the time the legislation was passed, many undercapitalized restaurants had already laid off employees. There was no sense in taking out a no‐interest loan – remember, those loans needed to be repaid – if there was little likelihood of reopening at all. The question of rent, the single biggest fixed cost for many entrepreneurs, wasn't addressed. The legislation also favored companies that had existing relationships with banks or who were sophisticated enough to access other forms of capital. Is it any wonder that, while it provided a short‐term benefit to some, the $3.5 trillion CARES Act did too little to help small businesses in the long term? Many didn't survive.
As winter of 2020 loomed, the community of Akron, Ohio, tried to take matters into its own hands. It had given out more than $5 million in direct grants through the CARES Act. But the challenges of small businesses accessing relief under the aid packages loomed large for the region. More than 90 percent of the 13,262 employers in Akron in 2018 had fewer than 50 employees. But together they employed as many as 160,000 people.
“To permanently lose 20 to 30 percent of them would be catastrophic,” said James Hardy, the deputy mayor for integrated development, referring to Akron's small business base. “Particularly when you consider that Akron had only recently ‘recovered’ from the Great Recession of 2008–2009. Meaning we had returned to pre‐recession job numbers.”11
Local leaders are better aware of the role of small businesses as employers. As Hardy put it: “[Losing those small businesses] would be a gut punch to thousands of local residents and entrepreneurs. One that could set them and their families back for a generation. Sixty percent of Akron residents live paycheck to paycheck; or worse.12 We know from this and other research that Black and female workers and business owners will continue to be hit the hardest.”
The city was spending $200,000 on a new app – the city's version is called Akronite – to encourage residents to shop locally. About 2,600 people had signed up so far to earn “blimpies” and redeem the rewards for cash, one‐on‐one, at small businesses.i Hardy expected the investment in the app to pay off in higher spending at local businesses. But the biggest benefit was that small business owners might think that somebody cares. “They're scared and frustrated,” Hardy said.
So was he.
If the pandemic made clear how vulnerable and underappreciated America's entrepreneurs have become, the spotlight and the next few years offers an opportunity to change the narrative. If we're going to rebuild, we need to let go of a few mindsets. Too much focus has been put on determining which entrepreneurs have the best chance to grow their businesses into large companies. This winner‐take‐all attitude belies the fact that most entrepreneurs are building more modest businesses and working at a much more local, grassroots level. They are an army of sorts, leading a revolution that continues from a centuries‐long tradition in America of embracing grassroots entrepreneurship and supporting local and community businesses. We need to create an environment in our country that will help a much broader set of entrepreneurs to thrive.
In the fall of 2020, even one of the country's staunchest advocates for big business, CNBC's Jim Cramer, took to the airwaves to plead for more federal aid to help small businesses. Darden Group, the parent company of Olive Garden, was thriving because it had access to capital and the resources to implement technology across its chains. There's nothing wrong with Darden Group, Cramer said. “But do I want to eat out at Olive Garden every time?”13
No. And most people don't want to walk down Main Street where every shop is a chain, either. As the pandemic rolled on, Milton Friedman's singular focus on profits and growth to the exclusion of other values seemed to have reached its natural conclusion: Free to Choose doesn't look so appealing if every choice is the same.
Luckily, while the United States is remembering the value of small business, the entrepreneurs of America are continuing to be what they always have been: the most determined group of people you could ever hope to meet.
Note
1 i Akron is the rubber capital of the world and the home of Goodyear, the maker of the Goodyear blimp.
Endnotes
1 1. Quotes from interviews with Isaac Collins, July 2020 and October 2020.
2 2. Tommy Felts, “I'm Black and a Plaza Business Owner in That Order; Why a Main Street Entrepreneur Joined KC's Protests,” Startland News, June 2, 2020, www.startlandnews.com/2020/06/isaac‐collins‐kansas‐city‐protests/
3 3. Alex Flippin, “Who Is Steven Craig?” News Press, July 14, 2016, www.newspressnow.com/news/local_news/who-is-steven-craig/article_472e12e4-4a07-11e6-9370-5f0bc1379fa4.html
4 4. Small Business and Entrepreneurial Council, “Facts and Data on Small Business and Entrepreneurship,” https://sbecouncil.org/about-us/facts-and-data/
5 5. Isabel V. Sawhill and Christopher Pulliam, “Six Facts about Wealth in the United States,” Brookings, June 25, 2019, www.brookings.edu/blog/up-front/2019/06/25/six-facts-about-wealth-in-the-united-states/
6 6. Dion Rabouin, “10 Myths about the Racial Wealth Gap,” Axios, July 23, 2020, www.axios.com/racial-wealth-gap-ten-myths-d14fe524-fec6-41fc-9976-0be71bc23aec.html
7 7. Ibid
8 8. Ewing Marion Kauffman Foundation, Access to Capital for Entrepreneurs: Removing Barriers, 2019, www.kauffman.org/wp-content/uploads/2019/12/CapitalReport_042519.pdf
9 9. Interview with Chris Cain, Summer 2020.
10 10. JPMorgan Chase & Co. Institute, Place Matters, Small Business Financial Health In Urban Communities, 2019, institute.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/institute/pdf/institute-place-matters.pdf
11 11. Series of email interviews with James Hardy, Fall 2020.
12 12. “ALICE in Adams County,” United Way ALICE Report – Ohio, 2016, http://ouw.org/wp-content/uploads/2018/11/18UW_ALICE_Report_COUNTY_OH_8.29.18.pdf