2020 has presented unexpected challenges to Main Street entrepreneurs. With Honeycomb, an investment crowdfunding platform, you have the ability to invest in small businesses while adding a new asset class to your portfolio.
For as little as $100, you can invest in Main Street businesses across the country and help power the small businesses that make your neighborhoods great. In this article, we’ll talk about the importance of putting our dollars to work locally, what Small Business Saturday is, and introduce you to small business investing.
What’s Small Business Saturday?
Most people are familiar with Black Friday or Cyber Monday, shopping holidays where big brands offer deep discounts and consumer activity typically reaches annual highs. But there’s another shopping holiday that should be on your radar -- Small Business Saturday. On Small Business Saturday you can expect many of your favorite local restaurants and retailers to host special events, offer discounts, or launch new products. This is the one day of the year where local businesses are in the spotlight.
But Small Business Saturday is not just about spending your dollars on Main Street. It’s also a time to intentionally support your local economy. According to American Express, Small Business Saturday in 2019 generated $19.6B in small business sales. For every dollar spent at a small business in the U.S., approximately 67 cents stays in the local community, compared to the 45 cents or less when spending at a big box store. This means that shopping small pays local wages, generates local tax revenue, and empowers local businesses to buy local themselves!
And in 2020, Small Business Saturday is more important than ever. According to a recent survey by the National Federation of Independent Business, one in five small businesses say they will have to close their doors if economic conditions don’t change. The pandemic and the resulting economic slowdown mean that our joint consumer behavior can spell the difference between our local businesses staying open or closing permanently. This 2020, we need to shop local like our community depends on it.
But that’s not all. Local businesses need capital. At the start of the pandemic, programs such as the Payment Protection Program (PPP) and EIDL (Economic Injury Disaster Loan) helped some businesses keep workers on payroll and shift operations. Now nearly six months after these programs launched, about 84% of businesses report that they have exhausted their PPP funds. With no future federal small businesses stimulus plan in sight, it’s going to take more than an amazing Small Business Saturday shopping spree to keep businesses afloat.
The picture is even more dire for minority and women-owned businesses. Ashley Harrington, senior policy counsel at the Center for Responsible Lending, drew a direct correlation between having a banking relationship and having an advantage in the PPP approval process. Unfortunately, because women and minority-owned businesses were less likely to have an established business banking relationship, they were disproportionately left out of relief efforts. In early April, CBS News reported that experts estimated that up to 90% of minority and women business owners were at risk of being shut out of the Paycheck Protection Program given its underlying requirements.
With no federal loan programs in sight and big banks tightening their lending criteria, we’re going to need a new approach to keeping our community businesses financially healthy. We’ll need to become the lenders ourselves.
Bridging the gap by investing in local businesses
This Small Business Saturday we’ll need to rethink our role in the community as not just consumers, but as investors. According to a recent Gallup poll, 55% of Americans own stocks, many in the form of retirement plans. If we were to look into those portfolios, it wouldn’t be a surprise to learn that they hold large companies from all over the world but almost no Main Street businesses. Even though more consumers than ever are consciously shopping small and local, many investment portfolios are putting money to work in large and faraway companies.
If we want our Main Street to survive this pandemic, we need to put our investment dollars to work locally. Investment crowdfunding, the opportunity to make small investments alongside your community in a business, has started to gain popularity.
Here at Honeycomb, we’ve created a community crowdfunding investment platform that focuses on allowing everyday people to lend money to their favorite local businesses. Over a hundred businesses and thousands of investors have used the platform to expand or sustain local businesses. While big banks have struggled to support local businesses, community members come together on our platform to invest in breweries, invest in restaurants, invest in black-owned businesses, or invest in women-owned businesses.
This Small Business Saturday, we know you’ll be shopping with your community in mind. We’d be thrilled to help you invest with a similar mindset.
Learn more about creating a free Honeycomb investments account just in time for Small Business Saturday here.