[Black Business\Small Business]
Andi Gray: “Small businesses make up 50 percent of the gross-domestic product and also employ half the workforce. What happens to them determines what happens to the overall economy."
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The year 2020 can’t end quickly enough for most small business owners.
Across the country, the pandemic forced many of them to close their operations temporarily – or permanently – and the continued economic uncertainty threatens to kill the ambitions of entrepreneurs who planned to launch businesses but now must put their dreams on hold.
None of that bodes well for the overall American economy, says Andi Gray, president of Strategy Leaders (www.strategyleaders.com), a business consulting firm.
“Small businesses make up 50 percent of the gross-domestic product and also employ half the workforce,” she says. “What happens to them determines what happens to the overall economy. We as a country cannot afford to fail them.”
Gray points to the 2008-11 banking crisis as a disturbing example of how a national crisis can sabotage entrepreneurship. In 2008 , for the first time, the number of business starts fell below the number of business closures.
“In other words, more businesses were killed off than were launched,” she says, ”and it wasn’t a one-time event. The problem continued on for years.”
The ripple effects? By 2009 small business contributions to GDP fell rather than grew. By 2010 the economic contribution gap between large and small businesses widened four-fold as small businesses struggled to keep up with their large corporate competitors. People lost their jobs, exports dropped, taxes fell and economic opportunity disappeared as entrepreneurs fought to recover. It took over five years for the small business community to get back on track, Gray says. But the damage was already done. By 2015, the U.S. was ranked 12th among developed nations in terms of startup activity.
She worries such lingering effects could happen again – and be significantly worse this time.
“Today’s COVID crisis is far larger and deeper than the 2008 crisis,” she says. “I would not be surprised if it takes far longer than five years for the small business community to get back to producing GDP and employment numbers we took for granted at the beginning of the year.”
In the meantime, small business owners hit hard by this latest recession must find ways to weather the storm. Gray offers a few suggestions for how they can do that:
“The good news is that small business owners are known for being nimble, flexible, and resourceful,” Gray says. “Many of them are finding new opportunities by solving problems that didn’t exist, or weren’t priorities, at the start of 2020.”
About Andi
Gray Andi Gray is president of Strategy Leaders (www.strategyleaders.com), a business consulting firm. Gray’s career started in sales, marketing and new business development at Xerox, American Express and Contel. Gray earned an Executive MBA from Columbia University while conducting research on success and failure drivers for entrepreneurial businesses. Gray writes a weekly column called “Ask Andi” in which she provides practical advice to business owners. She also authors a monthly column in Chauffeur Driven Magazine. Gray is also the co-founder of the networking group BOHCA (Business Owners Hemp and Cannabis Association), where she helps industry specific owners grow their business through strategic planning.
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