One thing is clear: The COVID-19 pandemic is wreaking havoc on small businesses. According to one estimate, more than 100,000 small businesses have closed for good because of the coronavirus-induced economic shutdown.
Even in the midst of a pandemic, the U.S. economy is more dynamic than we often think. While many small businesses are struggling to meet payroll and other costs, many others are surviving and even thriving. Indeed, the COVID-19 pandemic is forcing small business owners to do what they do best: Adapt and innovate.
Online sales, for instance, have taken off in many industries. Amazon and Walmart aren’t the only examples of business models that work in today’s day and age, although theirs may be the most successful. According to a recent McKinsey survey, 60 percent of U.S. businesses claim their new remote sales models were proving as much (29 percent) or more effective (31 percent) than traditional channels—those that predate the coronavirus. Consumers are embracing online sales more than ever before, and companies of all sizes are meeting that demand.
But the current crisis isn’t only a tale of established businesses, whether struggling or succeeding. In recent months, we have seen hundreds of thousands of new small businesses form, and in a wide range of industries. Entrepreneurs have filed over 500,000 applications for an employer identification number (EIN) since mid-March, according to the U.S. Census Bureau. Between mid-March and mid-April, the Small Business Administration (SBA) issued nearly 300 start-up loans worth about $150 million.
Yes, the SBA is primarily focused on the Paycheck Protection Program, but that isn’t stopping the federal agency from helping out start-ups too. And, yes, applications for EINs are down from last year, but that was before an unprecedented pandemic swept across the globe. Context matters.
Americans are in desperate need of good news, and the good news is this: America’s entrepreneurial spirit remains alive and well. At the least, the current crisis hasn’t ground entrepreneurship to a halt. At best, the crisis is inspiring entrepreneurs to meet new needs—needs that didn’t exist six months ago.
The New York Times recently profiled Shanel Fields, who launched MD Ally, a Pennsylvania-based health care start-up. MD Ally allows 911 dispatches and other first responders to route non-emergency phone calls and patients to virtual doctors, helping local governments improve their emergency response systems. Fields has raised $1 million in seed money and recently signed up her first customer.
In Fields’ words: “Those non-emergency calls overcrowd E.R.s and delay ambulances.” So, she decided to do something about it.
Fields is hardly alone. Across the country, hundreds of thousands of entrepreneurs are turning a crisis into an opportunity. That is worth celebrating.
In doing so, entrepreneurs are following in the footsteps of those who came before them, some of whom founded high-profile companies during turbulent times. Lest we forget: Airbnb was officially created in 2008—in the depths of the Great Recession. Venmo and Uber, now household names, followed suit in 2009 when they were hardly sure bets. Microsoft was founded in 1975, as “stagflation” gripped the United States.
When a crisis is turned into an opportunity, it can bring out the best of entrepreneurship, the backbone of our free-market system. After all, every S&P 500 company started off as a small business.
The COVID-19 pandemic has exposed many truths about the American way of life—from the good to the bad and the ugly. However, one of the key takeaways is the resilience of American entrepreneurship. On a daily basis, we are witnessing small business owners fight for their lives. We are seeing them fight for the wellbeing of their employees and those who depend on them.
We are seeing countless entrepreneurs turn despair into a decision, a decision to make something of the crisis. As Brian Chesky, co-founder of Airbnb, put it, “If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life.”
For many of today’s entrepreneurs, that “problem” is the coronavirus and they are working around the clock to find solutions. Their own, unique solutions. Our economy will reap the benefits for decades to come.
With entrepreneurship leading the way, we can all rest assured that the U.S. economy will overcome this public health crisis. The COVID-19 pandemic is no match for the American spirit.
Catalyst articles by Luka Ladan