Just a few weeks ago, a New York Times article warned that as many as one-third of New York’s small businesses could be “gone forever”. Bloomberg reports that small businesses are “dying by the thousands”. Business bankruptcies in Maryland have reached a “staggering state”. There are countless stories like these around the US and none of them sound very good. So are things that bad for small businesses? Is there not a great need for billions in new stimulus funding to save them? The short answer is no. Well, not for all of them.
America is a big country with 30m small businesses. And if there’s one thing I’ve learned about small businesses it’s that you can’t just lump them all together to support a narrative, be it moral or political.
I’m not trying to sugarcoat things. Many small businesses have suffered during the pandemic and consumer-facing businesses have suffered the most. Restaurants and retail shops have had to significantly curtail operations. Companies in harder-hit industries – travel, personal care, landlords, even dog walkers have seen their livelihoods literally disappear during quarantine. And I can’t even imagine how gyms and fitness centers in some cities and states are going to survive these never-ending months of shutdowns and restrictions. I see them all as I walk around the city where I live. These are the businesses that need targeted help from the government.
But that’s not the entire story.
Because here’s what I also see: the more than 600 clients in the mid-Atlantic region that my technology consulting firm serves. These firms are a microcosm of the small business economy nationwide. These companies are primarily not consumer-facing. They are privately held and oftentimes family-owned or -managed. They are little, nondescript firms in out of the way, nondescript industrial parks and suburban office centers. You drive by them all the time but you never see them because your attention is distracted by other companies selling delicious foods or cool clothes. These companies don’t do that. They make and sell unsexy products and services for unsexy industries and belong to trade groups with names like the National Coil Coating Association, the Specialty Equipment Market Association and the Independent Packaging Association.
These are industries that could put you to sleep. But believe me when I tell you that the people running these businesses – my clients - are not sleeping. I am in close contact with all of them and I can report that they are doing fine. Some worse than others. Some better. Sure, the media loves to cover the stories of the failing restaurant or Main Street store. But my clients’ fortunes are reflected in other kinds of data that don’t get much media attention.
For example, just this past week a CNBC/SurveyMonkey small business survey found that more than two-thirds of the small businesses they surveyed are confident that they can survive for more than a year under current conditions – a number up from 37% in their last quarterly survey. The National Federation of Independent Businesses reported a small drop in small business confidence this month … but the levels are still comparable to 2017 and nowhere near the depths reached during the 2008 recession.
Want more evidence of our small business resiliency? The National Association of Home Builders Confidence Index (the construction industry supports countless small firms) has tied its record high. Industrial production continues to increase. Both manufacturing and service business conditions have expanded in the past three months, according to the Institute for Supply Management. E-commerce sales are up almost 20%. And according to a report released this week by Goldman Sachs, small businesses are “recovering well” from the pandemic, with active small businesses standing at just 6% below their pre-pandemic levels. It turns out that small businesses – who employ more than 50% of the country’s workforce – were only responsible for 18% of the job losses during the pandemic.
My clients coat film, churn out corrugated containers, make prefab structures, assemble machines, distribute building materials and stamp out pallets. Exciting? No. Critical? Yes. During the pandemic these companies – and millions of others – have continued to work. They suffered initial setbacks and disruption. They sent their employees home. They tapped their reserves. But they pivoted and they innovated, and they’re still here and they’re fine.
Make no mistake, this is a severe economic downturn. Many small businesses will probably never return. But the vast majority will. In fact they already have. You don’t hear or read about them because they’re boring. They’re quietly making and servicing stuff behind the scenes. The government needs to target those businesses that have really suffered for no fault of their own. But for the rest of us, we’re OK, thank you very much.