If we can find any positive in this pandemic it would be the outpouring of support for local businesses. One of the first things I learned in college was that 90% of the USA Economy was small businesses. Of course, the number is probably different now as that lecture was 20 years ago, but the point is still the same: Small businesses drive our economy. However, we must dig deeper because the landscape of the small business has changed.
Restaurants need help and there has been a major push to support them in our area. However, I have seen negativity toward franchises and we need to be careful here. Sure, there are “mom and pop” restaurants that are obviously local, but some large franchises are owned by locals as well. We must remember that many franchises allow locals (franchisees) to buy and place restaurants in their communities. The sign may say McDonald’s and the company helps, but the restaurant is the franchisee’s small business.
In my business, I am the sole-proprietor, but a national firm handles my investment advisory services. Because of all the regulations in the industry, my business would not survive without their help. Our accounts also use outside custodians, like Fidelity. When you see a Fidelity advertisement, instead of saying, “They’re huge, they don’t need my money,” remember your account may be helping a local business like mine.
I believe we should keep this perspective after the pandemic and our discretionary income returns to our economy. Economics is a beautiful thing because it shows how all things are related. It’s easy to see how not dining out can hurt a restaurant, but let’s go further.
We go to a movie, pay for a ticket, then buy popcorn, right? Do you sneak food into a theatre? We shouldn’t do that because the popcorn matters! Have you ever noticed movie ticket prices vary by city? This is because each population has a different equilibrium price that a reasonable person will pay to attend a show. In an area with a lower cost of living, the theatre can only charge a little over the fees paid to show the film, so their profit is made on snacks. If we take that away, the theatre owner must charge more for the tickets, so they can pay their staff and keep the theatre open. As with restaurants, the theatre relies on support from the local population.
We are not required to buy snacks at the movies; our theatre even gives the kid’s meals to adults if you ask. When you bring food in, it’s insulting to the theatre owner. Would we go to any other small business, use their service and just leave without paying? How would we react if our boss said they didn’t feel like paying us today?
The Golden Rule goes a long way in our world and we should treat others like we want to be treated in everything we do. All of our actions (and purchases) matter.