Small business survival and post-COVID recovery
There being no clear indication up to this time as to just when there will be a measure of respite from the COVID-19 pandemic, the restraints that continue to harness the business sector grow increasingly worrisome. The uncertainties which impact, to varying degrees, in all sectors of business have implications for livelihoods and by extension, for the well-being of families.
The Stabroek Business makes no claim to having a macrocosmic, across-the-board insight into the particular extent to which the various sectors have been faring, in what has now become a situation of particular uncertainty. Insofar as the challenges confronting the business community are concerned, our focus has been primarily on the small business sector, mostly the agriculture, agro-processing, and some of the micro- and small-businesses in the retail trade and other facets of the services sector.
We know from first- hand information that some of the smaller businesses, quite a few in the agro-processing sector, have folded in the sense that some of the owners have set aside their substantive pursuits and are now pursuing alternative means of supporting their families. Small farmers too have been afflicted by loss of labour support and in some instances the weakening of the farm-to-market logistics; so that, in effect, their normal operations have come to a halt.
What is also true is that up until now there has been no arrangement to speak of, designed to bring any meaningful measure of relief to the small-business sector as a whole. We have witnessed the presentation of the 2021 budget and the allocation of $250 million to the Small Business Bureau, an amount, when account is taken of the substantive mission of the Bureau is, relatively speaking, ‘chump change’. More to the point, it is no secret that only a relative handful of the huge number of our local small business ‘hustles’ are registered with the Bureau so that most of these ventures will not benefit from the little that the Bureau will have to offer.
There is, of course, no ‘fall-back position’ for those small business hustles wedged between the rock of COVID-19 and the ‘hard place’ of a decided shortage of state support, the point here being that the longer something resembling a meaningful ‘rescue ‘package takes to emerge, the greater the likelihood that many, perhaps most of those small businesses that had offered the promise of growth during the period preceding COVID-19, might now fold forever.
With hindsight, government’s failure to activate the 20% allocation of state contracts to small businesses when the opportunity arose to do so could now mean the difference between survival and ‘going under’ for many of those small businesses. Once it became known that the 20% allocation was likely to kick in there occurred simply too much dithering and prevarication. While some understandable procedural issues appeared likely to stand in the way of the implementation of this provision, enshrined incidentally, in the 2004 Small Business Act, one cannot help thinking that those could have been fixed over time when, with hindsight, account is taken of what we have lost in potential small business earnings since then. It will be interesting to see how soon the provision is activated following the recent legislative amendment.
Insofar as the full and effective implementation of the 20% small business allocation is concerned, one feels that in the circumstances, outside of the SBB’s ‘paltry’ $250 million allocation, there is really little if anything in the national budget for the small business sector. The current administration ought to have already been moving in the direction of the full and effective implementation of that particular clause in the Small Business Act. If it can move reasonably quickly, within the confines of the provisions of the Small Business Act then it is not unlikely that it may be able to salvage some of those sections of the micro- and small-business sector that have not yet been sucked under by the strictures arising out of the COVID-19 pandemic. If this does not happen then the micro- and small-business sector, as a whole, is likely to find itself on a hiding to nowhere.
We have already pointed out in previous editorials that much of the dilemma confronting micro and small businesses has to do with the fact that they benefit from no sustained representation from the mainstream Business Support Organizations. Contextually, one may well ask whether micro and small businesses may not have fared better under the provisions of the 2021 budget had its concerns benefitted from some robust lobby designed to ensure that at least some of its concerns were met outside the framework of the SBB.
The sporadic ‘noises’ made by some BSO’s focusing on micro- and small-business concerns still amount to a small voice in a yawning wilderness. As was stated in previous editorials, the mainstream BSO’s have their own ‘fish to fry,’ those that have to do mostly with positioning their members to benefit from the Local Content spinoff from the country’s oil & gas pursuits.
Conversations with mainstream business persons, members of the mainstream BSO’s, do not leave the impression that these are equipped with a sense of a broader private sector that extends to the agro-processing operation run from a domestic kitchen or a small community canteen that may rely for its survival on no more than a handful of regular customers and that the returns from these ventures pay the wages that support families.
The fact of the matter is that the introduction of oil & gas considerations into the local economic equation would appear to have widened our pre-existing tiers of business and drawn an even sharper line than had previously existed between the haves and the have-nots. A crisis may well be looming here since, where developments like those that arise out of the advent of oil & gas widen the gap between ‘rich and poor’ in the business sector, then the ripple effect which that gap will have across the wider society could give rise to serious and potentially destabilising challenges for those who rule.