Stuff I Think About

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If I had a business in NYC now…

Here’s what we know about COVID-19 & the impact on Small Businesses right now:

  • The Federal government is unlikely to do more to help Small Businesses

  • Neither the State or City are prioritizing the concerns of Small Business Owners — whether this is the right or wrong policy can be debated

  • The economic situation in New York City isn’t likely to get much better until there is a widely used vaccine, which is still at least six months in the future

Here is what we don’t know:

  • The results of the upcoming election

  • The particulars of further fiscal stimulus and the impact on State & Local government spending

  • What will happen to COVID-19 case counts in NYC over the next six months. With so many returning in the fall it seems inevitable that cases will rise, but by how much and what will be the reaction?

  • If schools will re-open and if they do for how long

  • When we will actually hit the tipping point and return to some form of “normal”

  • How much lasting damage will persist in the NYC economy

With economic activity in Manhattan down according to various measures by 40% - 50%, here is what I would do if I owned a business:

  • Figure out immediately if I am breaking even or making money. If I was, I would be over the moon that I have a bullet-proof business model and figured out what to do not only to survive but thrive when the economy recovers

  • Otherwise, if I hadn’t already, I would “permanently” close and conserve as capital as much. There are too many unknowns and it’s not worth it to throw more money at the issue

I suspect this thinking is pervasive at the moment. I’ve heard a lot about all of the businesses that have closed “permanently” and each saddens me, but forever is a long time. With retail vacancy rates spiking, one can assume in six months there will be many locations available and business owners will have strong leverage over landlords to lock in a lease on generous terms — perhaps even the location where they had previously operated. It would not surprise me to see many chains re-open at higher density and to see many “reincarnations” of independent concepts that have closed.

Remember, it’s never as bad as you think when things are bad and never as good as you think when things are good. I hope I’m wrong, but I suspect as bad as things are now, they will recover much faster and aggressively when NYC reopens as presently believed.