Our company, the one that publishes The Leader and other newspapers in Texas and North Carolina, owns six small businesses and we employ about 90 people across our divisions. We aren’t big, but we’re probably a good sample of businesses across the country. This well-intentioned plan to send all Americans some cash is absolutely ludicrous. It’s like spending all your time wiping water off the floor when the sink is overflowing. The problem is the faucet keeps running, and that’s what needs to be fixed.
Hundreds, thousands, maybe hundreds of thousands of small businesses will be devastated in this pandemic. Ours may be one of them, though we have a plan to survive. And as government looks for ways to curb the economic catastrophe, they’re going to send everybody a couple months of rent? That’s not going to help.
The problem is, small businesses are going to lay off a whole lot of people, and the unemployment those former employees can get (not to mention the missing health benefits) is peanuts compared to what they earned at work. We’ve already seen it in restaurants and bars, and those numbers are mere sprinkles on what we’ll likely see over the next two weeks.
Consider this: 48 percent of all U.S. employees work for small businesses. 18 percent of us work for businesses with fewer than 20 employees.
I know Sen. Marco Rubio is working on a plan to actually help small businesses, which can then keep people employed through this downturn. But from a small business owner, here’s what needs to happen:
* Landlords need to reduce the strain on tenants somehow – defer rent, cut it in half, recoup it later. Most small businesses rent; they don’t own.
* Technology companies need to be flexible with the costs of IT infrastructure. Our IT provider, a company called Meriplex in Houston, is the absolute worst. We inherited a contract with them, they charge us $12,000/month for service that they, themselves, said should really be just $5,000/month. But they’ve told us we have a contract, so sorry. Businesses need connectivity, but the costs are crippling. In our case, the cost of our ridiculous contract means we had to eliminate two employees.
* Banks (and I assume this will happen) need to postpone loan payments. Our company is not highly leveraged, but a lot of them are. We need to hold on to cash for the next three months, with just enough to resume operations when the viral dust settles.
* Locally owned retail stores need just enough cash to make payroll and hunker down until customers are so starved to get out of the house that the stores can’t keep the shelves stocked.
* Restaurants need enough money to keep a core group employed, servicing delivery and pick-up, and they need local support.
It’s just my opinion, but if government wants to do anything to help this scenario, it’s not handing out a few hundreds. That money won’t be spent spurring the economy – it will only go to the grocery stores, utilities and landlords. Those companies are part of the economy, but they don’t drive this country’s economic engine.
As you follow the economic fallout of the coronavirus, just remember that trying to wipe water off the floor doesn’t stop the overflowing sink. Seems we ought to fix the faucet. In this case, the faucets of our economy are small businesses.