Small businesses are bearing the brunt of the economic shut-down as a result of COVID-19. In a recent interview on WLOS News 13, Center for the Study of Free Enterprise Director Dr. Edward Lopez spoke about the conditions affecting small business owners.
Recent reports such as this one by McKinsey Institute have focused attention on COVID-19’s impact on small business.
The authors combine four prominent surveys of business sentiment among the nation’s small and medium enterprises. Because these are each long-running surveys, we can compare results before COVID and since, sector by sector, and in this way get a feel for the still-emerging impact.
The small businesses getting pinched the hardest are those with some combination of: 1) they were already in poor condition or close to it before the pandemic; 2) they rely on foot traffic especially retail, accommodations, and food services; 3) they have limited options for adapting to changing consumer patterns and government restrictions.
McKinsey Institute estimates that 1.7 million small businesses employing 20 million people are highly vulnerable and at risk for permanent closure due to the pandemic.
Yet not all sectors are being hit hard, and some are relatively unaffected. The McKinsey study shows things to be relatively stable and potentially improving in sectors like finance and insurance, professional services, construction, and to some extent also real estate, administrative support, and manufacturing jobs.
That 1.7 million estimate does not account for the temporary safety net provided by the Paycheck Protection Program, either, troubled as it has been.
So the outlook on small business in the short term is mixed. There will be lots of pain with every small business closure that happens as a result of the pandemic and lockdowns. Yet small businesses in America are also resilient. And small business has a way of re-emerging and adapting itself after a crisis, and shaping itself to changing lifestyles. So the outlook on small business in the long term can be positive.
People might not know it, but in Western North Carolina manufacturing accounts for about 20 percent of the economy’s production. And professional services employment had been on a positive trend before the pandemic. We also have a long-term advantage insofar as consumer habits are shifting permanently toward more outdoor activities.
You can check out detailed info about the WNC economy at our North Carolina Data Dashboard. Soon we will be sharing results of our studies as part of our COVID-19 Research Initiative, including a study on the county-by-industry impact of COVID and Governor Cooper’s executive orders.