5 reasons to save our local businesses NOW

I though a lot before writing this article. Maybe it was too off-topic. However, it goes completely in line with what we do at Colligere. To help this specific part of the population will trigger the recover to everyone else. So here i list 5 reasons to save our local businesses NOW. Not after the Coronavirus epidemic crisis or just when things got better, but now.

“In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using exactly the same logic . For there is no such thing as a failed soldier, dead or alive —likewise, there is no such thing as a failed entrepreneur”

Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

5 reasons to save our local businesses NOW

1 – All sorts of business are in trouble. But local, small business are the most fragile.

The thing that separates a company from bankruptcy can be resumed in one expression: Cash flow.

If a firm don’t have cash flow and the bank account goes dry, they cannot pay their obligations and suppliers can execute them. This process has some variations between countries but the basic steps are similar in the western world.

Why big corporations have a smaller risk during this crisis?

Even though their cash flow also drops or even stops during a crisis, huge companies have plenty of bank credit lines available. So when things go bad, it is easy for them to access money and keep running their operations.

Small companies don’t have such easy access to credit, or if they have, it is just too expensive.

There are exceptions (small companies with big credit lines and corporations without), but as a rule of thumb, this difficult access to money makes small business much more fragile

2 – The lion’s share of governmental help will go to massive corporations, not to small entrepreneurs.

Big firms can afford entire teams of lawyers and accountants to prepare documentations and cases with the sole target of accessing relief funds from governments.

Meanwhile, in small business, sometimes this is done by the owner or some non-specialized employee. They don’t have the same knowledge (or contacts) of a famous law firm, so they eventually end with the breadcrumbs of all those billions that governments, everywhere, are investing to save companies and jobs.

3 – We must avoid a world like the one of the movie Demolition Man

In 1993, Sylvester Stallone and Wesley Snipes starred a classic movie where they confronted each other in a high-tech future. There, the fast-food chain Taco Bell took over all other restaurants. As the female character starred by Sandra Bullock explains to Stallone in a classic scene, now all restaurants are Taco Bell.

Before I wrote about big corporations having easier access to credit and government money to survive during the crisis. Many of those gigantic companies can use the governmental money (which is your money) to later take over the small businesses that didn’t have the same privilege. Something similar already happened in 2008. Bigger market concentration, less quality of services for you.

4 – More meaningful jobs

I write this item as someone that worked both in multinational corporations and in local businesses.

When you work in a smaller firm, the effects of your efforts are way more visible. You see it advancing, people around talk to you about it and ask questions that you know how to answer.

The same cannot be said in most corporations, if you get enclosed in a cubicle doing very specialized tasks, with an effect in the final product very difficult to distinguish.

It is much easier to be proud of your work when you see your contributions making the difference. You don’t see yourself only as another gear in the machine.

5 – Local Business more often procure their supplies in the local community

Let´s think about restaurants and food-chains.

Mcdonalds, Burger King and alikes buy what they need using large and long-term contracts, generally made with other colossal corporations (like when they buy meat from food-industry behemoths like Marfrig or JBS).

Meanwhile, the local restaurant will procure fresh vegetables in the nearby market, and buy meat with the local butcher. So if this small restaurant goes bankrupt, soon the butcher, the vegetable stand or the laundry that washes their table cloths will all be in trouble.

By supporting the local restaurant instead of the chain restaurant, the local hotel instead of the chain hotel, etc. you are actually supporting your entire environment to cross this difficult moment together.

Just like with the supplies, local firms let a good part of their profits in the neighbourhood.

When you stay in a chain hotel like Ibis or Marriot, a small part of what you pay (aprox. 4%) is profit for the company itself and it’s shareholders. Part of this profit is remitted to some billionaire in his yatch at Seychelles (or some other paradisiac island).

When you reserve an independent hotel, the profit goes to a retired couple, so they can buy a new car in the local dealer. Money stays in the neighbourhood.

Ok, you gave me 5 reasons to save our local businesses now.

So how can we help local business to overcome the Coronavirus Crisis?

Some suggestions are:

1 – Order delivery food from your local restaurant.

2 – Instead of Starbucks, goes to your local coffee-shop. Here in Warsaw, after discovering a small and charming local cafe called Cafe Charlie, I stopped visiting chains like Costa Cafe. It tastes better, and it feels better.

3 – Book a local hotel or hostel when travelling. More important: Book direct with them instead of using websites like Booking.com. Those sites take 15% of the reservation for them and have some very questionable practices against small hotels.

4 – Do good reviews of the local places that you enjoy! In Google, Yelp, or Tripadvisor. As a Hostel owner, i lack words to explain how a good review makes my day better.

5 – Spread the word, share this article and soon we leave that behind. It will pass.

Author: Levi Borba, founder of Colligere Expat Consultancy, former RM specialist for the world´s greatest airline,  co-founder of Nearby Airport Hostel Warsaw and author of the book Moving Out, Living Abroad and Keeping Your Sanity.