“Small Businesses Are Dying by the Thousands — And No One Is Tracking the Carnage”
By Madeleine Ngo, August 11, 2020, 9:08 AM EDT
- They simply close down and never show up in bankruptcy tallies
- More than half of owners are worried their firm won’t survive
“Big companies are going bankrupt at a record pace, but that’s only part of the carnage. ”
“By some accounts, small businesses are disappearing by the thousands amid the Covid-19 pandemic, and the drag on the economy from these failures could be huge.”
“This wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce, and because owners of small firms often have no debt, and thus no need for bankruptcy court.”
“Yelp Inc., the online reviewer, has data showing more than 80,000 small businesses permanently shuttered from March 1 to July 25. About 60,000 were local businesses, or firms with fewer than five locations.”
“While the businesses are small individually, the collective impact of their failures could be substantial. Firms with fewer than 500 employees account for about 44% of U.S. economic activity, according to a U.S. Small Business Administration report, and they employ almost half of all American workers.”
“Small business attrition is high even in normal times. Only about half of all establishments survive for at least five years, according to the SBA. But the swiftness of the pandemic and the huge drop in economic activity is hitting hard among typically upbeat entrepreneurs. About 58% of small business owners say they’re worried about permanently closing, according to a July U.S. Chamber of Commerce survey.”
References:
- https://www.bloomberg.com/news/articles/2020-08-11/small-firms-die-quietly-leaving-thousands-of-failures-uncounted?utm_campaign=news&utm_medium=bd&utm_source=applenews