By any measure, 2020 was a tumultuous, challenging time. Who would have guessed last January that by March, we would be facing a global pandemic that sent the economy into a spiral of uncertainty and caused millions of Americans to seek the safety and security of their own homes, surrounded by cases of toilet paper and hand sanitizer?
It’s easy to think that our world has changed forever and that somehow we will all be different when we reach the other side of this pandemic. But history has clearly shown time and time again that this just isn’t so. We are creatures of habit with famously short memories. Once we feel safe from the ravages of COVID, we will most likely not only return to our old routines but do so with unbridled enthusiasm and reckless abandon.
A quick look back.
Such was the case in the wake of the 1918 Spanish Flu. If you open your history books to page 138, you’ll see that World War I and the pandemic were followed by almost a decade of celebration and prosperity, a period that came to be known as the Roaring 20s.
There is a strong possibility that history will repeat itself and that we will experience our own Roaring 20s in the coming years. But since that name is already part of history, I’m going to dub this recovery the “Soaring 20s.”
If you recall, the economy was booming before COVID struck. When the pandemic took hold, our economy began to take an uneven hit. Some sectors – hospitality, tourism and aerospace – suffered huge losses almost immediately. Others – technology, life science and clean energy sectors – weren’t hit as hard, if at all. Throughout 2020, the bones of Washington’s economy have remained relatively strong, thanks largely to our highly diversified economy that doesn’t hang its hat on a single industry.
Recover and rejoice.
As the Spanish Flu spread in 1918 and 1919, killing more than 675,000 Americans, it was hard for anyone to imagine they would ever be able to listen to live music, go to the theater or have drinks with friends in a bar again. But that’s precisely what happened in the years that followed. People were more determined than ever to celebrate and reconnect with others. Restaurants and bars were overflowing. Jazz became the soundtrack of the period, and innovation and optimism flourished in abundance.
As we turn the corner on this pandemic, we will probably be just like our ancestors, who have struggled against adversity time and again, from world wars and famine to killer plagues. We will overcome the pandemic and economic uncertainty, we will emerge on the other side in the next year or so, and we will once again pick up the pieces, rebuild and restart. It is part of who we are and part of what makes Washington so unique – the tenacity and resiliency of its residents.
Full speed ahead…
So what does this mean for small businesses and how can they come roaring back in the 2020s?
First, businesses today have a technological advantage over those in the 1920s. Thanks to cloud computing, open-source libraries, advanced manufacturing technologies, e-commerce, artificial intelligence, and SaaS subscription models, small businesses can access sophisticated tools that not so long ago, only billion-dollar companies could afford. These can quickly level the competitive playing field without the historical need to build to scale in terms of workers and capital.
Near term, there will be an increased focus on domestic production. This creates opportunities for small businesses to join new supply chains, especially if they can adapt to the new tools and technologies available to them.
Travel and tourism should come roaring back in the next two years, along with the desire to dine out and enjoy drinks with friends in a social setting. Those who figure out the missing link – access to capital – will be able to reopen or start fresh to meet the rapid increase in demand for entertainment and escapism. Landlords and developers will welcome entrepreneurs to fill spaces left empty by failed enterprises, and in some places, speculative development of retail and commercial space.
Startups should find office space more affordable. The pandemic may have permanently shifted workers away from large office buildings, and improvements in Internet connectivity may allow workers to work where they live rather than live where they work. In a recent KPMG survey, 69% of CEOs said they were looking to downsize their company’s footprint post-pandemic.
Even so, there will still be a need, and perhaps even a desire, to work in group settings again. No matter how good the technology is, virtual meetings can’t fully replace the give and take that occurs across a conference table or the random creativity that takes place when someone drops into your office unexpectedly to chat.
Retail spaces may become smaller or house more than one business because actual production – whether it’s a bakery, laundry, dry cleaner or café – can be performed in a shared industrial space in a cheaper part of town or out in the suburbs.
Work anywhere, anytime?
The market for shared coworking and maker spaces may increase as well in the coming years. Before the pandemic, there were more than 100 of these workspaces across the state. As businesses and workers become more dispersed, these spaces may offer a tempting alternative to traditional office space, which has been historically centralized in urban centers. These shared spaces – with access to meeting rooms, office equipment and high-speed connectivity – may also serve as satellite facilities for larger corporations that continue to encourage remote work. This, in turn, could cause new ala carte service businesses in HR, accounting, marketing, engineering and customer service functions to spring up around these work centers.
The ability to work anywhere will have an impact on real estate costs as well as workforce recruitment. If workers can work where they want to, local real estate markets may see increased activity, bringing new residents to smaller communities. In turn, companies may use remote working – either full- or part-time – as an attraction strategy, offering a reduced pay structure in exchange for the ability to work in locations that offer a lower cost of living.
Working remotely will become something of a status symbol for those who can do their jobs this way. The most significant variable will be bandwidth. To attract these workers, communities will need a big pipeline to the Internet. The lack of rural bandwidth has become all too evident with the pandemic, as Zoom screens stutter and freeze because someone’s third-grader is taking a math test. But solutions such as Starlink, SpaceX’s network of satellites, may provide much-needed bandwidth to remote communities. Time will tell.
The danger for urban centers is that they may experience an exodus of residents, especially those in high paying tech jobs who want a more rural or suburban lifestyle. Downtown businesses have already been hit hard by the pandemic and social protests. The loss of residents may cause streets to become ghost towns after 6 p.m. rather than the vibrant cultural hubs and community gathering points they have become over the last several decades.
A lot is unknown, of course. But what is known is that the pandemic has given businesses a once-in-a-lifetime opportunity to reinvent themselves. Over the last century, entrepreneurs and business owners have proven that innovation and bold risk-taking are never in short supply and always the way forward.
As we enter the new year, and along with it a new year of hope and opportunity, I recall one of my favorite quotes by George Santayana:
“We must welcome the future, remembering that soon it will be the past; and we must respect the past, remembering that it was once all that was humanly possible.”
Somewhere north of the Emerald City, looking forward to the Soaring 20s,