At the start of the new decade and as people started to settle back into routines after the holiday season, many were optimistic about the year ahead. Never in a thousand years could anyone have predicted what would lie ahead: a pandemic.
Panic set in and social distancing guidelines were established in March, while businesses around the country began to close and questioned the future of their operations.
Now, as millions of employees are furloughed or laid off and millions of businesses are closed, the economic fallout is piling up and leaving the most vulnerable exposed.
From early March through late July, about 80,000 businesses permanently closed, 60,000 of which are small businesses, according to Yelp, the crowdsourced business review platform.
Other than seeing “temporarily closed” signs at a local bakery or reading a news article about a person who sacrificed everything to open their own store and is struggling, small businesses often go unnoticed in economic turmoil. One reason is small business owners usually don’t need to take on debt, which means no bankruptcy court, according to the Chicago Tribune.
As for large businesses, the pandemic has reinforced two top trends in the economy during our lifetimes: consolidation and inequality, wrote James Kwak in the Washington Post.
Over the past few decades, Lowe’s and Home Depot have doubled their joint share of the home improvement market while JP Morgan acquired Washington Mutual and Bear Stearns to emerge from the 2008 financial crisis as America’s largest bank. Those two examples are a reminder that corporations will continue to grow and widen the gap between large and small companies.
As the U.S. has become one of the hardest hit countries from the pandemic, one thing that separates large and small businesses’ ability to survive remains clear: capital.
Since the pandemic, many chain restaurants have offered curbside pickup for customers who want to bring lunch or dinner to their homes. While this new method of serving customers has helped chain restaurants, small restaurants with one location and ones that fall in the small business category don’t have anything to keep themselves running.
This shows that chains with large amounts of capital and resources are able to keep afloat and continue to find new ways to serve clients, whereas small businesses don’t share the luxury of adopting new solutions to serve customers while complying with new health regulations.
As technology becomes increasingly integral to businesses, large corporations are able to introduce innovations because of their ability to cover their costs, while small businesses are left out to dry as they don’t have the ability to pay for new tech solutions.
Time during quarantine has highlighted the fact that large scale companies that are technologically advanced are at an advantage and better equipped to face challenges. They’ve shifted to meet customers’ needs and are able to cover the costs of technological change.
In quarantine, people get their movies and shows via Netflix, they order takeout dinner from restaurants more often and they purchase goods from Amazon. Small businesses, such as a local bakery or flower shop, aren’t able to overcome the pandemic's challenges in the same way and ended up falling behind.
As the pandemic’s reach widens, so has the gap between large and small companies.
Businesses that are able to find various ways to meet customer’s demands using technology and capital reserves will outlast those who don’t or can’t: America’s small businesses.
Andrew Withers is a junior finance major. Contact Andrew at email@example.com.