Maintaining a small business is hard enough as it is, never mind being hit by a global pandemic that causes massive shutdowns and an economic downturn. Since the coronavirus showed up on the scene, things have become quite serious for many small business owners, and it’s not just the loss of potential business.
More and more small business owners are closing their doors permanently with a second lockdown order in many states and no end in sight of the restrictions. Nearly 66,000 businesses have closed up shop since March, according to Yelp, which has been tracking announcements of closings posted on its site. In June alone, the most recent period for which data is available, businesses were closing permanently at a higher rate than in the previous three months. During the same period, permanent closures increased by 3 percent overall, accounting for roughly 14 percent of total closures since March.
And some industries are being hit harder than others. Aside from the psychological impact of being deemed “non-essential,” one wouldn’t be that far off to assume that anything involving gatherings of many humans would be last on the list of things to re-open — bars, restaurants, nightclubs, music festivals, etc.
But for those small businesses who are hanging on and toughing it out, there are other issues at play as well, and it isn’t just the business owners who are suffering. Most workers are still trying to save for retirement during the recession triggered by COVID-19, and the amount of money going into employer-sponsored retirement plans has dropped remarkably due to layoffs and business losses.
Some companies were forced to reduce or stop matching contributions. Small firms and their employees have been hit the hardest, according to a study from Ascensus, which does record-keeping and administration for corporate retirement plans.
In companies with up to 500 employees, Ascensus found that employer contributions decreased 11.4 percent overall from March through May, as a result of factors including business closures, interruptions, and layoffs, which meant fewer workers’ savings needed to be matched.
For those Americans who are fortunate enough to be unscathed, at least financially speaking, recent events are a stark reminder to save your money and make smart, strategic financial moves to brave the storm with savings, investments, and emergency funds.
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