How Increased Vaccinations Will Impact Your Small Business With more people getting vaccinated, small-business owners are wondering when things will get back to normal.
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When I speak with with small-business owners across a range of industries, we constantly find ourselves asking, "Will the vaccine restore the economy? Will it make things go back to normal?"
I'm not advising people on whether to get the vaccine or not. However, I feel it's important to discuss how vaccinations might affect entrepreneurs across the country and in different industries, and what they can expect moving forward.
But first, some data.
Correlation between vaccinations and the economy
While studies show that vaccines prevent millions of deaths annually worldwide, there exists an economic return on vaccinations. The Global Alliance for Vaccines and Immunizations (GAVI) estimates the annual economic return to be between 12% and 18%.
Throughout history, the economy has been improved thanks to vaccinations, as some diseases become reduced or nearly eradicated. The smallpox vaccine is estimated to have saved the world economy by $1.35 billion per year, and the polio vaccine has saved the world's governments $27 billion in treatment and rehabilitation costs.
More recently, researchers at the Penn Wharton Budget Model at the University of Pennsylvania found that doubling the pace of daily vaccinations to 3 million (about double its current level) would increase employment by 2 million jobs and gross domestic product by 1 percent by summer 2021.
Small businesses have long been known to serve as the lifeblood of the U.S. economy, creating two-thirds of net new jobs and driving U.S. innovation and competitiveness, according to the Small Business Administration. If an increase in vaccinations will lead to an increase in employment, it stands to reason that small businesses will be the biggest beneficiaries, as they would be the enterprises growing enough to warrant the hiring of new employees.
As part of President Biden's American Rescue Plan — and as an incentive to spur vaccinations —businesses with fewer than 500 employees can receive a tax credit of up to $511 per day for each employee taking time off to receive and recover from the vaccine. This is encouraging.
Impact of vaccinations on small businesses
Data about smallpox and polio vaccinations may mean little to folks struggling to figure out when customers will return. Further, the world was a different place when smallpox and polio were a threat to populations.
The whole idea of vaccinations is to reach "herd immunity," or a critical point when enough of a population is immune so as to stop the spread of the disease. Herd immunity may take years, though some regions may reach it faster than others.
Unfortunately, state and local governments have largely been dictating when and how businesses can remain open, which restricts foot traffic and ultimately revenues.
For businesses looking to plan ahead, it's always a good idea to consider short- and long-term funding options. The second-draw PPP expires May 31, and if a business doesn't qualify, several other opportunities exist.
Some industries may be slower to recover
Some areas or industries may return to normalcy faster than others. Understanding this can be helpful for small-business owners looking to plan ahead.
Central business districts will take a while to return to their pre-pandemic state. Corporate tenants have benefited by negotiating their leases or letting them lapse, increasing profitability. However, those negotiations and lapses have had the opposite effect on small businesses in and around central business districts. I've had to advise several entrepreneurs who normally served those business customers to pivot to new markets, such as delivery to other, outlying areas.
What about the travel industry?
Travel-related businesses, including businesses located in tourist-heavy areas, will also take time to return to pre-Covid levels. It's not that folks aren't traveling at all: Research from Airbnb indicates that Americans do want to travel but prefer to stay somewhere close to family or nearby.
This can mean that air travel will still take time to return to pre-pandemic levels, and small businesses that cater to tourists, such as ground transportation operators, cafes or local attractions, will need to wait much longer.
There has been much speculation about when the cruise industry is expected to reopen and passenger ships will set sail again. Between March 1 and July 10, 2020, the Centers for Disease Control and Prevention (CDC) discovered almost 3,000 cases of Covid-19 and 34 deaths across 123 ships.
However, at some point in 2021, cruising is poised to return, notes AARP. The CDC lifted its no-sail order in October and laid out new guidelines. While there will be mandates for shorter cruises (7 days maximum), temperature screenings and social distancing, it is unclear whether ships will require proof of Covid-19 vaccination before boarding. Vaccinations will be a requirement for crew members, but the rules are evolving because of the different health requirements of the countries of the ports at which the ships dock.
Perceptions and moving forward
Mass vaccinations are a way to restore confidence in public health and by default, the economy, but they're much more than that. It's about perception — perception of safety, perception of normalcy.
While I am making no judgment calls about the suitability or efficacy of the vaccine, or on people's decision to get vaccinated, it will take much more than herd immunity to restore the economy.
Nonetheless, it's a good start.