COVID-19 has impacted the us like no other. This once in a lifetime pandemic has impacted all facets of our lives.
And it has had a longstanding economic impact on the local, regional and national economies and psyche.
When it comes to entrepreneurship, small businesses have been adversely impacted by COVID-19 and, in particular, African American businesses.
According to Bloomberg, approximately 17% of small businesses shut down three months after COVID-19 hit. African American businesses have a disproportionately higher rate with 41% of black businesses shuttered for the same period.
And it’s been reported more than 100,000 small business permanently closed in the eight weeks beginning in mid-March, 2020.
Many businesses have been forced to shut down entirely and those that remain open now must absorb lower revenue streams (for example in the restaurant industry, carryout and curbside only) and incremental costs due to adhering to COVID operational standards to conduct business safely.
And think about the impact on Detroit’s entrepreneurial and specifically, the African American business community.
According to the U.S. Census (2012), the city has approximately 62,000 small businesses, making it the 4th largest in the country. And with nearly 51% of these businesses being minority-owned, the economic impact borders on devastation for black businesses within the city’s already fragile economy.
And that reality will hit the Motor City hard without proper planning.
Small businesses are economic generators and is, in fact, big business.
According to the U.S. Small Business Administration (SBA), small businesses account for 99.7 percent of firms with paid employees. What’s more, from 2000 to 2017, small businesses accounted for more than 65% of net new job creation.
What can we expect for 2021?
Although I’d like to remain cautiously optimistic, chances are many more small business won’t make it short-term. In other words, expect potentially another tough year.
Assuming COVID expansion rates decline due to vaccinations, for example, various studies project GDP growth will range from 3.4% to 4.2%. The total unemployment rate is expected to decline to 5 percent. And the University of Michigan’s latest outlook issued in late November forecasts real GDP economic growth returning to pre-pandemic levels in the second half of the year.
However, many economists are not expecting a full recovery until 2022.
Therefore, without proper plans and tools, the entrepreneurial community will be continue to have significant challenges.
But, what should you be doing now to prepare your business?
- Research Funding Opportunities: Do your research regarding funding and grant opportunities, including traditional and non-traditional funding sources for small businesses. Additionally, here are local and state agencies (SBS, MEDC, TechTown, Michigan Women Forward, et. al) offering grant and loan programs.
- Establish/Leverage a Relationship with a Banker/Trusted Advisor: It is critically important to establish a relationship with a financial institution. One of the reasons African American businesses didn’t receive a higher share of the Payment Protection Program (PPP), for example, is many didn’t have, build or leverage a relationship. This is critical since another $250 billion are allocated under Phase II of the recently-enacted legislation focused on providing resources to small businesses.
- Promote and Encourage Local Shopping: Engage with local chambers and municipalities an d encourage them to develop programs which encourage residents to shop local, whether online or in-person. This should not be a one-time effort, but offer during the year focused on driving consumer traffic.
- Focus on Grassroots Marketing/Leverage Your Network: Review your marketing plan and focus on cost-effective measures, including social media, word-of-mouth and community engagement. Leverage your network by encouraging each other to support each other’s business.
During these ongoing, challenging times, focusing on business recovery is critical and these steps are essential in laying foundational pieces and bracing for what will, more than likely, be another challenging year.
About Mark S. Lee
Mark S. Lee is President & CEO, The LEE Group (TLG), MI LLC, an independent integrated marketing consulting firm focused on providing marketing, branding and communication solutions to clients. Additionally, TLG provides training & development to organizations in the areas of branding, re-branding and communications and has advised on how to effectively implement in an integrated fashion.