Forget the mega caps, the post-COVID economic recovery will come from the companies who employ over 50% of the workforce and represent 99% of all companies in the US – small and mid-sized businesses

The sheer importance and impacts of SMB’s for any economy are hard to ignore. According to the Small Business Administration (SBA) as many as 30% of SMB’s across the US have been forced into a non-operation status, which equates to 15% of the workforce and is where the unemployment peaked in May 2020. That maybe a mathematical coincidence but I doubt it. 

Since then we have seen a robust recovery but there is good evidence that the resilience required to protect such a calamitous increase in SMB’s business failure is still not there. The massive stimulus packages in the form of the PPP and the American Rescue Plan are of course very welcome and have saved many businesses from going under, but we know from history that capital on its own is not enough. 

So how do we ensure the future success and prosperity of the most critical part of our economies?

First: solid and quantifiable strategic planning at the company level. It is estimated that fewer than 25% of SMB’s owners have a 5 year business plan. Without sufficient structure to the business plan, every and any event that can and will impact these SMB’s will have a disproportionately large impact on their ability to survive and proposer. We are not talking about million dollar McKinsey solutions, but rather what we have developed with ELITE which democratises the process of building strategic business goals, on solid financial and market assumptions for the masses. As Benjamin Franklin famously said, “an investment in knowledge is the best investment of all”.

Second: the creation of a framework for successful businesses. As noted by the Brooking institute, as the recovery plan dollars begin to flow, the will be distinction between places that “merely spent their money, and which places invested it?” In the race to provide solutions, cities and local governments should be conscious that this is a once-in-a-generation opportunity to rebuild back better and create competitive equitable regional economies that support racial, gender and all levels of minority inclusion in the SMB sector. Just like the company management teams I discussed last month, diversity is a str ength in local economies. We are delighted to be working with JobsOhio on such an initiative that is providing world-class business development support across a diverse range of businesses and communities in Ohio. Early results are impressive both in terms of corporate growth and job creation. We are confident that this trend will continue.

Finally the delivery of the right capital, to the right SMBs at the right time. This is easier said than done, but with the first two steps in place (where companies have a solid understanding of their needs, the infrastructure of continuous support and development exists at state, and local level), any investment dollars delivered into this ecosystem will have significantly higher ROI than peers. 

Success is about sustainability, and business maturity is a significant factor in their likely success- failure rates dropping by 50% if a business can get past the 5 year mark. The right resources, support and capital create a truly dynamic environment for small business growth and that is where the sustainable recovery will come from.