Anjali Sundaram writes for CNBC
“It continues to be a very painful time for small businesses,” John Stanford, co-executive director of the Small Business Roundtable, told CNBC’s “Worldwide Exchange” on Thursday.
The report, which surveyed over 35,000 small and medium-size businesses across the world, found that 22% of U.S. small businesses were closed in February. Those figures were up from October’s 14%. At the peak in May, the pandemic saw 23% of small and medium-size businesses closed — only 1 percentage point higher than the current closure rate.
While the overall closures are nearing Covid highs, the report found that different areas of the country were experiencing varying degrees of difficulty. Some states, like Maine, Idaho and Colorado, were seeing 9%-10% closures, while others like New York, Pennsylvania, and Massachusetts were seeing at least 30% closed.
Within states, the report also found that certain demographics were getting hit harder than others: 27% of minority-led small and medium-size businesses reported closures, compared with 18% of others. Female-led businesses saw 25% closure rates, while 20% of male-led businesses closed.”
There is no doubt that the Covid-19 pandemic has been tough on many businesses. While the news is full of stories of how some US businesses are flush with cash after payment restructurings and PPP (Paycheck Protection Program) loans, many others have been unable to stay afloat in this challenging environment. You need only drive around your town to see the many businesses that have closed up shop and their buildings or storefronts are now vacant.
At the same time, the stock market has seen record inflows of money and reached new highs. Investors are betting on risky stocks like Gamestop and pouring money into cryptocurrencies like Bitcoin. It’s only a matter of time before investors see new opportunities and take advantage of the openings created where businesses have failed.
For those businesses that survived, they’ve learned to be stronger. To manage cash better. To negotiate better terms. To better understand their business model and what it takes to be profitable…or at least solvent. It has been trial by fire but my guess is that many businesses are coming out of this pandemic stronger. Maybe not financially, losses will take time to be recovered, but stronger in the execution of their core business. [See Resources to Restart You Business]
For those who didn’t survive, it’s heartbreaking to see those business owners lose their dreams and watch as their hard work failed to keep businesses solvent. Yet, just like the fires that sweep through the forests and burn up the deadwood, the aftermath of this pandemic’s siege on the economy brings a flurry of new life. Bright new ideas will replace these failed businesses and give new entrepreneurs a chance at success. They too will face risks and their success is hardly assured, but I see a period of rebirth ahead. The underlying economy will recover and with the money available, probably quickly. For inventive, entrepreneurial, and nimble business entrepreneurs, there are many opportunities for success in the aftermath of a terrible year.