Want to help Small Businesses? Stop talking about stimulus and start talking about convergence
Our economy runs on small businesses. The recovery process will involve the movilization of their entire ecosystem, from downtown property…
Our economy runs on small businesses. The recovery process will involve the movilization of their entire ecosystem, from downtown property owners to business associations and local organizacions, the small businesses themselves and also the banks, insurance companies, suppliers and lawyers who serve them.
The good news is that we have seen that the possibilities are endless. All it takes is political will and the urgency will force that will into converging.
The type of help we’ve been seeing for #SmallBusiness has proven tricky. While government counts money in millions and needs staff in the thousands to manage and channel those impossible amounts, small businesses are in desperate need of a few thousand dollars to keep their staff of less than 20. Scales don’t match.
According to Yelp 66,000 #SmallBusiness have closed since March. Harvard says 110,000. Some even say we won’t know until the government counts heads next year.
“Inject more capital” is what geniuses at Yelp are saying we need (see NYT link).
Geez.
Dude, printing money is never a solution. Ask Robert Mugabe. Rather, we should analyze separately the scope and scale of help each type of business needs to find solutions at the key points of the ecosystem.
From a walk on any Main Street, we can distinguish three types of establishments:
Personal and professional service businesses like beauty and nail salons, event planners, tax offices or photographers. They are probably devastated.
Restaurants and other Food and Beverage establishments. Depending on their nature and creativity, some could pivot and some couldn’t.
General retail. At this point, many outlets must have come to the harsh realization that they are not as essential as they thought and that their sales will tank unless they do something fast.
Furthermore, each company is an asset class of its own. Grouping everyone as “small biz” harms them. A specialty makeup store with 120 employees making over $80k each on commissions and occupying premium commercial real estate is nothing like an owner-operated Mom&Pop’s on a neighborhood commercial cluster who barely scrapes $35k. Making both compete for Federal funding is cruel.
Some businesses have found it terribly hard to translate experiences, which were their advantage, to digital or remote. Some face a crippled market with shifted priorities and less cash. A few cold water buckets:
$25 for an artisan, hand-printed, ecological placemat may not be essential post-COVID spending.
Financial help will not suffice: no paying customers means few finances to sort
Legal assistance won’t be much unless you need help to close
Marketing will expand reach but doesn’t change external conditions.
Recovery will take a village, literally.
When we look at the opportunities, it is clear that either the entire ecosystem helps small businesses with their bootstraps or the entire system will fail.
Small businesses will come back because they are the backbone of the way we organize our communities. Even in large cities there is a need for a neighborhood hangout, a dry cleaner, an ice cream shop, a café.
The small businesses that come back may not be the same ones we know but they will be small, they will hire and soon they will be loved.
Those who endure will probably need some therapy-level help to recover from the mild PTSD that their new reality will surely bring. I put this together during the lockdown and sadly, I sense the need will still be there after orders are lifted.
Who your neighbors are will matter. A caring, compassionate community will make up for a lot. Most of us will have to take pay cuts, even landlords. Some will stay jobless. Artificially high minimum wages will help the few who keep their jobs but will make millions of others basically unemployable.
This is where cities must step in to lift unnecessary bureaucratic licensing, permitting and even zoning to let people work from home, sell from home, cook and deliver from home. Even build an accessory commercial unit in a few square feet of their home.
That may be the difference for millions of people defaulting on rent, debts, mortgages and other obligations.
Business associations, local organizations or nonprofits who depend on memberships and gov money will need to refocus to become productive parts of their communities. The only way to help will be by not disappearing. Turning a profit to ensure that will be a must.
Curating experiences, knitting the local identity and telling the story will still work, but will need a reality check: not every small biz is viable and there are no participation trophies in a broken economy.
The creativity of local organizations will be challenged.
I foresee a new kind of downtown organization emerging. A self-reliant, autonomous entity that works for profit, develops property, acts as real estate and even insurance broker, invests in local businesses, builds capacity and markets all those efforts and their outcomes.
The need for all actors on the ecosystem to converge in order to really help small businesses is lost, somehow, in the race to grab some federal funding before some millionaire Hollywood hotshot takes $28 million home (looking at you, deNiro, you SOB).
Its importance is something we must not stop communicating.