By: Daniel Tossounian
There is something essentially appealing about the tandem term ‘small business.’ It summons up images of a familiar mom and pop corner grocery, a rustic family farm or a charming little eating place tucked away between larger corporate enterprises with more recognizable identities…aka you deserve a break today.
Small businesses afford us, the consumers with the three C’s, character, charm and finally choice. Imagine an Orwellian world in which all available options were big box stores, national restaurant and coffee chains who would need to consult ‘corporate’ any time a suggestion or even simple request might be proffered, like say, adjusting the air conditioning.
It is rather a refreshing feeling to look directly at the person serving you across the counter and realize they are also the CEO as it were, and your perceived sense of satisfaction or lack thereof is their best indicator of success. That seems to be essence of the small business.
While the a forementioned has enough truth to it, the entire truth about small businesses is a bit more complex. Some key facts (and misconceptions) to consider about small businesses are as follows:
Most small businesses fail at high rates the first year* Quite frankly the reverse is true as only 20 percent of small businesses go under the first year with that number inching upwards each successive year. Nevertheless, by the fifth year over 50 percent of startup businesses are not only still operating but thriving.
*Relatively few people quit their secure jobs to pursue a small business venture. From 2009 to 2016 new startups in the U.S averaged almost half a million annually.
*Due to consolidation and mergers most of the employers in the US are large national or multinational companies.
The truth is that a tremendous number of Americans workers are employed by small businesses. This is in large part due to the SBAs generous designation of 500 or less employees as a small business. The result of this is that a hefty 49 percent of the country’s total adult work force are definitively employed by small business.
Working from the comfort of one’s home is quaint yet not realistic*
Of the over 30 million small businesses in the US over 22 million of them are operated by individual owners. Small businesses that make it through their first five years go on to afford their operators with handsome returns 50,000 being the mean in income average. Moreover, despite the typical grim prognostications, fully 40 percent of small businesses end up being profitable with the remaining 60 percent either breaking even or operating at a loss, and fully half of small startups still operating after five years.
It is obvious that many austere impressions of small business viability are simply not accurate with a more sanguine reality being the norm and in Hawaii these prevailing
facts regarding small enterprise have been more, or less in concert with the national status quo.
In 2020 Hawaii likewise conformed to the grim reality of the covid pandemic which swept the island economy like a media tsunami which swamped economies on every continent on the planet. According to The National Academy of Sciences the pandemic caused massive dislocation of small businesses almost immediately upon its onset. The availability of government aid through the Coronavirus Aid, Relief, and Economic Security (CARES) Act helped to ameliorate the disaster. Nevertheless, a full 43% of businesses had temporarily closed before aid could be delivered.
Employee health concerns were main reasons for closure, and disruptions in the supply chain being the secondary factor. The larger urban centers like New York City reported as many of 54% of firms closing and employment was down by 47%. Retail, the arts and entertainment, personal services, food services, and hospitality businesses all have reported employment declines exceeding 50%. In contrast, finance, professional services, and real estate-related businesses experienced less disrupted, as these industries have been better able to operate remotely.
Obviously, the impact from this international pandemic catastrophe has landed most crushingly on small businesses, and Hawaii has been no exception. The travel industry which is the lifeline of Hawaii’s macro economy came to a virtual standstill. This coupled with the local restrictions and shutdowns was a hammer blow to local enterprises not seen since the hectic days following Pearl Harbor.
Among the myriad of businesses affected most notable have been the family restaurants, small neighborhood bars, exotic tea houses and coffee outlets, specialty retail shops, foreign cuisines vendors. These distinct and unique enterprises constitute the variety and unique flavor which can serve to enrich our collective cultural experience. And it has been these very types of businesses which have heartbreakingly been under siege and most
vulnerable to the pandemic’s devastating effect.
Never, the less, when we consider how many small business operators have somehow managed to persevere, like plucky little mariners weathering the perfect storm while keeping their little dinghies afloat and having done that alongside the corporate ocean liners like a Costco, a Walmart, an Amazon or say a Starbucks, etc. well this can is easily be defined as a profile in courage that warrants our inquiry.
I will be doing a seven, part series profiling individual small entrepreneurs operating on Island in the age of covid who have managed to survive – if not thrive in the face of centennial disaster that has derailed the success of other business and curtailed careers.
First their original dream – which is the entomology of almost all small businesses will be explored as well as the adaptive coping strategies they have employed to get through the crises…culminating in their hopes and dreams for their businesses in a post covid Hawaii.