“It’s not just that we’re slowing down things. We’re actually hitting the pause button, and there is no precedent, there is no mold for that.”
- Diane Swonk, chief economist at Grant Thorton, Coronavirus Cost to Businesses and Workers, New York Times, 3/15/20
We have a responsibility to support small businesses, the owners and the employees, to ensure that people have salaries and that the backbone of our local economies is not destroyed.
Diane Swonk made it vividly clear that this isn’t about a quick emergency. This is our economy hitting pause – something for which we have no precedent and no model. And we don’t know for how long.
This pause will impact our hourly, low-wage workers first but is already forcing small businesses to shut their doors. Restaurants in Seattle are closing for 2-3 months. Small product businesses in Washington, D.C. are closing for the month.
Let’s be clear, if small businesses earn no revenue, go bankrupt, or fold, then people don’t get paid, people don’t eat, and people lose their homes.
Technology businesses will suffer less, and service businesses will suffer more. Product businesses that can sell online might fall in the middle.
So it’s clear we need to act.
But what should we do? Where do we start?
We start with controlling the virus – social distancing is becoming the baseline across the country.
Then what?
How do we help the small businesses in our communities as customers, neighbors, elected officials, philanthropists, and colleague?
Here’s the good news:
We have an instinct to come together and help each other in times of crisis.
It is time to work together and think up new creative ways to help, and then make sure that help is inclusive of every race, ethnicity, and income group in the community.
Where do we start?
Here are three steps I think we need to take in every community (with backup support from state and federal governments) to help our local small businesses survive this pause:
Step 1: Strengthen social connections between business owners and with the local government
We learned from research conducted after Hurricane Katrina that businesses with strong social connections to other business owners recovered while those without strong connections were less likely to rebuild.
Strong social connections mean that the business could delay payment for a service or materials, or lend a hand at a friend’s shop, or even forgo payment when possible.
This means we need to work overtime RIGHT NOW to make sure that every business owner in our community has strong social connections or help them build them now. We need to find all the small business owners in our community and help them connect. Connect them to the local government. Connect them to neighbors. Connect them to other business owners in the community – big and small.
We need to do the research and outreach ASAP to make sure we know who the business owners are in different parts of our community. This means very purposefully reaching out to community leaders that are strong connectors. Connectors are people who are known and trusted by their community and believe in the potential and strong future of that neighborhood and population. (not every “community leader” has that second part)
This might work through online outreach, but it also might mean putting up posters in storefronts or on bulletin boards outside faith institutions – anywhere people walk by or might still stop in. This means phone calls to people in the community with a request to have them call 5 people to tell them about how to connect.
We have a responsibility to create those strong connections and a need to do so quickly.
And yes, it takes time, but is completely doable today.
Step 2: Help business owners find new forms of revenue to survive this alternate reality economy
Mark Cuban is talking about this on LinkedIn. He is encouraging businesses to think about what they know how to do and what is in demand today.
Will everyone need to pivot for the short-term? That would be the best outcome possible. How do we help small businesses still earn revenue during this time, even if it’s not through their usual products or services?
We’ve seen fine dining restaurants in a number of cities turned into take-out spots over the weekend. They know that no one will come in. They know they can feed people at basic costs. They know there is a need.
Can we help more local businesses identify a need during this crisis and help them reposition to earn revenue in a different way right now?
How about we get each business owner onto calls with 5 other businesses to brainstorm other sources of revenue? How can those social connections help each one weather this storm?
Let’s help reposition businesses as much as possible. There are needs – let’s answer them.
Step 3: Provide relief now – don’t wait
We need to provide grants and zero-interest loans to small businesses now, not in two months. Service businesses (with no online option) are already closing their doors. People are losing hours of pay and people are losing jobs. We need to provide stopgap funding to these businesses so they can pay employees now.
The need will be different for different types of businesses and different sized businesses. Larger businesses with higher margins will be able to repay a zero-interest loan over time. A five-person product business with low margins will need a grant – that lost revenue is never coming back.
This relief needs to come from all levels of government and our philanthropic community. We all have a responsibility to help. We have a responsibility to provide relief to our small business owners, the entrepreneurs of our country, so that business owners can rebuild when we hit play again on our economy.
Are you ready to provide relief? I’m including a few models of grant and loan programs below that already went live. Use these as models for your own community or create a new one.
Have a great resource or model to provide relief to small businesses? Share it with me and I’ll add it to this list.
Want help to make this a reality in your community? Let’s find a time to talk.
We are all struggling to understand what is going on today. No one knows how to begin to guess at what will happen tomorrow. But we know that we need to come together (virtually), provide relief to the backbone small businesses in our communities, and support each other to rebuild when the time comes.
Let’s get through this together.
Resources:
Small Business Administration Disaster Relief Fund
Seattle, using CDBG funds, to provide grants to businesses with bricks and mortar space
Anchor businesses and institutions offering short-term grants (because they removed all the foot traffic) like Amazon in Seattle
San Francisco Disaster Relief Fund grants for small businesses
New York City offering zero interest loans for businesses with fewer than 100 employees and grants for businesses with fewer than 5 employees
Sacramento offering zero interest loans for businesses under 25 employees
Main Street America – compiling local resources (good source for examples as more places act)