Over the last few weeks, the United States has been grappling with the challenges of the global coronavirus pandemic. But the devastating effects have only just begun to surface for the average citizen. While COVID-19 is a very real and dire threat to the health and lives of the elderly and our most vulnerable, its unprecedented impact on the wider economy places us all at risk.
The American way of life as we know it could be forever changed unless critical action is taken immediately.
Although the U.S. economy has been performing at record highs over the last several years, it is not enough to absorb the shockwaves of this virus. The nation has come to a grinding halt with cities taking drastic measures to contain the disease's spread — shutting down schools, businesses and public places across the country.
Virtually every industry has been affected, with some such as the airline and casino industries requesting urgent government assistance to remain solvent. And while there are talks within the halls of Congress and the White House about a potential stimulus package to keep businesses on life support, the vast majority of Americans simply cannot rely on government bailouts. That is especially true for small businesses and their workers.
Nearly half of all Americans work for small businesses, and unlike large corporations, small businesses simply do not have large cash reserves on hand to sustain a sudden halt in operations. It is these businesses and hardworking Americans who will bear the brunt of the impending fallout. Sadly, most are woefully unprepared.
Just last year, a survey found that nearly 70% of Americans have less than $1,000 in savings at any given time, and around 45% have nothing saved at all. Facing the possibility of nationwide layoffs and business failures occurring on a mass scale, these same Americans now must find a way to pay their rent, critical bills and living expenses without the means to do so.
White House officials have warned that without action the unemployment level may reach as high as 20%. Simply put — in the coming weeks, we may witness the single largest wave of personal bankruptcies in our lifetimes and the creation of an enormous class of newly impoverished Americans.
The point of this column is not to cause more fear or to add to the hysteria of an already desperate situation. Instead, we must openly acknowledge the severe reality that our nation is facing and make the necessary preparations for tough times to come. COVID-19 has gotten a lot of attention for its dangers to public health, but we have to take the dangers to the economy just as seriously. This is a wakeup call.
Business owners must immediately ready themselves to weather the storm as best they can. They should put into place plans for operating with a reduced workforce and therefore reduced payroll.
Business owners should forecast budgets based upon various levels of income reduction, and they should look to trim unnecessary expenses wherever possible.
Small businesses should also immediately transition to remote videoconferencing to help keep employees safe and healthy. Retailers should expect supply chain interruptions and adjust accordingly. Many owners should consider opening up lines of credit for emergency loans and take advantage of historically low interest rates.
Entrepreneurs also should look to tap into any federal and state programs that can provide financial aid. Whatever your individual business needs to survive, do it now.
Workers must also prepare themselves and their families for potentially catastrophic circumstances. They must consider the reality of having no income for the next several weeks or months. They should formulate a household budget for the most severe conditions and have a plan of action in place should the worst-case scenario occur.
Only time will tell just how devastating this pandemic will be for the well-being of our vulnerable citizens, our economy and our country. This is a once-in-a-century event, and we are all in uncharted waters.
Once we have physically survived, then we will need to financially survive what's upon us. We must band together and take care of each other. And while we may not see an exorbitant death toll from this virus, we are all but guaranteed to see mass casualties when it comes to American small business.
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