Editor’s Note: This conversation is part of our “Future State Of” series. It has been edited for length and clarity.
The impact of COVID-19 on America’s small businesses has been nothing short of catastrophic. To put the situation into context, Yelp recently released data indicating that some 60,000 local businesses closed for good between March 1 and July 25 of this year. Small businesses are at the heart of this country’s economy, so for America to recover effectively, local businesses must find ways to revive and rebound.
Taher Behbehani, GM and SVP of Samsung B2B, sits down with David Rabkin, Executive Vice President and General Manager of U.S. Small and Midsized Enterprises at American Express, to discuss the biggest challenges facing small businesses and some of the ways in which this crucial sector can come back strong.
Taher Behbehani: David, thank you for joining today. It’s really a pleasure to reconnect with a dear friend and a prior colleague. We have had the opportunity to speak with many different industry leaders from different industry segments for this series, but I think where you are has a very intimate sort of knowledge of what’s happening in the business environment, especially with small businesses. Can you share some of the observations you’ve had through data and what you saw when the COVID emergency began and how it has evolved in the past few months?
David Rabkin: Thanks so much for having me. It’s a pleasure. I lead a segment called U.S. SME, which really serves, on behalf of American Express, small and midsized businesses throughout the United States. And so we’ve had a front-row seat to what’s been going on, and it has been astonishing to see a couple of things. Number one, the steep decline of business spending in the middle of March was something that I don’t think any of us have ever seen before. What was really unusual this time though, was not just the precipitous drop, but the quick rebound — not to the levels of pre-COVID, but the very quick rebound over the period of six to eight weeks of a real chunk of people’s economic activity. And while it didn’t go back up immediately, we’re at a point now where spending on things that are not travel- and entertainment-related is really right about where it was pre-COVID. And that’s amazing.
Emerging changes from the pandemic era
But we’ve also been able to see tremendous pivots from the small business sector, and so many of our business customers have started to do things that were, if not entirely different than what they were before, either adjacent, or an evolution of their business models. It’s really been quite striking.
TB: Do you see a share shift in terms of wallet — what they’re spending more on, and what they’re spending less on?
DR: The first thing, which is relatively straightforward, is they’re just not traveling, and so that has been the thing that has been astonishing to watch in numbers. People are literally not flying much at all. They’re beginning to fly a little bit again; we hope that continues. We know the airlines are doing a terrific job of creating a clean and safe product, but we’re not seeing those numbers come back as quickly as one would like. Hotels are coming back a little bit more quickly. Dining is starting to happen more; although, while so many people are working from home, we’re not seeing people do the business entertaining as before COVID.
But we are seeing them investing in things to grow their businesses. We’re even seeing people, whether it be schools, nonprofits or even restaurants, that are investing in renovations and construction projects on their own businesses because they’re in it for the long haul.
TB: If I’m a small business, where would I go to get additional funding to grow my business? Would I go to a bank? Would I come to an American Express? Are there alternative offers?
DR: People with good credit histories and certainly people with cash on hand are able to go to many financial institutions, including ours, to tap those lines of working capital. But I would encourage small businesses to continue to look for the traditional sources of capital that they had before.
We think if you’re a small business today, there are a lot of opportunities. And what we also remember very vividly is that in 2008, 2009, which was really much more of a financially driven crisis, new business formation was at tremendous levels. And some of our most exciting companies around today, certainly in the growing technology space, were founded out of that opportunity. So, we’re seeing a lot of people who are looking to create new and different ideas, either on the backs of their existing businesses or in the form of new businesses entirely.
TB: That’s great. Let me shift and go a bit deeper into the area that Samsung worked with on the businesses, which is really providing technology solutions to improve their business operations. Have you seen a shift in that category?
DR: Yeah, we’re seeing the same thing that you are. And we’re actually seeing it across the board. And it’s really people digging in, not just to the hardware and software, but into tools and capabilities, and in many cases, tools and capabilities they may have already had, but hadn’t used at the level that they’re using them today. One fact that I love to quote is that right now, 76 percent of small businesses say they’re relying more on digital tools than they ever had before.
TB: Small Business Saturday, it’s been incredible — for this country, for what it does as a social cause. Tell me what’s happening this year, given that it’s a very different year.
DR: We couldn’t be prouder to have been the genesis and a leader in this Small Business Saturday movement. It’s really wonderful to be able to connect with customers in smaller businesses and to remember that they really are the backbone of our economy and the backbone of employment. So, after more than a decade of Small Business Saturdays, it really has become a movement. What we’ve found is more and more of our partners, both large and small, are joining us and creating offers, not only on Small Business Saturday, but for a shop-small period that could extend far beyond that first Saturday post-Thanksgiving.
The thing that I would remind people this year, if you want to help, and I hope that you all do, is that small businesses aren’t just the storefront. We love the storefront. They create our neighborhoods; they play an essential role in our communities. But small businesses go far beyond the storefront, and even many of the storefronts that you see in your communities today also have digital presences.
TB: One of our missions is to help the small businesses. We’re very dedicated and focused on it. And it’s really a pleasure to work with your team to see how we can help even more.
DR: And we enjoy working with you as well. And we know that Samsung is like-minded in that support. We feel like this is a great moment for large corporations to take a look at their smaller brethren and see that we all depend on each other.
TB: Thank you for your partnership and thank you for your time.
DR: It’s been a pleasure. Thank you.
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