Today bars, vacation rentals, and indoor restaurant dining rooms will all be shut down again in Miami-Dade. While we wait to see what’s next in South Florida, and across the country, here’s some perspective of what’s most at risk right now. American small businesses. Let’s start with this number, 3.3 million. What’s that represent? The number of small businesses that failed in the United States during the initial lockdowns. 3.3 million small businesses across this country that were ordered to shutdown never reopened. That was discovered in a June studyby the National Bureau of Economic Research. For additional context, just how big of a deal is the loss of 3.3 million small businesses? It’s 22% of all of the small businesses in the United States active prior to the pandemic. That’s right, just under a quarter of our small businesses were already wiped out through the first wave of shutdowns. And it’s not as though it’s been exactly rosy for those who reopened.
According to the restaurant industry, they estimate approximately 65% of restaurants which reopened were still not profitable in June. This comes as many patrons were still nervous about dining out, and many restaurants aren’t profitable with limited capacity mandates imposed by state and local governments. What’s the expectation for any additional pressure provided by new closures? Also, how many businesses just trying to hang on might consider giving up instead against the backdrop of the uncertainty? What’s more, is that even among small businesses there’s a disproportionate impact. Against the backdrop of calls for increased racial equality and the general benefit to all of society of having minorities benefit from the opportunities, entrepreneurship provides, comes minority-owned businesses being the ones which have suffered most and will continue to suffer the most if shutdown policies persist.
While 22% of small businesses in this country have already been lost, the numbers jump dramatically for minority-owned businesses. Thirty-two percent of Hispanic owned businesses have closed along with a whopping 41% of Black-owned businesses. Lockdowns have been hard on small businesses across the spectrum, but it’s been a crushing blow for many minority-owned businesses. This isn’t just a problem and a tragedy in the here and now, it’s certain to continue to have reverberations for years to come. The risk/reward considerations for entrepreneurs are already challenging with only 50% of startups surviving during normal times. Those odds are likely worse currently and then there’s the wildcard. Why would someone take on the personal and financial risk against the backdrop of potentially being shut down and essentially ordered out of business due to no fault of their own? A second round of closures would and will doubtlessly have a chilling impact in our economy and with our would-be entrepreneurs for years to come. And the negative impact won’t stop there. Historically 2/3rd's of all jobs created come from small businesses. What happens when we have dramatically fewer small businesses? What happens when the only retailers left are the Amazon’s of the world and the restaurant chains big enough to withstand the setbacks?
This is an important window for South Florida and the country generally. It’s true that many, especially younger people, haven’t been abiding by safety protocols proven to be effective in stopping the spread of the virus-like wearing masks and socially distancing. Their selfishness and foolishness shouldn’t be the downfall of South Florida’s small businesses. Rather than lauding protests where the virus was spread, politicians should have been condemning the risky behavior and discouraging the gatherings. Instead in the name of political correctness or potentially worse, a political agenda, our businesses are made to pay the price? That’s inexcusable and unacceptable. If you want to bring down the hammer do it with those who are reckless. Don’t imperil even more businesses and our economic future in the process instead. This is another reminder that elections have consequences and it’s often those closest to you then have the biggest implications in your daily life.
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