Despite trillions in Fed “stimulus” and endless government handouts, John Stanford, co-executive director of the Small Business Roundtable, told CNBC this week that “it continues to be a very painful time for small businesses.”
Anyone that was hoping for a “quick recovery” for the U.S. economy can forget about that right now. Yes, many states are attempting to “reopen”, but in most cases it will be a multi-stage process that takes many months to complete. Meanwhile, fear of COVID-19 is going to keep many Americans from conducting business as usual even after all of the restrictions have been finally lifted. Even now, many of the stores, restaurants and movie theaters that have reopened are seeing very, very few customers. Unfortunately, millions of small businesses are not going to be able to survive in such a depressed economic environment for very long.
In America today, the rules of the game are slanted very heavily in favor of huge corporations and are slanted very heavily against small businesses.
It has been this way for years, but millions of small business owners just kept soldiering on because they wanted to work for themselves and not some corporate behemoth.
But for most small businesses things have never been easy. For most of them, it is usually such a struggle to try to eke out a very meager profit at the end of the month after covering expenses and payroll. But now COVID-19 has come along, and many small businesses haven’t had any revenue for weeks.
The good news is that the lock downs are starting to end, but the bad news is that many small business owners are facing a “new normal” in which their monthly revenues will be down by 30, 40 or 50 percent (or more). All of a sudden many small businesses that were once barely profitable have been transformed into businesses that are bleeding a lot of cash each month, and many of them simply are not going to make it.
It was always obvious that this pandemic would kill a lot of those businesses, but the true scope of the problem wasn’t apparent until now. According to Bloomberg, a survey that was just conducted found that 52 percent of U.S. small business owners “expect to be out of business within six months”…
COVID-19 could shutter most American small businesses.
That’s according to a new survey from the Society for Human Resource Management which found that 52% expect to be out of business within six months. The survey of 375 firms was conducted between April 15-21 and doesn’t account for improved business conditions as some U.S. states reopen this month.
Yes, the big corporate giants dominate our society today, but there are still lots and lots of small businesses out there.
Ultimately, we are talking about millions upon millions of businesses that are about to be destroyed…
“SHRM has tracked Covid-19’s impact on work, workers, and the workplace for months,” said SHRM Chief Executive Officer Johnny C. Taylor, Jr., “but these might be the most alarming findings to date. Small business is truly the backbone of our economy. So, when half say they’re worried about being wiped out, let’s remember: We’re talking about roughly 14 million businesses.”
Around the country, governors can choose to end the lock downs, but they can’t order customers to go out and spend money.
And considering the fact that more than 30 million Americans have lost their jobs over the last six weeks, a lot of them don’t have money to spend anyway.
But even if everyone was still working, there is a large segment of the population that will simply be afraid to venture into public places as long as this pandemic is going on.
If you doubt this, just consider what we are witnessing in Texas. Reuters sent a reporter to one of the most popular malls in Austin, and what that reporter discovered is quite sobering…
A dozen or so people were strolling about the sprawling open-air shopping center Monday afternoon, with three seated on the patio of a Tex-Mex restaurant. Only one shopper wore a mask, and the loudest noises were from songbirds perched in the live oak trees along the deserted pedestrian thoroughfares.
“I’ve seen one customer today – they didn’t buy anything,” said Taylor Jund, who was keeping watch over an empty Chaser clothing store. “There’s absolutely no one coming around here.”
If even 20 percent of customers stay away for the foreseeable future, that is going to be enough to kill millions of small businesses.
So the truth is that we are facing a major national crisis.
According to the CNBC/SurveyMonkey Small Business Survey released Monday, which surveyed 2,200 small business owners across America, while the $660 billion Paycheck Protection Program was instituted to give them a lifeline through the coronavirus and economic shutdown, only 13% of the 45% who applied for the PPP were approved.
We really are caught in a downward spiral now. We desperately need to get Americans back to work so that they can start earning paychecks again, but with so few customers right now, businesses will continue to lay off even more workers in the weeks and months ahead.
Meanwhile, the cost of living is actually going up. Thanks to the ongoing meat shortages, fresh meat prices are escalating quite rapidly…
Fresh meat prices escalated 8.1% in stores, compared to the same period last year, according to Nielsen data for the week ending April 25.
Experts expect prices to skyrocket in the coming weeks, as meat processing plants across the U.S. are forced to close due to the coronavirus pandemic. Pork and beef prices could increase by as much as 20% compared to 2019, according to a new report from CoBank, a cooperative bank that is part of the Farm Credit System.
The economic collapse that so many have been warning about is here, and it is going to continue whether there are lock downs or not.
Yes, there will be ups and down ahead, and there will be moments of legitimate optimism.
