A small business that suffers damage or loss has plenty of options with regards to government assistance, lower-interest loans and tax breaks in order to try to recover some of the financial loss. However, some business owners may choose to shut down if the proper time and circumstances present themselves.
The Baltimore riots of 2015 left more than 200 businesses damaged, including a CVS pharmacy that burned to the ground. One small business, a liquor store and bar, had its inventory stolen, cash taken and windows smashed. The proprietor has yet to decide whether or not he will re-open the establishment. First, he has to clean up shattered glass everywhere.
In order to repair the building and order more supplies, the small business owner may take on more debt and owe higher insurance premiums. An insurance policy may cover some of the expenses, but not necessarily all of them. Over the long term, added costs mean higher prices passed along to consumers, a business model that may not be sustainable for some owners.
Many of the small business owners in neighborhoods hit by looters already faced tough conditions before the Baltimore riots. Many buildings were already abandoned. Korean-American retailers became targets of crime in poor areas. The quality of products, services and food suffered as a result.
The burned-out CVS store plans to rebuild, but that franchise has the backing of a multibillion-dollar corporation. A neighborhood business, which represents the economic lifeblood of many communities, may not have the resources to rebuild after a tumultuous event. The Small Business Administration may issue low-interest loans for owners up to $2 million at 4 percent interest. Even with the loans, small retailers may not generate cash flow quickly enough to pay off new debts. Some businesses would rather have grants instead of loans, but those sources of money may need to come from private or nonprofit groups rather than from the government or banks.
Opening a business in an area with a stigma for violence could raise insurance premiums. Some neighborhoods in other riot-torn cities such as Detroit, Washington, and Newark, New Jersey, have yet to recover fully, even from race riots in the 1960s. Some retailers may decide to leave and rebuild elsewhere rather than re-open a damaged storefront.
Owners have several factors to consider when they decide to close a business or keep it open after a calamity. A proprietor may believe too much money was lost and the debt burden is too much. Businesses may have lost market share to other retailers. Costs may have escalated too high, especially for more employees. Most of these types of establishments remain small for 10 years. Either a business grows bigger, stays successful at current levels or closes.
A small business owner can get government help in emergencies, but the negative effects remain long after any rioters leave the store alone. Proprietors must rely on multiple sources, both public and private, in order to make informed decisions moving forward.
Photo courtesy of pakorn at FreeDigitalPhots.net
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