Imagining A New World

Covid-19 & The Small Business Owner

Finding a place in the new normal

A new study by Cake & Arrow, a research and design firm focused on innovations in customer experience, considers the pandemic’s present and future effect on the American workforce. Excerpts presented here. Access the full report.

Covid-19 has shaken our economy, our society, and our individual lives to the core. The nationwide shutdown has left millions of businesses shuttered, more than 150,000 dead and tens of millions unemployed. As states have slowly started reopening amidst the continuing spread of the virus, it has become clear that a return to a pre-pandemic sense of normalcy will not happen anytime soon, if ever.

The impact will be long-lasting and far reaching. It may fundamentally change the way we live and operate, creating a “new normal,” less predictable than the one we knew, in which individuals, businesses, and the government will need to make peace with uncertainty and a continued state of flux as we continue to grapple with what life amidst pandemic looks like.

When Your Business Is Your Life

While the pandemic has left no group of people completely untouched, some have felt the impact more acutely than others, and for many the pandemic has threatened their lives, their livelihood and way of life. Nearly everyone has, to some extent, experienced the strain of what happens when the professional spills over into the personal, and perhaps this is no more true than for small business owners, for whom their businesses are their lives. In fact small businesses have been among the hardest hit by the pandemic. More than a hundred thousand businesses (and counting) have already closed, and some predict that between 25 and 36 percent of all small businesses could close permanently, just as a result of the disruption of the first four months of the pandemic

We also know that while politicians have long paid lip service to “Main Street over Wall Street,” small businesses, which are indeed at the heart of the American economy, employ- ing over 60 million people, often end up with the short end of the stick when it comes to government and institutional support. After the 2008 crisis for example, it was found that a post-crisis decline in bank lending was far more severe for small businesses, declining by almost twice the rate than for large and medium sized businesses (Cole, 2012), and that the Obama-Era Small Business Lending Fund money intended to shore up small businesses facing a lending crisis was used by banks not lend to small businesses as intended, but rather to repay bailouts (only $4 billion of the $30 billion carved out actually went to small businesses).

Small businesses faced a similar fate with the CARES Act, the most recent stimulus package, when banks came under fire after the first round of loans were distributed for favoring bigger publicly-owned businesses like Shake Shack and Ruth’s Chris Steakhouse, while leaving smaller businesses in more dire need with nothing (Biers, 2020). A recent survey of small business owners found that 84% believe America’s leaders favor big business over small business (Small Businesses for America’s Future, 2020).

Understanding The Experience Of Small Business Owners

Building empathy to inspire action

Using what we learned through our conversations with small business owners for our research, we developed a framework for understanding the vary- ing experience and mindsets of small business owners amidst Covid and for identifying key challenges and emerging opportunities for how they can be better supported amidst this crisis and beyond.

Rather than focusing on the more obvious characteristics of a business—such as size or industry—our framework is based upon the mindsets and motivations of the business owners we spoke with, revealing more nuanced and personal truths about the owners of small businesses.

How they relate to their business

We found that the small business owners we spoke with all had different reasons and motivations for going into business for them- selves. While some were more motivated by a sense of mission or purpose in their work, others tended to be driven more by success and results. Similarly, among those we spoke with, some were more oriented toward their profession—they were perhaps dentists or artists or practitioners of a trade, while some were more oriented toward their community—finding their identity not in their particular line of work, but within the places where they live and work.

The Professional

Who they are
Trained in a highly professionalized trade, possibly a medical field, these small business owners are highly educated, disciplined, confident, and self-sufficient. They tend to be high achievers who may have attended top tier universities and can sometimes be somewhat single-minded. Pragmatic and practical, they are able to make tough decisions for their businesses, and tend not to let emotions and sentimentality get in the way.

What matters most
As professionals and high achievers, they care deeply about their professional reputations, upon which the success of their businesses depend. They not only want to be at the top of their professional field, but want their business- es to be seen as modern, well-run, efficient, and highly professional. They are ready and willing to make personal sacrifices to ensure the success and ongoing reputation of themselves as professionals and of their businesses.

