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California Small Business and the Global Economy

Sept. 17, 2020 | Daron Woods '20

On Aug. 27, 2020, the Center for Commerce and Diplomacy (CCD) hosted a webinar titled “California Small Business and the Global Economy” to bring together leading minds from the policy sphere and the private sector. Participants discussed the magnitude of the challenges facing small businesses in the state, as well as current and future policies and practices to help small businesses navigate this challenging time.

The COVID-19 pandemic and the global policy responses to the crisis have shocked economies all around the world, and the small business landscape in California has been significantly impacted by the crisis with 37 percent of all jobs in California at risk. While some large companies like Amazon and Target have seen increased demand for their services and increasing valuations, small businesses, which make up 99 percent of firms in California, have been hit hard.

Our first guest speaker, McKinsey Partner Jeff Berg, assessed the macroeconomic impacts of the public health crisis to give webinar attendees the big picture. Berg then presented surveys that captured the sentiments of business leaders with regard to their expectations around the ability of the U.S. to manage the public health crisis, and what the results of those efforts would be.

Most business leaders expect partially effective measures to mitigate the pandemic, with a generally positive response but with continued regional disruptions due to localized coronavirus outbreaks. Additionally, the full recovery timeline is highly dependent on sector with some sectors recovering in next six to 12 months (e.g., healthcare and social assistance) while others potentially taking upwards of the next 4-5 years to reach pre-COVID GDP contribution levels (e.g., arts, entertainment, accommodation and recreation).

McKinsey Partner Sheldon Lyn spoke about the challenges that small and medium-sized businesses (SMBs) reported as most pressing, and the pandemic-related risks to employment in various sectors in the U.S., in California, and in San Diego. Using results from McKinsey’s SMB Financial Pulse Survey, Lyn indicated that SMBs have identified the lack of customers, uncertainty about when customers might return, uncertainty surrounding mandated business closures, supply chain issues and employee concerns about workplace safety as the top challenges that they currently face.

Lyn also shared analytics on jobs most vulnerable to the effects of the pandemic – i.e., those jobs most at risk to be furloughed, laid-off or otherwise unproductive such as those kept on payroll but not working during periods of high social distancing. The analytics suggested as many as 6.5 million jobs in California could be at risk with 2.4 million of these being in SMBs. A large share of these jobs are in hard-hit sectors with heavy SMB penetration, including accommodation, foodservice and retail.

Isabel Guzman, director of the Office of the Small Business Advocate in the California Governor’s Office discussed the various small business support policies currently deployed in California to provide assistance during the crisis. These include programs like Shop Safe, Shop Local that provides small businesses with Personal Protective Equipment and other assistance to promote safe in person activity, along with the Disaster Relief Loan Guarantee Program to help pandemic-impacted small businesses in disadvantaged areas access capital. 

On the local policy side, World Trade Center San Diego Executive Director Nikia Clarke expounded on the challenges that small regional firms are facing in pursuing export driven growth strategies, importing goods and components for their products and accessing capital to invest in their businesses. Clarke also mentioned various business support and development initiatives underway at the World Trade Center, such as the MetroConnect program that helps small and medium sized businesses access global markets and the Advancing San Diego program that subsidizes internships for small businesses. 

Numerous resources for small businesses were mentioned during the panel discussion. Some of these resources are below.

Statewide Resources from the California Governor’s Office of the Small Business Advocate

General California Business Development Resources

Shop Safe, Shop Local Program - PPE Grants, Free Reopening Consulting, and More

California Small Business Assistance Programs

Coronavirus Resource Portal for California Small Businesses

Coronavirus Disaster Relief Loan Guarantee Program

Regional Resources from the World Trade Center San Diego 

Reopening Guidance for San Diego Small Businesses

Reopening Resource Portal for San Diego

MetroConnect - International Sales Accelerator and Export Support Services

Advancing San Diego - Subsidized Internships for Small Businesses