Charles Laverty Warns 20M Small Businesses Will Fail Without A New Marshall Plan

NEWPORT BEACH, CA / ACCESSWIRE / June 17, 2020 / Commentator and entrepreneur, Charles Laverty has warned that over 20 million small businesses are beyond saving and has called for a "Small Business Marshall Plan" to stave off the disaster caused by the ongoing Coronavirus lockdowns.

Laverty notes that the various bailout payments and programs did not change the fundamental problem facing the more than 30 million small US businesses. The loss in revenues has been dramatic, often 75% or more, he says but business costs have mostly remained unchanged. This, Laverty notes is why, even with trillions in Federal and State funds spent to "save jobs," the US has already registered 44 million new unemployment claims in just a matter of weeks.

By adapting to the lockdowns and mandatory closures, businesses have mostly continued to operate on revenues which have typically been reduced by 75 to 80%. Meanwhile those business owners have seen losses soar as everything from taxes and labor to rent, utilities, shipping and supplier costs have remained high. The result has been that exhausted business owners have also exhausted their options and resources. Hundreds of thousands of these business owners are not even in a position to reopen when allowed.

Worse, says Charles Laverty, the way we are reopening dangles the false promise of a V-shaped recovery that simply is not coming. Most business production is still handicapped by restrictions of some kind. So even those that have demand for their products and services simply cannot get to full production.

Businesses are simply not profitable with social distancing and other restrictions. There is no way to alter that fact, he argues. Most small businesses are not massively profitable in the best of times, he points out. If you make them operate at 50% or 75% capacity, then you are guaranteeing that most will operate at losses. You can only operate at a loss for so long before the damage becomes permanent.

Laverty Launched Nuzuna Fitness in 2018 and notes that the fast-growing operator of technology enabled fitness programs, physical therapy personal training, wellness products has watched smaller, fitness businesses teeter on the edge of failure. Allowed to limp forward on their own, many businesses will not survive this start-and-stop approach of partial reopening. Many millions of firms will never recover the cash, assets and inventory needed to survive the inevitable business challenges they will face over the next year. As a result, business failures will spike and stay that way for at least twelve months.

When 20 million businesses fail this will lead to a systemic, long term recession that will take years, if not decades to recover from. You may coldly argue that market forces ensure that new businesses will rise to take the place of the failures. But with an entire generation of entrepreneurs mentally and financially exhausted who will launch these businesses?

Widespread business failures will lead to massive oversupply of used commercial space, equipment and supplies which must be liquidated. Suppliers in every industry will face years of exceptionally low demand for new products and supplies. All of this will create higher systemic unemployment which will depress consumer demand and further hurt consumer savings.

This doesn't lead to a recession like we have come to know it. A recession is a relatively small, but nevertheless painful reduction in GDP lasting months or a year or so. Typically, it is caused by a contraction of consumer and business spending. Instead, the self-inflicted wounds of the Coronavirus response leads to a systemic, across-the-board shift of supply and demand that takes the US economy back perhaps decades economically.

Charles Laverty says the only way to avoid this is to combine a nation-wide, full, unrestricted reopening with a recovery plan modeled on the Marshall Plan that the United States devised after World War II. "I am fiscally conservative," says Charles Laverty "but this situation was caused by non-market forces from political and health leaders. We cannot expect the market cannot fix it on its own without unbearable pain."

Writing on his blog, Laverty says that a true and full reopening will help demand recover and get people working and spending. Only that combined with massive government spending can eliminate the gap between revenues and costs while refilling the inventories and bank accounts of tens of millions of business owners.

For More Information

Charles Laverty

Nuzuna Fitness

949-432-4824

info@nuzunafit.com

1451 Quail Street Ste 104

Newport Beach, CA 92660

SOURCE: Nuzuna Fitness

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