What will winter be like for small businesses?
Easy answer, who knows? Not such an easy answer, who knows? The election (fortunately almost over) will set a course depending on which party wins. The pandemic will mark the other course. Regarding the elections, perhaps the biggest immediate question is whether there will be some kind of immediate stimulus package that could include some kind of immediate cash payment like the last package and / or renewed unemployment assistance. The economy grew at a record pace in the third quarter, but is already losing steam. A renewed stimulus package would help mitigate the effects of the new Covid restrictions that are now being implemented in some parts of the country. But there is a long time between the election results and the day of the inauguration. This “Who knows?” – what could happen between the elections and the inauguration, would be treated in capital letters.
Regarding the course of the pandemic, the economic situation tends to be less optimistic even as third-quarter GDP made a spectacular jump of 7.4%. But on the other side of that picture, layoffs in some industries are starting to rise. Several states are already beginning to re-enforce restrictions, and if infections and hospitalizations continue to spread (in thirteen Midwestern states, the average daily case has risen 45% in the past two weeks) more restrictions could be implemented. What effect could that have on Christmas shopping? The most likely effect is that online purchases will increase even more. That could mean fewer people going to stores and will again force layoffs in the retail sector.
For a small business owner, if consumers start to clamp down on spending because the virus is charging a higher price or more closures are implemented, they need to be even more careful with their cash. Until workers and consumers feel safe and healthy, spending is likely to remain restricted. Do you have costs that can be reduced? Are there possible new sources of income? Could you narrow down the variety of items you sell? Will you have enough cash to make it into the spring when the daylight begins to grow, and hopefully a vaccine will start to be given in large quantities? If the real improvements start to take hold in the spring, one scenario I might see (with tongue firmly planted on my cheek) is that consumers will be desperate to spend all the money they have been saving and will come pouring out of their homes waving their cards. credit cards and throwing cash in the air to celebrate as they race to the stores. Make sure you are still there to open the doors and get out of the way. Cash is king.