 Covid Experience

While these business owners may have had a closer eye on how the virus was playing out com- pared to others, the complete economic shutdown came as a sudden shock. While some were forced to shut down their businesses entirely, others were deemed essential and were allowed to continue operating. And while many could technically stay open, they were ill-prepared to do so and needed time to adjust their operations to meet safety standards and often lacked the clientele and the staff to make staying open worthwhile or even possible. Being the driven and enterprising people they are, they were first in line to secure PPP loans and funding and they used the extra unexpected time to plan, adjust operations, and execute changes to their businesses that they had planning for or been putting off.


These business owners tend to thrive in situations where there are clear rules, procedures, and guidelines to follow. Covid-19 has presented a unique challenge in that regard, especially to those working in a medical field. Many complained of issues related to:

  • Accessing essential programs and information
  • Negotiating new standards & restrictions
  • Dependence on low-wage staff who were making more money on unemployment Client wariness, attrition
  • Client wariness, attrition

Looking Forward

For these professionals, the biggest challenge is adjusting the business model to match the economics of the “new normal.” For many, their business model is built on protecting the credentialed person’s time, a model which relies on low-wage staff to perform lower-skilled tasks. Given that this lower-skilled work has suddenly become riskier, and that social distancing requires a less crowded workspace, the economics of this model no longer make sense. How can these business owners stay safe, compliant, sane and solvent in the new normal?

The Creative

Who they are
Both creative and entrepreneur, these business owners went into business for themselves because they didn’t like working for other people. They often work within a creative industry—the arts, music, design or fashion and have non-traditional educations, holding art degrees or no degree at all. They can be defined by their idiosyncrasies: they may be workaholics, have a high tolerance for risk, and may be inclined to work at odd hours when they feel the most productive or inspired.

Covid Experience

As it became apparent that Covid-19 was a real thing in the U.S and businesses would be affected, these business owners first went through a period of denial before deciding to take definitive action. Depending on their industry, some were able to quickly and easily transition to remote work, but for those whose businesses not only designed, but produced and manufactured goods, they had to find ways to manage this aspect of the business remotely, likely having to pause production for at least some period of time.

Many were forced to cancel travel plans, postpone installations or live events, put a hold on hiring, and explore new ways to collaborate remotely with colleagues and clients, although they were generally better equipped to do the later than other types of small business owners. Many saw sharp declines in new business opportunities and saw existing client work dry up, pause, or stop indefinitely. In response, they did things like freeze hiring and pay raises, cut contractors, and dig into the couch cushions to see where money was being wasted.


In imagining this new world, it presents us a society—including our government, our cities, and the private industries that drive our economy—with both opportunities and imperatives...

Conducting in-person work remotely. While for the most part these business owners are well set to do the bulk of their work remotely, there are aspects of their work that can be challenging to do from afar, and they have ran into a spectrum of different pain points as they’ve attempted to run their businesses remotely:

  • Waning morale, energy, and attention of employees
  • Networking and making in-roads with new business
  • Managing production and supply chains from afar

Looking Forward

For creatives, the biggest challenge they faced was related to new business and keeping a healthy pipeline. When Covid struck, many were already coming off of slow months after the holidays and were expecting business to pick up as they approached Q2. As businesses around the world managed the uncertainty in their own way—many by hunkering down, tightening spending and laying off workers—getting these same companies to commit to spending, especially on longer-term projects, was not easy.

And as the new projects coming in waned and existing client work dried up, the uncertainty of when and if business would ever pick up began to set in. How can these business owners continue bringing in new business in the midst of uncertainty?

The Influencer

Who they are
Disillusioned by their jobs in more corporate or institutional settings, these business owners have strong convictions and are driven by higher-order values like community or equality. They believe businesses should uphold these values and desire to do work that aligns with their values. They often have a background in the arts, non-profits, or the public sector—and may have been teachers, social workers, or art therapists.

 Covid Experience

Given that these small business owners tend to operate community spaces—venues, studios, and restaurants—the impact of Covid on their businesses was immediate and direct, with everyone we spoke to completely shutting down their business for at least some period of time. Some were able to quickly pivot their businesses online—teaching remote classes, holding instagram live events, curating online exhibitions, and of course for restaurants, doing take-out only—while others had more trouble translating their businesses into a digital context. Most of the influencers we spoke to were forced to layoff or furlough a significant number of their employees.

