Quaint
We are very important people…do you realize the national value of small businesses? And we are even more important now than in the pre-COVID economy. There was a lot of rhetoric about how harmful the shutdown was for the small businesses of America, and it was hard; I felt it firsthand. Yet it was easier for me to pull back, batten down the hatches and wait for a better climate than for the mid-size businesses with fixed monthly expenditures. I believe the mid-sized businesses were the hardest hit. We want to be more than quaint and picturesque, don’t we? We want to be viable and prosperous…So what does this mean for us today?
Let’s look at three recent reports. In the recession recovery from 2009-2011 small businesses accounted for 67% of the new jobs created across the nation. That’s a pretty hefty statistic! ThoughtCo discovered that as hard as it was to start a business at any time, in 2011 nearly one million self-employed people were folks who had been unemployed the previous year. That percentage of startups had increased from 3.6% pre-recession to 5.5% post-recession. In other words, unemployment drove a larger number of people to take charge of their own futures. They started small businesses. That number remained pretty constant through the pre-COVID years.
In 2019 Better Accounting published SBA statistics proving that small businesses were still driving the economy. They produced 44% of all economic activity, created 2/3 of new jobs and delivered 43.5% of the US GDP. These pre-COVID numbers validate Chamber efforts to support small businesses and are wonderful reasons for all new and small businesses to get involved in Chamber activities. But does that still hold true in the post-COVID economy?
McKinsey suggests economic recovery from the shutdown may take up to five years. The three largest sectors of small businesses were real estate, construction and miscellaneous services. Well, the real estate market recovered pretty quickly, didn’t it? Let’s focus instead on the plight common to all small businesses: They cite low financial resilience as one leading factor complicating small business recovery. Since many small businesses operate with a slim profit margin to begin with, staying out of debt and careful management of resources assumes greater significance than before.
I found a very interesting statistic put out by CNBC. Of the 31.7 million small businesses still viable in 2022, 81% have no paid employees. That means the bulk of recovering small businesses made it through the shutdown by not paying any salaries. So here’s the correlation: Compare the pre-COVID stat of 67% percentage of new hires coming from small businesses with the current 19% who are hiring. We see a huge shift in the paradigm. National recovery hinges on our small businesses growing strong enough to hire people, and yes, the hiring shortfall will end. We all like that idea! We’d love to lighten the load and shrug off a few of our too many hats! The Chamber offers resources to help us do that. Take advantage of ribbon cuttings, networking, and some of the many benefits of membership. Find ways to collaborate with other Chamber members.
National recovery awaits us. Our small businesses may very well hold the key to financial recovery for the nation. Let’s transition from being quaint to being vibrantly healthy.