Small businesses have been called the “real economy.” But compared to their corporate competitors, most have struggled to secure enough aid to stay afloat through the pandemic.
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Nine years ago, Michelle Smith, a military veteran, opened Brewed Downtown, a small shop serving, “good breakfasts, good sandwiches, good soups,” in Jacksonville, North Carolina, after years of managing chain restaurants with her husband. Her goal was to open her own shop to provide inexpensive, healthy, reliably delicious food for her customers.
But, in the early days of the pandemic, Smith says the arrival of standard restaurant supplies was nearly impossible to predict. She waited six weeks for packets of crackers to arrive, so she started asking customers if they wanted crackers with their soup to ensure none was wasted. She says the shop waited 16 weeks for straws and that plastic cups have been hard to get and very expensive. To offset the cost, Smith started offering a 10 percent discount to customers who brought their own.
She says part of the problem was that her shop wasn’t a priority for the big retailers who were focused on their large corporate clients with more money to spend. A local business that was renowned for their fried chicken went under, for example, because fast-food businesses snapped up all the available chicken, leaving none for smaller, local shops. Smith explains that she wants to stop placing recurrent orders and start working with small farms and local suppliers who won’t restrict what she can buy just to serve corporations with deeper pockets.
“I was dipping into savings, just trying to get things so I could keep us going,” Smith says. “I’m still playing that game. I should be able to buy whatever I want from whomever I want. I’m contacting manufacturers directly.”
To hear Smith tell it, many small businesses are still struggling to keep the doors open because of the COVID pandemic. Major issues facing small shops include supply chain shortages, which make it hard to consistently stock products. Paycheck Protection Program (PPP) loans weren’t distributed evenly, and in small rural towns outside major population centers, regular customers can be hard to predict. But many experts say small shops, sometimes referred to as Main Street or the “real economy” (as opposed to Wall Street), are vital parts of their communities and can overcome challenges with creative business models, community engagement, and clever marketing. Meanwhile, it seems as if every week new headlines announce the “growth” of America’s economy. One recent CNBC report declared 2021 the strongest full year since 1984, citing how much the GDP had grown and how much money consumers spent during the pandemic. Those headlines, though, don’t always match up with Americans’ experiences. In a recent fact-check of Vice-President Kamala Harris’s claim that one-third of small businesses closed during the pandemic, economists said she wasn’t far off the mark, although it’s hard to nail down exactly how many doors permanently shut. For the 31.7 million small businesses still in existence around the country, the struggle to stay open is an ongoing battle.
Smith is far from the only one struggling with supply issues. Mandy Baker, owner of MANAHOUSE COFFEE in Jacksboro, Tennessee, says she knows many of her supplies sat on boats in piers for months, unable to be delivered. She still scrambles to get everything she needs. Baker says she often places multiple orders from suppliers and companies on Amazon in the hopes of getting coffee cups, lids, and other items she needs to keep customers happy.
“I’ll take what I can get,” Baker says. “It’s tough right now.”
Small businesses like Smith’s and Baker’s also came up against a bigger, federal bad guy: improper distribution of PPP loans. The Paycheck Protection Program was designed to keep employees on payrolls and doors open, but a 2020 New York Times report found that just 1 percent of PPP applications received more than one-quarter of the total loan money. It’s not hard to imagine which companies got that money, either. According to the Times, powerful law firms like Boies Schiller Flexner and a restaurant chain started by the operator of New York’s biggest horse tracks received the maximum loan amount of $10 million. The most famous billionaire to receive PPP was Kanye West, according to CNBC, and so did nearly 400 country clubs and golf resorts. Smith, though, received nothing. She says she didn’t have the right paperwork to qualify for PPP loans despite needing the money and being in business for nearly a decade.
Eva Cantor, a behavioral economist and financial advisor who also serves as a member of their local chamber of commerce in urban Texas, says the way the government distributed PPP money was extremely counterintuitive. The government used banks to distribute the loans who then often lent to preferred borrowers which are, by definition, large corporations. Cantor says in effect, part of the program accomplished the exact opposite of its goal.
“When a pandemic happens, you can’t let the hotel and airline industry totally die,” Cantor says. “But they shouldn’t be getting Small Business Administration money that’s earmarked for small business.”
The Small Business Association (SBA) was created in 1953 and has offices in small towns like Lawrenceburg, Tennessee, where Artful Harvest founder and owner Karen Kiaunis says the local community can be hard to make friends with. Kiaunis is a Maine native and moved to the area to escape deep snow and cold winters, and says she tried to invite other local SBA board members to participate in last fall’s Harvest Festival. She says some local businesses participated, but others were “too busy” or didn’t respond at all. When she asks about SBA meetings, it’s hard to get a response or feel welcome and included.
“People who have been here have been here forever,” Kiaunis says. “So maybe they feel different.”
Still, Kiaunis says her business is doing well and she’s grateful for the advancements she’s made since opening in the middle of the pandemic. She says word-of-mouth marketing was crucial for her initial success, and that after a local community member with thousands of Facebook friends posted a shot of the healthy salads she offers, business picked up. Now when she shops for supplies at local stores, she says people will point her out and say, “There’s the salad lady!”
That word of mouth isn’t easy to generate without being authentic. Danny Caine, part-owner of the Raven Bookstore in Lawrence, KS, says part of addressing the problems small businesses face these days is creating a space people want to spend time in, and that unique marketing goes a long way toward keeping customers invested in a business and its voice. Caine says Raven, which opened in 1987, often takes a strong stance and isn’t afraid to speak out against big corporations like Amazon. In fact, the shop has published a short zine that helps customers see the importance of supporting indie shops over buying books from Amazon and says their political or economic takes have become an asset.
“Your point of view is important, especially if it’s aimed at elevating the cause of marginalized people,” Caine says. “If you’re doing that work through a business, lean into that.”
Whether taking a political stance or simply looking to connect with potential regulars, all the businesses we spoke with advocated for deep community involvement. In fact, Cantor says it’s important for small businesses to exist simply because any dollar spent there will stay in the community longer than a dollar spent at say, a fast-food chain. Jake Hare, founder of startup-incubator Launchpeer based in Charleston, South Carolina, agrees.
“When you see a startup that’s successful, you have to think they’re really dumping money into that local economy,” Hare says.
It’s not the only thing Hare and Cantor agree on, either. Both say small businesses do well to focus on niche areas they’re singularly good at, versus trying to attract every living customer in their radius. “You tap into network effects so much easier than if you try to move to a big city,” Hare says. “Stay in a small town, capitalize on the resources you have and pull people in or push yourself out.”
In small towns, it’s also easier to make a big impact. Caine says Raven sponsors a local startup independent newspaper and makes charitable donations as well as giving away gift cards frequently. Kiaunis says her paint classes allow locals to connect as well as diversify her offerings. Baker offers board games and encourages kids to hang out in a safe and welcoming space, and says it’s important that her shop is a judgment-free zone. Smith says when a customer comes in with devastating medical news, she’s there to offer a hug and a bit of comfort, not just a product that costs money. These services are the kind that larger companies simply can’t offer, and leaning into them can also help owners keep their doors open because regular customers see their value.
Are the economic reports reflective of the way small businesses are struggling? Not really. But they’re not exactly reflective of how much a small business brings to its community, either. In a recent Artful Harvest post, Kiaunis let customers know she’d made some cupcakes.
“Will you please save me one each?” a customer commented. When Kiaunis replied that she would, the joy was palpable.
“Yippee!” the customer responded.
What Starbucks do you know that will do that?
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