Henry Zellerhoff

Mr. Storer

Literature/Composition 4

6 November 2020

Corona Capsizes Small Businesses: Why we Must Protect Prevailing Companies

            What is a small business? You might have some idea of what constitutes as a small business, but you may be surprised to learn the answer. According to the American Society for Quality (ASQ), a small business is defined as a privately owned corporation, partnership, or sole proprietorship, with less than 500 employees (What is a Small Business). The necessity of being a legal entity makes sense for the classification of a small business, but the requirement of having no more than 500 employees seems excessive. The reason behind this is small businesses are relative, meaning some small businesses can be considered small having up to 500 employees if the other businesses in that industry tend to have a lot of employees. One example is Apple, a tech giant with 147,000 employees as of 2020 (Tankovska). Surely a tech company with 500 employees seems small when being compared to Apple having almost 300 times that. Now that you understand what characterizes a small business, it is important to understand why they are important.

            What comes as a surprise to many is that out of all small businesses in the entire United States, 30.7 million, or 99.9% of them, are considered small businesses. Furthermore, small businesses employee 59.9 million people in the United States, or 47.3% of all potential workers (2019 Small Business Profile). Lastly, 20% of all small businesses have at least one employee (Lauckner, Sally).

Then came Covid-19. First arriving in the United States on January 2020, Covid-19 has slowly began eating away at the wellbeing of our country and the world. As the virus continued to spread, small businesses were forced to make changes. Such changes included becoming Covid-19 friendly (masks, hand sanitizer, six feet apart etc.) and closing the business for a period of time. Unfortunately for some businesses, after they “temporarily” closed their doors, the lack of customers and purchases put many out of business. With the advent of Covid-19, 164,000 small businesses closed temporarily resulting in 98,000 closing permanently (Sundaram, Anjali). While that does not seem like a lot of businesses compared to the 30.7 million total, average quarterly revenue has fallen by 52%, average payroll expenses have fallen by 54%, and the average number of employees has fallen by 53% across all small businesses in the United States (Arora, Rohit). Furthermore, the United States had an unemployment rate of almost 15% in March of this year and is still high now at roughly 8% (The Employment Situation-September 2020).

Although the previous statistics seem very dreary, the government has stepped in and provided some help towards the success of small businesses. This has been seen through the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act), but more specifically through the sub-act called the Paycheck Protection Program (PPP). The PPP is a loan administered from the Small Business Administration (SBA) which provides small businesses (and a variety of other business types) with a loan of up to 2.5 times the average monthly payroll costs with a total maximum of $10 million (Diana Fitzpatrick, J.D). Although this act helped relieve small businesses during the first few weeks of shutdowns (which occurred shortly after school closures in March), businesses have still been struggling greatly. While it is helpful that the government has support the United States small businesses, more actions must be taken to ensure their success.

            It is imperative that people who have money to spare, small business owners and workers included, support their local small businesses. In doing so, we can protect the jobs of millions of United States citizens and keep unemployment rates low. In addition, supporting small businesses will lead to broad-based prosperity among many families in local communities.

            According to Alfonso Serrano, a small business strategist for Fundera with an economist perspective, small businesses create 1.5 million jobs annually, or 64% of all new jobs (Serrano, Alfonso). Serrano believes it is commonly accepted that small businesses create the most jobs in American, and that small businesses are the main fuel that drives the United States economy. With a shortage of small businesses due to Covid-19, Serrano predicts a higher unemployment rate and more suffering across America. Serrano’s perspective helped me understand the important role small businesses play, because with a loss in small businesses due to Covid-19, the 1.5 million jobs created would plummet, leading to lower unemployment rates.

Devra Gartenstein, an economist and reporter for Chron with a background in finance, argues that small businesses are not only important on a nationwide scale, but also paramount to the success of local economies. For instance, when someone spends money at a local small business, that money goes to pay a worker in the neighborhood, who in turn, is likely to spend that money at another local small business, repeating the cycle. This type of mutual support is important during hard times, like the present, and can prevent business closure and lower unemployment rates (Gartenstein, Devra). Gartenstein’s idea of mutual support furthered my acceptance of the importance of small businesses, and that without it, many people would face financial hardships. In addition, I learned about how money travels within a community, moving from one family to the next in almost a cohesive order.

Sean Ludwig, a contributor to CO- who specializes in small business strategizing and has a background in marketing, believes Covid-19 has not been all bad. In fact, Ludwig explains that some industries have thrived during Covid-19. One example are garden supply stores. As people have spent more time at home, a common practice for many homeowners is “landscape beatification”. To make their landscapes look nicer, homeowners have turned to garden and landscape stores for their garden and landscape needs (Ludwig, Sean). Ludwig’s perspective challenged my belief that Covid-19 is purely negative, because some small businesses have benefited greatly during the pandemic.

It cannot be argued that small businesses are unimportant. Small businesses make up the most businesses in the United States and tens of millions of jobs, with millions of new ones created every year. Unfortunately, Covid-19 has greatly reduced the success of small businesses in 2020. Because of the paramount role they play in the United States economy, it is all of our responsibilities (except people who do not have enough money to spare because typically small businesses are more expensive than larger companies), even if you are a small business owner or employee, to support your local small businesses. Otherwise unemployment rates will increase, and many families will suffer financial instability in the coming months and years. Next time you are going to eat a meal at home, consider going to a local restaurant. I am sure you will be greeted by a delicious array of foods, and a masked smile.

 

 

 

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