by Hilary Gowins, Vice President of Communications
Illinois Policy
Most people have spent the past year wondering if and when we’ll get back to normal.
Denetta Flamingo is busy dealing with a new normal. It’s one that cost her the home where she raised her children. It’s taken other assets. Those sacrifices have kept her small business alive.
Still, the dream she invested everything in – Ottawa Nautilus Fit24, a gym in Ottawa, Illinois – is up for sale.
"I’m doing the best I can," she said. "Today I’m at the gym and a regular customer who had not been here since March of last year came in. Everyone was in tears. He has M.S. and came in for me to fix his phone and feel the gym out with the new rules. Although I have stayed in touch with him and many others that still haven’t returned, just having him here and seeing him to make sure he was OK means so much. We are a family – new members and old members. We help each other, whether it’s fixing a phone or just lifting each other’s spirits."
The weight of COVID-19 mitigation crushed the small business sector in Illinois. Owners like Denetta Flamingo sold off equipment and other assets to try and remain solvent.
Photo by Victor Freitas/Unsplash
Nautilus Fit24 has been in business since 1974. Denetta began working at the gym in 2009 and purchased it in 2014 when the previous owner left Illinois.
"How can you let a business that’s been around that long go under?" Denetta said. She’s fighting to keep the gym open, even if that means it’s under new ownership. "A new owner will have the funds to bring this gym back to its prime."
Continuing to fight means struggling. Denetta has been steadily selling off equipment and personal items during the pandemic just to pay her bills. She ultimately had to leverage the equity on her home of 30 years by selling it to keep the business open. She was denied state grant money. She wasn’t eligible for federal Paycheck Protection Program money, either.
There’s a hole in Illinois’ economy. Denetta has been trying to fill her portion with heart and hard work.
Over 11,200 retailers in Illinois were forced to close up shop last year.
Small shops were hit the hardest – 35% of small businesses have closed in Illinois as of March 3, compared to Jan. 1, 2020, according to data from The Opportunity Insights Tracker.
Those retailers represent jobs on a large scale – small businesses have traditionally created the majority of new jobs each year in Illinois. And the loss of these businesses carries worrisome implications for the state’s workforce and its economic recovery more broadly.
So what happens next? How many of the small businesses left standing will survive in the long run?
The short answer is, 2021 will still be a grind.
"With each day that [the government] lets us open up, it is looking better and the weather has been very cooperative," said Kristan Vaughan, who operates Vaughan Hospitality Group, with six Irish pubs across the Chicago area.
It used to be seven pubs.
"We closed one location permanently and are maximizing PPP and Employee Retention Credit, but Illinois still tries to beat the small business when they are down with the property taxes, fee hikes and more," she said.
Those cost burdens are what Illinois needs to get under control. Otherwise, any bounce-back small businesses make will be hindered and likely continue to lag the rest of the Midwest. In Illinois the leisure and entertainment industry, which includes restaurants, lost jobs 61% faster during 2020 than the nation as a whole.
These numbers are a huge problem for Illinois: the people who live and work here, as well as the politicians tasked with running the state. Small businesses are the main job providers in the state – 69% of all new jobs created in Illinois come from firms with fewer than 20 employees.
The pandemic has affected everyone, but the economic fallout has been especially devastating for specific groups. In addition to retailers, restaurant owners and other small business owners, women, working mothers and Black Illinoisans suffered the worst in terms of job losses. So did low-income families – 36% of workers in households earning less than $40,000 lost jobs.
COVID-19 is the reason for devastation of this magnitude. But it’s important to acknowledge that Illinois had been lagging the rest of the country for years on economic gains and opportunities for the people who call the state home, as well as for the people who used to call it home.
If you do what you always did, you’ll get what you always got. If Illinois doesn’t change, it’ll mean more public debt: which drives higher taxes, a decline in services and more people leaving. It’ll also make the odds even longer for business owners trying to survive.
Hilary Gowins is vice president of communications at the Illinois Policy Institute, a nonpartisan research organization that promotes responsible government and free market principles.
