a word of encouragement or a piece of good advice can mean the difference between throwing in the towel and continuing forward. Help local organizations that are encouraging budding entrepreneurs to get into business. We’re going to need all the new entrants we can get.
Write letters to Congress and encourage your neighbors to do the same. We need them to act now to save small business. Instead of giveaways, for which our children and grandchildren will pay the bill, encourage them to implement a TARP for Small Business program. TARP worked great in 2008. The federal government loaned out billions to big businesses, and got their money back, plus interest, within 10 years. We can do the same now for SMBs. If we save SMBs, we save jobs, and we keep the economy moving forward. But we have to act now before we lose another million SMBs.
Andi Gray is president of Strategy Leaders (www.strategyleaders.com), a business consulting firm. Gray’s career started in sales, marketing and new business development at Xerox, American Express and Contel. Gray earned an Executive MBA from Columbia University while conducting research on success and failure drivers for entrepreneurial businesses. Gray writes a weekly column called “Ask Andi” in which she provides practical advice to business owners. She also authors a monthly column in Chauffeur Driven Magazine. Gray is also the co-founder of the networking group BOHCA (Business Owners Hemp and Cannabis Association), where she helps industry specific owners grow their business through strategic planning.
https://www.entrepreneur.com/article/360408