Small business: Knocked down by a second wave?

“What will be left of my vibrant downtown when we emerge from the coronavirus crisis?” asked James Kwak at The Washington Post. In Amherst, Massachusetts, where I live, Pleasant Street was home to 40-plus bars and restaurants, three bubble-tea shops, a century-old stationery store, and myriad other businesses. Most are now in severe trouble. The pandemic is accelerating a trend that has been building for decades of large businesses taking share from small ones, making Main Streets across the country “grow blander and more corporate.” As I walked down Pleasant Street recently, no business owner I spoke to “was ready to admit defeat.” But each day it seems more certain that “their customers will be claimed by a handful of winners with the cash and technological infrastructure to survive.”

Many businesses are already closing for good, said Emily Flitter at The New York Times. For some, the second wave of shutdowns was a death sentence. “We did everything we were supposed to do,” says the owner of a karaoke club in Wichita Falls, Texas. But after the second order to close, he “just said, ‘I can’t keep doing this.'” Other businesses see the writing on the wall. A sports-memorabilia seller in Omaha says that as soon as he saw the prospect of Division I sports getting canceled, he negotiated an exit from his lease and shut down for good. Some of the businesses going under now survived “world wars, the Great Depression and the 2008 financial crisis, and floods,” said Amy Haimerl, also at The New York Times. Harrell’s, a family-owned department store, anchored Burgaw, N.C.’s downtown for 117 years before announcing last month that it would close. “I did not want to be the one who brought it to an end,” says owner Vernon Harrell, who’d worked there since he was 13.

Before the crisis, small business was already fragile, said Annie Lowrey at The Atlantic. “More than half of them had less than two weeks’ worth of cash on hand,” making any major downturn deadly. It’s not just stores closing now, but also the next generation of startups. “The pandemic will mean the triumph of franchise chains over mom-and-pop shops, of C-suite executives over entrepreneurs working in their basements.” The prospect of small businesses getting wiped out en masse is worrying even big investors, said Annie Massa at Bloomberg. Larry Fink, the CEO of BlackRock, the world’s biggest money manager, says that major corporations are doing fine as markets rise, while small and midsize companies face a steep climb up. If the U.S. is to really recover, he says, we can’t create a “bipolar economy.”

The Week

%d bloggers like this: