As Featured on Pymnts.com
Here’s a question: Does the U.S. have a retail crisis — or a small business crisis?
Here’s an answer. We have both.
Which is why “fixing” retail must include giving SMB merchants the tools they need to compete in the very dynamic environment that now defines Retail U.S.A.
Let me explain.
THE HEARTBEAT OF AMERICA?
Chevrolet may use “the heartbeat of America” as its advertising tagline, but it’s small business that everyone believes keeps the heart of the U.S. economy pumping. Twenty-six million strong, employing 50 percent of the workforce and creating 65 percent of all new jobs, SMBs and storefronts that line the side streets and main streets of our cities and towns are the fuel that keeps our economic engines humming, roughly 100 million Americans employed and what feeds a thriving middle class.
Well, that used to be the story line.
The truth is that America’s small business engine is sputtering and has been in a gradual decline for the better part of the last four decades.
That somewhat revised storyline has also been somewhat of a well-kept secret.
Between the late 1970s and the mid-2000s, like the sun rising in the East, the U.S. could count on between 500,000 and 600,000 new businesses opening every year. Things went off the rails, not surprisingly, in 2008 — courtesy of the financial crisis.
But unlike the comeback stories of past recessions, small businesses haven’t come back this time. After a high of 614,024 SMB openings in 2014, the Census reported that only 452,835 firms were started in the U.S. that year.
Only, you say, but that’s not too shabby — and at least it shows forward progress, right?
Economists don’t think so.
They’re troubled by these numbers because they believe we’ve had adequate time as an economy to get the SMB growth engine revving again. And they fear that the impact on the vitality of the local economies that this void has created won’t be fully felt for a decade or more.
Of course, business openings are just one part of this story: Business exits (AKA failures) are the flip side of that small business coin — and where those same dismal scientists say there’s even more cause for concern.
Small businesses are also risky businesses, and the Small Business Administration tells us that 60 percent of them won’t make it past their first birthday, never mind reaching their second, third or magic five-year milestones. Only a third, they say, will ever cross into double-digit territory and celebrate a decade of being in business.