Pandemic-proof? Local small biz not so lucky
A new national report ranks Wisconsin 9th for pandemic-proof small businesses, but the same can’t be said for Greater Madison operations.
As states begin the process of gradually reducing restrictions imposed in March 2020 to curb the spread of COVID-19, businesses and organizations that have been closed or operating on severely altered schedules for the better part of a year are reopening — but not all of them.
Nationally, around 100,000 businesses closed permanently during 2020. Recognizing those that survived, WalletHub released a new report on the states with the most pandemic-proof small businesses. While Wisconsin was not immune from business closures, the WalletHub study ranked the Badger State ninth in the nation for its pandemic-proof business climate. Wisconsin was joined in the top 10 by five other Midwest states — North Dakota, Minnesota, Illinois, Michigan, and Ohio — a sign that the Midwest weathered this economic storm much better than our counterparts on the coasts.
Among the highlights from the WalletHub report, which compared the 50 states and the District of Columbia across 11 key metrics, Wisconsin ranked:
- 26th — Share of small businesses operating in high-risk industries;
- 3rd — Share of small-business employees operating in high-risk industries among total small-business employees;
- 16th — WalletHub’s “states whose weekly unemployment claims are recovering the quickest” score;
- 18th — Business vitality;
- 30th — Average annual federal small-business funding per GDP; and
- 3rd — Small-business credit conditions.
“Small businesses have a very positive outlook moving forward, largely because states are distributing the COVID-19 vaccine and rolling back restrictions as a result,” says Jill Gonzalez, WalletHub analyst. “Vaccination, combined with additional aid for small businesses in the most recent stimulus, declining COVID-19 cases, and warmer weather, should result in greater business revenue in the coming months. Due to this increased revenue, businesses will be able to step up their hiring. The worst of the pandemic is behind us, and once businesses fully reopen, they should expect a boom in the coming years as a result of the pent-up demand from consumers.”
Of course, WalletHub’s report looked at the entire state of Wisconsin and didn’t analyze how specific cities or regions have fared, and Greater Madison has not made it through the pandemic unscathed.
IB spoke briefly with Zach Brandon, president of the Greater Madison Chamber of Commerce, about what a statewide study like WalletHub’s can actually tell us about what’s happened on the ground in Madison and the surrounding communities.
How reflective of the current environment in downtown Madison and the surrounding areas are these rankings? Do you believe, for example, that Madison small businesses have been more pandemic proof than elsewhere?
“Small businesses in Greater Madison are not pandemic-proof. What the WalletHub study does show is that a diverse economy creates more stability, and Greater Madison has the most diverse economy in the nation. However, that stability does not guarantee survival of small businesses, particularly consumer-facing, foot traffic-driven businesses.”
Specifically, WalletHub notes Wisconsin ranks very high (3rd) in both the share of small-business employees operating in high-risk industries among total small-business employees and also small-business credit conditions. Downtown Madison is especially dependent on retail and the restaurant/hospitality industries, and we’ve seen a number of those types of business closures over the course of the pandemic. Do you think those industries are poised for a quick recovery once more people are vaccinated and local public health regulations are loosened, or will it take a few years or more to bounce back?
“Greater Madison will recover from this pandemic. The question is how fast and how intact. We are on a path toward removing regulatory barriers — because we are controlling the spread of COVID — but that does not mean businesses will just bounce back. According to the most recent survey we conducted with our regional partners, 31% have already closed or expect to close in the next 12 months if local public health orders are unchanged, and 70% of businesses experienced a decline in revenue in 2020 compared to 2019.
“Earlier in the pandemic, we worked to flatten the infection curve to protect our health care infrastructure. Now we need to bend our confidence curve to realign with our reopening curve, and people continuing to wear masks and get vaccinated are a big part of that.”
Do you think local small businesses have access to the credit they need to operate, apart from emergency PPP funds that many took advantage of during the pandemic just to get by?
According to our survey, 70% of businesses received assistance through the Paycheck Protection Program, a tribute to the work of our community’s banks and credit unions. We are encouraged by the variety of local, state, and federal programs that continue to be available and helpful to small businesses, though we need to be strategic with further relief funds to help advance our goal of a more equitable recovery. Wisconsin has historically done very well with SBA loans, but that is not the case for entrepreneurs of color. For true recovery, much more must be done to address this economic inequity.”
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