18 million Americans remain convinced that these layoffs are just temporary and they will have their jobs back in six months. Given this survey, we suspect that number is extremely optimistic.
But nobody is going to be able to stop the process that has now begun, and economic conditions will ultimately become far worse than most Americans would dare to imagine.
What cannot be replaced by corporate chains is neighborhood character and variety.
There is much more to this article than first meets the eye: In a Tokyo neighborhood’s last sushi restaurant, a sense of loss
“Eiraku is the last surviving sushi bar in this cluttered neighborhood of steep cobblestoned hills and cherry trees unseen on most tourist maps of Tokyo. Caught between the rarified world of $300 omakase dinners and the brutal efficiency of chain-restaurant fish, mom-and-pop shops like it are fast disappearing.
Chef Masatoshi Fukutsuna and his wife, Mitsue, smile without a word. In the 35 years since they opened up shop, the couple has seen many of their friends move away for a job or family, only to return decades later, often without the job or the family, their absence unspoken.
Absence is a part of life here on what remains of the Medaka shopping street, a road so narrow that cars have to drive up onto the sidewalk to let another vehicle pass.
Once the sky turns pink and the sun sets, the street descends into shadow, save for the faintest glow from halogen lamp posts.
It’s a neighborhood in twilight. More like it are scattered across this city, their corner cafes and stores far from the neon blare of the famous shopping districts. The number of independent, family-owned sushi bars in Tokyo has halved to 750 in the last decade, a trade association says, driven out of business by fast-food joints and a younger generation that doesn’t want to inherit them.
“People would rather pay 100 yen for a plate of sushi at a really cheap place or they’d shell out tens of thousands of yen to go to a famous sushi restaurant in Ginza that they heard about on television,” says the chef, absentmindedly changing the channel of the TV. “But places like ours, shops that are right in the middle, we just can’t seem to survive.”
In the U.S., and presumably elsewhere, there are other financial pressures on small businesses: the complexity of compliance with the ever-increasing thicket of regulations is constantly increasing, as are taxes and fees as local government seeks to extract more revenue from the small-business tax donkeys.
These increases in costs while revenues sag as customers seek cheaper chain meals or simply stop going out at all are a double-whammy.
But look at what’s lost in the demise of local small businesses:
— The loss of neighborhood character and variety, replaced by homogenized chains and lifeless shuttered storefronts.
— the loss of food that’s been prepared by hand with real ingredients.
— the loss of neighborhood cohesion and social circles; residents who were once recognized as individuals and who belonged to loose but important social circles are unknown in faceless chain outlets.
— the loss of local employment. Employees in chain outlets commute from distant places, and their hours and locations may change, making it impossible to know local residents.
— the loss of walkable, interesting neighborhoods. What’s there to explore or provide interest in a string of steel and glass chain outlets?
— the loss of local social gathering places. Once local neighborhood places are lost, people Belfast in a monotonous uniformity of menus and spaces.
What’s scarce and thus valuable are not fast-food outlets; what’s scarce and valuable are walkable, diverse neighborhoods of locally owned and operated stores and cafes which offer social refreshment and bonds as well as home-cooked meals.
Small business optimism soared in May to its highest level in 34 years, with some components hitting all-time highs, the National Federation of Independent Businesses said Tuesday.
The NFIB’s Small Business Optimism Index rose 3 points in May to a reading of 107.8, its second-highest level in 45 years and strongest level of the recovery. Economists were expecting the index to rise to 105.2 from 104.8.
The May reading was just under the 1983 record of 108.
Several measures hit the highest levels ever recorded. Plans for business expansion, reports of positive earnings trends, and compensation increases broke new records. Expectations for strong increases in sales reached their highest level since 1995.
“Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages,” said NFIB Chief Economist Bill Dunkelberg. “While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”
The NFIB cites tax cuts and regulatory cuts as helping drive the optimism of small businesses.
“The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy,” the NFIB said in its report. “Regulatory costs, as significant as taxes, are being reduced.”
This is the war on success that our government is waging. They are almost trying to make the economy worse by putting companies out of business. To Quote Jim Clifton of Gallup:
Our leadership keeps thinking that the answer to economic growth and ultimately job creation is more innovation, and we continue to invest billions in it. But an innovation is worthless until an entrepreneur creates a business model for it and turns that innovative idea in something customers will buy. Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation.
For the first time in 35 years, American business deaths now outnumber business births.
Let’s get one thing clear: This economy is never truly coming back unless we reverse the birth and death trends of American businesses. It is catastrophic to be dead wrong on the biggest issue of the last 50 years — the issue of where jobs come from…when small and medium-sized businesses are dying faster than they’re being born, so is free enterprise.
And when free enterprise dies, America dies with it.
Mike Maloney explains…