The Growing Economic Border—Small Businesses Adapt or Die While Large Companies Thrive

Giuseppe Gargiulo, who has been styling hair for over 25 years, says he’s never seen his business take a hit like this. “The problem is, people are too scared to come out.”

By NICHOLAS GARGIULO
EL NUEVO SOL

My father, Giuseppe Gargiulo, is a hairstylist based in the Beverly Hills salon, Giuseppe Franco. With decades of experience in the industry, he’s sought by celebrities ranging from action heroes to comedians. Thanks to lockdown restrictions he’s been unable to work for months, only just recently being able to open his doors again after new guidelines were recently released for California businesses. There hasn’t been a simple solution for face-to-face businesses to avoid shutting down, while large businesses, especially one’s based around online sales, are doing better than ever.

Covid-19 is affecting every aspect of people’s lives. The problems are glaring – on top of the loss of normalcy, many Americans have had their small businesses closed permanently and many have had family members lost to the disease. Yelp reports that 97,966 of businesses they track that have closed during the pandemic are shutting down permanently. At the same time, as reported by Comparisun, Amazon CEO Jeff Bezos is on track to become the world’s first trillionaire by 2025.

Small business owners across the country are doing their best to avoid shutting down their businesses for good. CBS Los Angeles reports a third of all California restaurants alone are expected to close permanently. Professor of micro-economics at California State University Northridge, Francisco Beltran Silva, says the best way avoid this is to follow the popular trend of the past several years – take the business online.

“Online therapy… this is something you might not have thought of ten years ago and now it’s available to people.” Beltran Silva says. “A therapist, instead of maybe serving ten patients [a day], maybe he can serve 50.” Beltran Silva also sees potential for new products in the age of Covid-19, like devices that clean copper and kill any trace of the virus on it.

While some business owners can adapt to the situation and change their approach, some businesses simply call for close contact with other people. Even when these businesses are allowed to open up to the public again, new issues have been arising. Giuseppe Gargiulo, who has been styling hair for over 25 years, says he’s never seen his business take a hit like this.

“They let us open up again…The problem is, people are too scared to come out.” Gargiulo says, highlighting the variety of issues around doing business during the height of the Coronavirus. The problem has shifted from not being able to work due to government intervention to not being able to work because people refuse to walk through the door.

Small businesses are either adapting or dying. At the same time Amazon, who’s dealings are usually done online, as reported by Fortune 500, is seeing a 42% increase in investor returns over the last few years, with that number rising as time goes on.

Francisco Beltran Silva, assistant professor at California State University, Northridge, during a Zoom interview. Photo by Nicholas Gargiulo / El Nuevo Sol.

Despite this, professor Beltran Silva’s outlook on the American economy was overall a positive one. He says thanks to our dynamic user market and service-based economy, we’re in a better position than many other economies to handle the virus and other issues that arise based on policy. In regards to any of these adapting small businesses growing to compete with Amazon, however, Beltran Silva says it’s not likely.

“[To compete with Amazon] you would need the support of a really huge investor.” Beltran Silva says. When asked specifically why, he says the key to their domination of the market is infrastructure. When asked for specifics, Beltran Silva says, “What they did was just change [the shipping cost] to ten cents… you cannot compete against that.”

While people are looking forward to the end of Coronavirus, people are being affected by it today. Giuseppe Franco, while now being able to open, is facing the threat of a clientele who refuse to risk contracting Coronavirus by showing up to get their hair styled. Without their support, the business will crumble. At the same time online companies with pre-existing wealth are benefiting from the current system. While some will be able to adapt and overcome, others will fall to the decisions made combating the virus. And during all of that, companies like Amazon will continue to thrive.