The coronavirus pandemic has changed the game for U.S. businesses, pushing forward yearslong shifts in workplaces, technology and buying habits — and forcing small businesses to fight just to survive.
Why it matters: These changes are providing an almost insurmountable advantage to big companies, which are positioned to come out of the recession stronger and with greater market share than ever.
What we're hearing: "There is no doubt that the longer this pandemic pulverizes this economy the main victims will be small and midsized companies," Bernard Baumohl, chief economist at The Economic Outlook Group, tells Axios.
- "We’re seeing the whole business landscape dramatically undergo massive changes and one part of this is how large companies with resources will take advantage of the troubles, the travails, the financial problems that some of the smaller companies have."
What to watch: Big companies, which have benefited far more from Congress and the Federal Reserve's coronavirus relief efforts, are expected to buy out or simply wait out smaller competitors.
The backstory: The Fed has provided nearly $3 trillion in liquidity since March to reopen credit and financial markets, and corporate titans like Apple, ExxonMobil and United Airlines have taken advantage, borrowing a record amount of money at rock bottom rates.
- The lone lifeline for small businesses has been the Payroll Protection Program, which economists have found to be inefficient, ineffective and insufficient, largely excluding the businesses most in need of assistance.
- In particular, businesses with Black, women and immigrant owners have disproportionately been shuttered because of the virus.
By the numbers: A recent survey by the National Federation of Independent Business found that 23% of small businesses would be able to operate under current economic conditions for no more than six months. Another 21% said no more than a year.
- "It’s a bleak picture," Holly Wade, NFIB's director of research and policy analysis, tells Axios. "It’s terrible."
What's next: U.S. companies are making major investments in supply chain relocations out of Asia and closer to home, as well as artificial intelligence and robotics and re-skilling workforces to operate remotely and autonomously, Mohamed Kande, U.S. and global advisory leader at PwC, tells Axios.
The bottom line: "That will be a tough environment" for small businesses, Kande says.
- "What happens when you have changes like that is you start to see a wave of consolidation. It’s hard for small companies to survive because they don’t have the balance sheets, they don’t have the capital to sustain a crisis for a long time."