Barstool Sports’ Dave Portnoy speaks with passion for the millions of worried small business owners and their workers
“The coronavirus pandemic is emerging as an existential threat to small businesses across the country,” the Washington Post this week. Over the past two months, more than 100,000 small businesses have permanently closed due to the effects of the Covid-19 pandemic. This trend could turn into a cascade of bankruptcies and small business closures, the largest since the Great Depression.
Extended periods of not earning revenue prevent business owners from remaining solvent. It’s a punch because little or no money comes in, but they’re still expected to pay rent, salaries, taxes, insurance, and other expenses. Mark Zandi, chief economist at ratings agency Moody’s, said in a report to clients: ‘It wouldn’t be surprising if more than a million of these micro-enterprises ended up failing’, referring to companies in 10 employees or less.
If you’re someone who has a job with guaranteed pay and benefits during the Covid-19 pandemic, it’s easy to just say shut everything down. You have the comfort of knowing that you will always be paid no matter how long this pandemic lasts.
For those unlucky enough to receive a stable guaranteed income to go months without earning money, they face an existential crisis. Founder of Barstool Sports Dave Portnoy, better known as “El Presidente”, posted a video on Twitter citing his issues with handling the Covid-19 outbreak. In her now-viral video, Portnoy shared her frustrations with how millions of small business owners and their employees are being mistreated.
We take small businesses for granted. Half of American workers are employed by small businesses. The failure rate for a new business is ridiculously high. Most earn a living. As Portnoy said, imagine if you worked for the past 20 years to start, build, and run a business. It’s not a 9 to 5 job, you’re still working. There is constant pressure and stress. You are responsible for your employees and your customers. If you’ve spent five years or more, that’s a rarity. You sacrificed everything to make it work.
Portney pointed out that after all your hard work, he could be wiped out in a matter of weeks. Few business owners have enough money to get through this pandemic. They are still responsible for rent, insurance, taxes and other costs while no income comes in. If your business has strong competitors online, you may never get your customers back. Once the business is closed, what could the 45-year-old owner do next? He or she might have no other marketable skills to offer and would have to start all over again. What will become of their workers? They will have to apply for unemployment benefits and look for a new job, competing with the other 30 million job seekers recently made redundant.
James Hammond, who covers bankruptcies as managing director of New Generation Research, said: “I think we will see bankruptcy activity on a scale that has never been seen in anyone’s working life. It will affect everyone, but it will be more difficult for small businesses because they don’t have a lot of money in reserve.
The Covid-19 crisis represents a unique crisis for American small businesses. According to a recent study of small businesses conducted by the National Bureau of Economic Research. “Nearly 7.5 million small businesses are at risk of closing permanently in the next five months, and 3.5 million are at risk of closing in the next two months,” according to a new survey by main street america.
The government has said it will help small businesses with its multi-billion dollar stimulus package. The Paycheck Protection Program aimed to provide forgivable loans to small businesses, so that they could survive and retain their employees. It has been widely reported that due to corruption or mismanagement, the money went to dozens of big companies. Some are worth over $100 million received millions in taxpayer aid— instead of the planned small businesses that depended on it.
Millions of small businesses will fail if things continue as they are now. Small businesses employ 58.9 million people, which accounts for nearly half of the country’s total workforce. The Bureau of Labor Statistics shows that about 20% of new businesses fail within the first two years of opening, 45% within the first five years, and 65% within the first 10 years. Alone 25% of new businesses reach 15 years or more. That doesn’t make business owners un-American or bad if they want to reopen, make a living, put food on their tables, and keep people employed. If they are forced to stay closed, they will eventually fail, shut down, hounded by creditors and forced to abandon all their workers who will enter the worst job market since the Great Depression.
It’s easy for those with secure jobs to single out protesters in Michigan as fools who want to endanger everyone’s life and mock Californians who wanted to get some sun and fresh air. at the beach like selfish morons. We don’t know their individual histories, so it’s not fair to assume that they would wish harm on others.
It’s not just a binary option – reopen and people die, close forever and you’ll be fine. It’s more nuanced than that. Politicians, health experts and business leaders must work together to formulate a smart and realistic plan. Kicking the box because they are afraid to make a decision is not a good strategy.
Portnoy’s video is reminiscent of the old school 1970s film, Network. In the defining scene, downcast, despondent, and angry veteran news anchor Howard Beale vents his frustration at bad state affairs on live television. He launches into an epic diatribe passionately decrying all of America’s problems. “Everyone knows things are bad. It’s a depression. Everyone is unemployed or afraid of losing their job. We know things are bad. They are worse than bad. They’re crazy, so we don’t go out anymore. He continued with the iconic call to action, shouting, “I’m mad as hell and I won’t take this no moreBeale implored his viewers to open their windows and shout the same statement. The scene cuts to dozens, if not hundreds, of people shouting from their windows.
Today, the equivalent of shouting out the window is spreading your censures on social media. Portnoy, channeling Beale in his expletive-laden video, fervently pleaded to pay attention to neglected owners and workers at small restaurants, retail stores, gyms, bars and other businesses you love and make your town special.
Instead of spending our time shaming, hating and arguing, we need to focus on making tough decisions fast before we further destroy the economy, drive small businesses out of business and put millions of additional unemployed people.