This year is going to hit small business really hard because of trickle down effect. With so many super-companies shutting so many doors (see my article on retail closures) let’s look, for a second at a detail on impact. Let’s take Ann Taylor. They are closing 117 stores. That is 117 store managers and assistant managers that fit into the definition of the middle class. In one store, the one manager will now be unemployed for, let’s say 4 – 6 months which is a reasonable average in today’s market. She (most Ann Taylor store managers will likely be female) has to support herself and there is a 50% chance that she is divorced and may also be a single mother. If she had a health plan, she’ll now have to pay COBRA in order to keep her plan, but let’s assume, she can’t come up with the $500-$900/month it may cost to keep the plan. She’ll let it lapse and will join the ranks of the uninsured. Her focus will be on paying the rent, for her car (or not), food, and the care of her children.
Will she go to her dentist for her routine cleaning? Likely not. Will she switch from her hair stylist to a less expensive walk-in chain? Or grow her hair long? Likely. Make her own meals rather than dine out? Yup. Avoid paying for expensive movies in the theaters? Yup. Cut off her cable? Possibly. Switch off the cell or landline and only have one phone? Probably.
And that is just the start. Now let’s move on to the dentist. The dentist relies on teeth cleaning for business retention so that when a cavity or cracked tooth crops up, you go to the dentist who has been cleaning your teeth for years. Out of the 117 Ann Taylor stores, with only 2 managers at each, that is about 234 teeth cleanings that will likely not happen. If a woman gets her hair cut every six weeks, then over 6 months, that would be just under 1200 haircuts lost. The dentists will lose over $20,000 just from those 117 stores. And the stylists…about $280,000. (If you are an economist, you’ll likely argue my figures…but this is just for illustration purposes.)
So what am I going to keep my eyes on in the next six months? The dental industry, and the beauty industry. How will dental hygenists do in terms of finding work upon graduation in 6 months? What about cosmetologists (hair stylists)? Will more dental offices open or close? How many new hair salons will open? How many will close their doors?
If I were looking for a job right now, where would I look? In recession proof areas — services and products that people cannot live without. And I wouldn’t be looking at the market today, but trying to project what that trickle-down affect will impact 6 months or a year from today.