5 ways to support small business to ‘build back better’

Monika Mathews cut the ribbon on QueenCare’s new Seattle location at 23rd Avenue South and South Jackson Street surrounded by community members and customers cheering the audacity of opening a new business in the midst of a pandemic. Her eyes sparkled over her mask.

To launch her skin-care business, she not only overcame the challenges that every entrepreneur faces. As a Black, female business owner, she also overcame systemic inequities that hinder success for women and minority owned businesses — all in the midst of the COVID-19 pandemic. Washington needs more entrepreneurs like Matthews.

In Washington state, small businesses account for more than half the state’s private employment. Nearly a third of all small businesses are minority owned. These very businesses were the hardest hit by the pandemic-induced recession. As a result, unemployment rates, during their peak over the summer, were highest among women, and in communities with large immigrant and minority populations. And small businesses, the most diverse category of business ownership, have suffered the highest percentage of permanent closures.

To truly address the economic fallout from COVID-19, we need to focus on the hardest hit communities and businesses. From our experience as a Port of Seattle commissioner and the executive director of a nonprofit that supports entrepreneurs with limited means, we have seen firsthand the impacts on our clients, partners and neighbors, and we’ve also heard from entrepreneurs how Mathews’ experience could serve as a road map for an equitable, enduring recovery.

Five major obstacles deter would-be entrepreneurs from even getting started. When housing, child care and health care demand too much of your time and energy, who can write a business plan or find financial backers? If the first step toward an equitable recovery starts with supporting small businesses, then we need to address the basic needs and challenges that siphon time and resources away from growing a small business.  

∙ Child care. Mothers bear the responsibility for early child rearing disproportionately, forcing many female entrepreneurs to give up their businesses for lack of child care. State and local governments could reduce the child care business regulatory burden (easily one of the most heavily regulated segments), expand programs that nurture in-home child care offerings, create tax incentives that lower the costs of operating child care centers and expand low- or no-cost early childhood education.

∙ Health care. An ounce of prevention is worth a pound of cure, and nowhere is that truer than health care. Great strides have been made through the federal Affordable Care Act and Washington’s Apple Health to ensure every Washingtonian has access to affordable, quality coverage. But gig workers and small businesses fall into wide gaps. Tying health care benefits to our employers deters entrepreneurship, risk-taking and innovation, especially for a would-be entrepreneur who is the sole provider of benefits for a family. Portable medical, dental, vision and pension benefits, that migrate with the individual regardless of where they work, are a potential solution to fill the gaps.

∙ Residential and commercial rent relief. With nearly a quarter million Washington households at risk of eviction once the moratorium expires and many small businesses unable to open their doors due to public health restrictions, tenants need relief. Rent relief programs can’t simply be rent forgiveness, but a combination of tenant supports, forbearance incentives and tax breaks, since many landlords are also in precarious financial circumstances.

∙ Regulations. Small businesses expend a greater proportion of their time and money on regulatory and tax compliance than large businesses. Whether you have one employee or 1,000, you still need to file local, state and federal tax returns, renew your licenses, adhere to all relevant labor laws, and stay on top of any changes to these regulatory regimes. In our work with truly small businesses, these compliance burdens are far and away the most vexing challenge our entrepreneurs face. We need to streamline the most burdensome regulations. We also need to expand navigation and startup supports for early entrepreneurs. For example, providing pro bono bookkeeping services during a small business’ first year could ensure that first time business owners both learn how to complete financial reporting requirements and also reduce the need for punitive enforcement after the fact.

∙ Capital. Providing small business owners with grants to lower the barrier to hiring their first employee or for opening a business in an economically depressed area can kick off a virtuous cycle of expanding revenues and increased employment. In addition, backstopping banks and credit unions that take the risk of lending to a startup will unlock the seed capital that many entrepreneurs need to build out their restaurant, purchase production equipment or buy a delivery van.

An economic recovery plan centered on small business pays for itself through greater employment, business revenue and tax receipts. It also benefits rural and urban communities alike. As we emerged from the last recession, the economic recovery plan emphasized big business, in particular an $8.7 billion tax break for Boeing in exchange for a commitment to keep manufacturing in the state. Unfortunately, focusing on big business put all our eggs in one basket. The demise of the tax break in early 2020 that came about from an international trade dispute with the World Trade Organization and European Union meant that Boeing ended up relocating more jobs to South Carolina anyway.

This time around, we should think small. Monika Mathews has all the qualities of a successful entrepreneur, and now we need to make sure that we provide her, and small businesses across Washington, with fertile ground to grow her business.