One of my readers emailed a sad but eloquently-written note from a business owner forced to throw in the towel.
Expect millions more similar stories.
It’s with a very sad heart that we are announcing the permanent closure of our hair studio.
This decision did not come easily, and was unanimously agreed up by Amy, Annie and myself. We simply can’t continue to acquire more debt without income.
With Governor Wolf’s latest extension of the stay at home mandate, and with no end in site for the salon industry, we have no choice. We are saddened, overwhelmed, and also outraged.
We are distraught over the loss that our team will experience. We are so sorry for them and for all of us.
We are forever grateful to this community for welcoming us with open arms and allowing us to succeed. For 16 years, we ran a thriving and happy business, gone in a matter of weeks based on the decisions of one man with too much power.
To all of you who have supported us over the years, we thank you from the bottom of our hearts. We will miss you tremendously. You are our friends, our confidants, our people.
For anyone who purchased a Gift Card after March 17, 2020, over the next 7-10 days you will see a full refund. Thank you so very much for believing in us!
Amy, Annie, and Rachael
I removed the name of the studio but left the rest intact. The integrity of the owner is commendable, refunding gift cards.
This very sad story will be repeated countless times in the next few months.
Disastrous Small Business Losses
Small businesses have been hit extremely hard. I covered that aspect in Job Losses by Size of Company: Who Lost the Jobs?
The 1-19 employee category is not through the roof because of single-person firms with no overhead, like myself.
I wanted to weed out one-person firms but that data is not available.
I suspect but cannot prove that 3-19 person businesses were the hardest hit by Covid-19.
If you have a store or an office overhead, and income dries up, you are in serious trouble.
When a third employee is added, the likelihood of an office or lease soars.
Number of Small Businesses
In 2018 the SBA reports there were 30.2 million small businesses with 58.9 million employees.
The above stat shows the average small business in 2018 had 1.95 employees. It's safe to presume small businesses are dominated by those with precisely 1 employee.
Once a storefront or a lease is involved, business risk skyrockets.
A 6.4 Million Discrepancy Between Employment and Unemployment
The BLS reported a loss of 20.5 million jobs.
Unfortunately, that number is on the low side by over 6 million, and the BLS admits it.
For details, please see A 6.4 Million Discrepancy Between Employment and Unemployment.
Inflation or Deflation?
If you believe the Fed's printing press will soon result in inflation, you are mistaken.
For discussion, please see Inflation or Deflation? Collapse in Demand Trumps Supply Shocks
Expect Millions of Bankruptcies
Unfortunately, millions of small businesses will go bankrupt over this. And bankruptcies are inherently deflationary.
Best wishes to Amy, Annie, and Rachael ... and Joe, Fil, and Roberto ... and Sue, Mark, and Katy ... and everyone else in similar shoes, Anywhere, USA.