The economy has taken a huge hit since the novel coronavirus arrived in the U.S. — so much so that the stock market crashes on March 9, 12 and 16 are the largest point drops in the country's history. In the months that followed, America saw economic depravity and skyrocketing unemployment rates comparable only to those of the Great Depression.
The government issued one-time stimulus checks of $1,200 in March through the bipartisan CARES Act, but those haven’t been enough. With 42.6 million unemployment filings and over 13% of the country out of a job, there’s no doubt that many Americans are struggling financially.
However, one large group may be especially at risk: Small businesses and their owners are fighting an uphill battle trying to stay afloat.
As of March, 75% of small business owners were concerned about the impact of coronavirus on the American economy, according to Forbes, and 38% were worried about the financial future of their company. This number rose drastically from 15% in January and is sure to have risen further in the past two months.
A CNBC survey about the future of small businesses during and after the pandemic found that at least 63% of small businesses said they could operate for less than a year in the current economic climate, with more than half of that group saying they could operate for less than a few months.
Even in late March, small businesses were seeing reduced demand because of panic over COVID-19, stock market crashes and excessive layoffs. Resulting from decreased traffic, small business owners are finding it difficult to pay employees and keep their company running.
Businesses with fewer than 20 employees were most likely to suffer effects from COVID-19, a survey in March by The Small and Medium Business (SMB) Group found. In these businesses, there’s a general absence of cash flow and capital, and they have less cushioning in case of tough times. Once the country began seeing a downturn in the economy, many of these businesses were the first to reduce hours, lay off employees and stop hiring subcontractors.
Mail, shipping and air freight rates have increased and continue to rise, while shipping times have become longer and longer. For example, an Amazon Prime delivery that would’ve arrived two days after ordering now takes up to two weeks. These changes are proving difficult for small business owners as it can slow their production or make it hard to keep a stocked inventory.
Many small businesses also rely on the U.S. Postal Service to distribute their products to customers. Increased shipping rates not only place a financial strain on business owners but could also discourage potential customers from buying the product, especially with no guarantee of how fast the product will arrive.
Small businesses across the country could be facing another difficulty. Many companies with in-person stores like boutiques, small firms or local coffee shops were deemed non-essential by the government during the lockdown. These companies, forced to close or make a drastic shift to online sales, are especially at risk for financial ruin and often can’t afford to pay employees. An extended lockdown could be devastating for these businesses that will likely be the last to reopen.
Even for small businesses that are open, many are seeing a decrease in traffic to their store. Many consumers aren’t ready to shop in person, and even more are pinching pennies just to keep their heads above water — they don’t have extra money to spend on clothes, coffee and other non-essential services.
Small businesses are the lifeblood of the economy. There are 30.2 million small businesses nationwide, and they account for 99.9% of all U.S. businesses. Many have said the pandemic has made a lasting impact on the way their businesses are run. They’ve had to make sense of and adapt to a new economy and a market that’s almost completely online.
It’s uncertain what will come next for the American economy. The fate of many small businesses lies in the hands of consumers who may, at this time, not be able to support the small businesses they love.
While millions of Americans are struggling, small businesses are weathering the worst of it.
Charlotte Matherly is a junior media arts and design major. Contact Charlotte at firstname.lastname@example.org.