For business owners who often consider their employees family, this was especially distressing. Many went to great lengths to ensure their employees were taken care of, starting GoFundMes, applying for grants to cover employee salaries until unemployment kicked in, or forgoing their own salaries to keep people on payroll. Given the prominent role these business owners tend to play in their communities, many saw overwhelming support from customers and patrons donating money, buying takeout, paying for online classes and doing what they could to support these businesses.


Because the success of these businesses is so dependent on relationships they have built within their local communities—with their customers, their neighbors, their employees etc.—shutting down their businesses or even conducting their businesses digitally tended to weaken these ties, putting their businesses in jeopardy.

  • Taking care of furloughed or laid off staff, especially more vulnerable staff who may not be eligible for unemployment
  • Maintaining a meaningful connection with the community, customers, members, and patrons without the use of their physical space
  • Retaining customers when the “experience” of what they are selling or offering is diminished when experienced digitally

Looking Forward

For influencers, the biggest challenge they faced was figuring out how to stay solvent without compromising their values. Because for these businesses, mission and values tend to take precedence over profits, they often run on very thin margins and are willing to sacrifice success for the business if it means staying true to their values.

For some this meant not accepting donations, for others it meant paying their employees a living wage, and still for others this meant providing classes or services on a sliding scale to accommodate a diverse base of clients, customers, or members. The pandemic really tested the limits of this philosophy toward running a business and many of these business owners are faced with tough choices between compromising their values or keeping their businesses alive.

Business Owner

Who they are
Natural-born business owners, these individuals tend to be more passionate about owning a business than they are the particular business that they happen to be in. They see owning a business as a way of life and almost as a profession in and of itself. Their businesses tend to be less of a passion project and more of a means to an end and business owners like these tend to have deep roots within their communities.

Covid Experience

Owners of small local businesses, many of them retailers or restaurants, these business owners were forced to shutter their businesses for some period of time and scrambled to figure out how to conduct their operations according to state and local guidelines without too much disruption. Not always leading the most technically advanced operations before the pandemic, some ended up spinning up their first e-commerce store or learned new tech tools to help them offer their services digitally, things which their businesses could have long benefited from but they had been hesitant to invest in before the pandemic.

Being practical and competent, however, most were able to do so relatively quickly and make relatively seamless transitions—keeping their businesses going, at least for a time. Being well connected in their communities and having strong personal relationships with accountants, insurance agents, and other local business owners, they knew who to turn to for help, and were quick to get in line for PPP loans and other types of fund- ing.

And while for many of these business owners the future is still unknown, they aren’t afraid to make tough decisions if they need to make them. Many have laid off their entire staff, some have already shut down one or more of their business’s locations, while others are considering liquidating and starting something new entirely.


Lacking the resources, the capital, and the institutional support of larger businesses and competitors like them, these small business owners had to turn on a dime if they wanted to stay in businesses, doing more with significantly less. In doing so they struggled with:

  • Transitioning to running their businesses digitally without the technology and systems already in place
  • Securing PPP loans and funding, with larger businesses given preferential treatment by banks
  • Interpreting and adhering to convoluted government guidelines for safety and social distancing

Looking Forward

While small local businesses have been under threat by retail giants like Amazon and Walmart for years, the pandemic has only intensified the threat, with these large retailers being deemed essential businesses and having the resources and infrastructure already established to meet the soaring demand for online shopping, many of these small business owners struggled to refit their operations quickly enough to meet demand and comply with new health and safety requirements, and continue to lose business to large corporations.

Imagining A New World

In imagining this new world, it presents us a society—including our government, our cities, and the private industries that drive our economy—with both opportunities and imperatives. There are opportunities for private industry to support small businesses and their owners in their efforts to band together, to share resources and expertise, to negotiate. There are opportunities to provide them with easier access to to capital, trusted financial advice, and accurate regulatory guidance and support. But if these businesses are to survive there are also imperatives. Imperatives to restructure our economy in ways that provide equal opportunity to small and large businesses alike. Imperatives to continue to support small businesses as they reorient them- selves to life amidst the pandemic and beyond.

If we learned anything from this research, it is that small business owners are impassioned, industrious creative, out-of-the-box thinkers, who are, despite all the cards that are stacked against them, for these reasons resilient. For the businesses that don’t survive, they may re-emerge in some new incarnation, for those that do, they may bear little resemblance to the businesses they were before the pandemic. Either way, small businesses and their owners will likely require the support and assistance of private industry and government as they undergo these transformations.