Over the past few months, I’ve missed my daily greetings and interactions with the small coffee shops and delis in my neighborhood. These stores and the people who work there define the character of our neighborhood, unite people of different backgrounds and create a community. The relationships created between customers and workers in independent business often go beyond just transactions—we become family. That’s the bond I have with small businesses in my community.
Small businesses have been the backbone of America’s economy but COVID could change that forever.
As we isolate at home, small businesses around the country are struggling to make ends meet. Though the number of customers has shrunk, all the regular bills and wages have not. It’s simply not possible for many small businesses which depend heavily on foot traffic and operate on thin margins to survive. Sadly, we expect to see a lot of small businesses close, many of them soon—and many of them permanently.
Small companies, from local restaurants to Main Street stores are among the hardest hit from the pandemic. I’m seeing a lot of “Closed for Pandemic” signs. Other businesses have just gone dark.
The pandemic’s yet-to-be-fully-seen and devastating toll on the small business landscape
A new study estimates that more than 100,000 small businesses nationwide have permanently shut their doors since coronavirus was declared a pandemic in March.
Businesses that have been able to reopen are struggling to survive. Though the government has passed two stimulus packages, it is not enough.
Small business owners say they’ve spent all or most of their loans paying salaries and bills, including rent. Unlike larger firms, small businesses—bookstores, bodegas, bars, dental practices, gyms and day care centers, hairdressers and manicurists, coaches and professional service firms—typically don’t have the financial resources to overcome a few rough weeks, let alone months. Fifty percent of the surveyed firms said they had two months or less of cash on hand on January 31.
Analysts warn this is only the beginning of the worst wave of small-business bankruptcies and closures since the Great Depression.
According to a new survey from Main Street America, nearly 7.5 million small businesses may be at risk of closing permanently over the coming five months, and 3.5 million are at risk of closure in the next two months. Less than 40 percent of small business survey respondents still expect to be open at year’s end even as people remain leery of resuming normal lives and the threat of a second wave of the virus looms.
Restaurants and retailers remain especially hard-hit. In May, the CEO of the OpenTable restaurant booking service warned that one in four eateries won’t be able to reopen after this pandemic.
Closures of this immense scale could devastate the country’s economic growth since small businesses account for 44 percent of all U.S. economic activity, according to the Small Business Administration. More than half our workforce either works for or owns a small business—and small businesses create two out of every three net new jobs in the private sector.
Shopping local matters
When you shop local, your money tends to stay local. Many small businesses buy supplies from other small local businesses.
| According to a recent study, for every dollar you spend at a small business, 68 percent funnels back into your community (compared to just 46 percent at major retailers).
Every time you spend money in a local business, that business grows, jobs are created and local unemployed people have more opportunities for work.
Small businesses are frequently the best at supporting local and national charities too. They are more altruistic, giving 250 percent more money to nonprofit organizations than larger companies do. Simply by shopping local, you support neighborhood families and help strengthen your community.
New and often insurmountable challenges exist
Many small businesses are finding it onerous to keep up and comply with constantly changing local guidelines, while others are deciding that no matter what their local officials say, it’s just not safe to keep operating.
Small business owners also say they’re working harder than ever to keep things running smoothly with fewer resources as they’re forced to adjust to a rapidly changing economy.
Black-owned businesses are the hardest hit
Black-owned businesses have suffered more devastation from the pandemic than any other group, according to the National Bureau of Economic Research. The number of Black small business owners plummeted from 1.1 million in February to 640,000 in April—a 41% drop compared to a 17% drop for white-owned businesses. Adding insult to injury, Blacks, Latinos, and other minority groups have been disproportionately affected by coronavirus, including not having access to testing or being able to get the necessary medical assistance.
Many minority businesses have had trouble accessing federal aid programs designed to help weather this crisis even though funds were set aside for them under the CARES Act. A survey of Black and Latinx small businesses conducted by the Global Strategy Group determined that only about 12% had obtained the full money requested.
But there’s one silver lining: Yelp reports that support for Black-owned businesses has skyrocketed on its site amid renewed activism for racial equality.
The movement to support black businesses and entrepreneurs, as a means to combat racial injustices, has gone viral on social media, with hashtags, documents and consumer apps generating their highest rate of traffic to date. Black-owned business directories have sprung up to help consumers find and support them with their spending, including the Black Wallet app.
Supporting black-owned businesses helps entire communities. “Nine times out of 10, black-owned businesses are making sure that people of color are employed as well,” said Nia Grace, owner of the restaurant Darryl’s Corner Bar & Kitchen in Boston’s South End. “Every time you buy food from a smaller, mom-and-pop shop or a restaurant, you know that it’s a person who lives here, and all the money is going to be spent back here or another place in the neighborhood.”
And buying from a Black-owned business isn’t just money in someone else’s pocket, it allows them to influence the next generation of Black business owners too.
Highlight of The Week: Promoting Black-owned businesses through an online directory
Here’s an inspiring story of how communities are banding together to help support Black-owned family businesses.
The app EatOkra offers a location-based mobile application to help customers easily find local Black-owned restaurants throughout the United States. The app is meant to boost the profile of small Black-owned businesses, many of which don’t have the luxury of hiring a social media manager or marketing director.
| BlackLivesMatter protests have raised awareness about inequalities and left many people looking for big and small ways to actively fight them.
“This [app] isn’t something we just jumped on because it’s the thing to do right now, we have been doing this since 2016,” Anthony Edwards Jr., one of the app’s founders. “People understand the difficulties the black community is facing on a totally different level and from many angles. In these past couple weeks they’ve seen it in economics, health care, police brutality. People are desperate to unify and combat these things.”
The EatOkra app has had over 100,000 downloads this year—90,000 of them from mid-May to mid-June. “It’s not just black people helping black business owners, it’s the whole community choosing to help Black-owned businesses,” said Joel Prinz, co-owner of the Lighthouse Coffee Co., in Reno, Nevada.
Challenge of The Week: Explore ways to support local and Black-owned businesses
The global pandemic has shown the urgent need for collective action to support small businesses. Our local businesses need our help to stay alive if we want our communities to look anything like they did a few short months ago.
Vote with your dollars. Each dollar you spend is a vote you are casting for your community, and the marketplace is your ballot box.
Think of all of your favorite stores and support them by buying from them or purchasing a gift card that you can give away or use later but which helps them now!
Let’s buy less from the big retailers and increase our purchases from small businesses.
Here are 15 ways to support your local businesses, including: ordering food more often than you normally would from restaurants, tipping generously, posting menus and small business shout outs on your social media, buying birthday presents from boutique stores, keeping subscriptions to gyms and clubs if possible (even if they are not open) and continuing to pay for services you used to get such as house cleaning and lawn care (if you can).
In case you don’t know how to find Black-owned businesses in your neighborhood, Facebook recently updated its Businesses Nearby platform to help.
Every little thing helps, and if we all do what we can, it’ll strengthen our communities! Will you join me?
Kendall Webb, Executive Director
JustGive 