Small businesses continue failing in the US amid the Coronavirus pandemic. Over 160,000 businesses have been closed because of the economic impacts of the ongoing pandemic. What solutions do entrepreneurs have in such uncertain times?
In May, a study from the University of Illinois, Harvard Business School, Harvard University, and the University of Chicago was projecting that more than 100,000 small businesses have shut permanently since the moment the pandemic has escalated in March. The study suggested that at least 2% of small businesses are closed forever, and over 3% of the businesses that failed were in the restaurant industry.
But analysts warned, at that time, that it was only the beginning of the worst wave of small-businesses bankruptcies and closures since the Great Depression. Unfortunately, they were right.
Last month, the social networking site Yelp released its latest Economic Impact Report, which shows that businesses closures across the US are increasing because of the Coronavirus pandemic. What’s more, 60% of the businesses that have been closed over the last few months won’t be reopening.
Yelp’s report found that, as of the 31 of August, 163,735 businesses have closed, down from the 180,000 that closed at the very beginning of the pandemic. Yet, the social networking site didn’t only monitor closed businesses but also focused on whose closures have become permanent. It seems that the number of permanent closures has reached 97,966. That’s 60% of closed businesses that won’t reopen.
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What businesses prospered and what didn’t in the pandemic
As for which businesses performed better during these uncertain times, the Yelp report’s results were similar to the results of the study published in May. Yelp found that throughout the last half of the year, restaurants, bars, and nightlife venues were hit the hardest by the pandemic due to the restrictions imposed to stop the virus from spreading. Yelp’s report found out that 32,109 restaurants and 6,451 bar and nightlife venues have closed over the past six months.
Businesses in the retail industry also saw many permanent closures, with 30,374 closed businesses that won’t reopen.
Yet, the report also showed that although small businesses were hit the hardest by the pandemic, home, local, professional and automotive services prospered better in the pandemic compared to other industries, such as the hospitality industry. Such services reported a relatively low closure rate when compared to other types of services and businesses, which isn’t necessarily a surprise since, like Justin Norman, vice president of data science at Yelp, told CNBC, “Consumers still need these services.”
What’s more, Yelp’s September Economic Impact Report also found out that those business models that were already adapted to takeouts, such as pizza places or coffee shops, performed better during the pandemic compared to other restaurants.
Ultimately, Yelp’s report highlighted the ideas that although it’s difficult to say when the business environment will stabilize, many companies are successfully adapting to these uncertain times and the consumer trends set by the pandemic’s impacts.
Can entrepreneurs start businesses during these uncertain times?
Launching a new business at any time can be a daunting task. But in the wake of a global pandemic, it may seem downright terrifying for entrepreneurs to invest their money in new business ideas.
Yet, a global pandemic doesn’t necessarily mean that a new business is doomed to failure. In fact, new businesses are still forming, despite the ongoing Coronavirus pandemic. Even more businesses have been opened compared to last year. As of October, there have been over 1.3 million applications for an employer identification number since March, according to data from the Census Bureau, which is a jump of 14% over the same period last year.
But what are the options for entrepreneurs who don’t want to make such bold moves of starting new businesses on their own? The answer: franchising.
Franchising can be a much more calculated risk amid the public health crisis the entire world is facing. Why? For several reasons, including:
Franchising may be safer than starting your own business
First of all, franchising is a much more calculated risk because it is a safer way for entrepreneurs to do business than to start their own businesses.
Think about it: starting a company from scratch isn’t just difficult, but it is also very risky. Yet, with a franchise, you already have the security of a proven concept that was a success and had paying customers. When you franchise, you no longer have to go through the pains of trial and errors, branding, and marketing costs because the franchisor has already gone through all that.
Now, buying a franchise for sale can be an emotional decision based on your personal preferences and what you think will work best. Yet, it is important to have the data and facts to back up the investment and buying process. You can talk to a franchise consultant for guidance on what franchise would be best to buy.
Franchising comes with added support
When you start your own business from scratch, you’re pretty much on your own, except your friends and family, who are going to be there for you. But even so, you’re the only entrepreneur who’s taking the risk.
On the flip side, franchise ownership comes with a few added benefits, a corporate team that can support you with legal issues, marketing efforts, business development, and training. Being part of a corporate franchise team means that you can connect with industry leaders and experts and get advice and support from them.
No one’s job is secure
Today, the unemployment rate is 23.9%, an all-time high. Over 22,2 million people have lost their jobs due to the pandemic.
And, you know what they say, “never say never.” Even if you haven’t lost your job over the past months, your employment may not be as secure as you may think. And, finding a new job these days can be incredibly hard, especially with fierce competition like it is now. So, franchising right now might be a way to reinvent your career and obtain greater earning potential.
(Syndicated press content is neither written, edited or endorsed by ED Times)