This week, we look at the challenges for small businesses, which face tight margins in the best of times. Plus, why cybersecurity teams are in the spotlight, and an interview with leadership experts on the new skills needed to navigate choppy managerial waters. |
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Small businesses are crucial to economies and societies: they’re entrepreneurship engines, economic multipliers, and community hubs. They’re especially important for women, minorities, and immigrants, for whom they create valuable opportunities. Families that own their businesses tend to have more upward mobility. Now, small businesses are going to need all the help they can get. |
A double whammy. Small businesses were likely to be struggling financially before the COVID-19 pandemic, and balance sheets for those in manufacturing, retail, and restaurants lack flexibility. Now, those industries are among the hardest hit by COVID-19. Last year, 65 percent of US small businesses were likely to close or sell if faced with a revenue shock. |
The numbers are staggering: 30 million small-business jobs are at risk in the US because of COVID-19. And the smallest of the small—companies with fewer than 100 employees—are the most vulnerable. The human cost is also growing, as a second wave of closings has many owners deciding it isn’t worth it anymore. |
But there’s some good news over the longer term. Many small businesses have adapted to new operating models that revolve around the contactless experience. Restaurants and grocers have added curbside pickup and experimented with new payment methods and apps. Apparel retailers have rapidly uploaded products to their e-commerce websites, offering free delivery and extending return policies. These shifts meet customers where they are now. |
Help wanted. There’s no doubt that the next few years are going to be difficult. Finding solutions will require an economy-wide effort to provide financing, restore demand, and improve small businesses’ capabilities and resilience. We’ve been monitoring and reporting on US small-business sentiment since March, and negative sentiment appears to have plateaued in recent weeks. We also offer small-business owners a list of resources, including information on how and where to apply for financial support, ways to support employees, and expert services at little to no cost. It also provides guidance on how to reopen—and how to grow once back in business. |
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INTERVIEW |
The end of the hero CEO |
Corporate leaders may not be the first who draw sympathy right now. But they are dealing with the fallout from the COVID-19 crisis at an individual level while also being responsible for supporting a wide cross-section of people, all of whom have their own range of experiences, emotions, and resources for responding. McKinsey spoke with leadership experts Amy Edmondson and Richard Boyatzis about a wide range of leadership challenges, including the shift away from a classic authoritarian leadership model to one in which problem solving is a team sport. |
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MORE ON MCKINSEY.COM |
A dual mission for cybersecurity teams | As companies extend commitments to remote workforces, cybersecurity teams need to address new risks while helping create business value. Here’s how teams can become full partners with business, risk, and IT stakeholders. |
Investment in mining: Through-cycle investment | As the COVID-19 crisis affects the medium-term pricing outlook in many commodities and puts pressure on planned investments, mining CFOs have a unique opportunity (and imperative) to review their capital-expansion strategies. |
Talent in insurance | Insurers that succeed in the coming years will be those that recognize that talent strategy has the same importance as core business strategy. |
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How does your experience in public schools inform your work today? |
I taught middle-school science at a public school in Washington, DC. Teaching was extraordinarily rewarding—and extraordinarily difficult. I’ve always seen education as one of the most powerful levers we have to create social mobility for people—in particular, for students who experience poverty and other socioeconomic challenges. |
Not a day goes by that I don’t think about either individual students or my time in the classroom. It’s grounding because it reminds me that all of the policy and strategy decisions we help clients make end up manifesting in interactions among teachers and students and in what students do every day. |
One of the biggest things I learned as a teacher, however, is that the challenges students face go well beyond learning. For students experiencing poverty especially, the margin for error in their lives is so small. A $50 speeding ticket or medical bill can have enough of an impact on a family to knock a student off their trajectory for a month or more. |
Our new research finds that continued school shutdowns will magnify existing gaps in learning for Black and Hispanic students. |
We haven’t solved this by any stretch—our achievement gaps have persisted for decades. No one thing is going to move the needle here. |
But one thing we could do, which a few systems are doing, is to recognize that while not all kids will return for in-person learning in schools this year, we can prioritize getting those students with fewer opportunities generally—students of color or students experiencing poverty—back into classrooms first. We also have an opportunity to disaggregate the role of the teacher and ensure that teachers are really focusing their time on activities that only skilled teachers can do, allowing other adults to do the other tasks. This can magnify the impact and time teachers can have with students. |
Finally, we simply need to get more resources for students who are further behind. We need to ensure they have access to devices and connectivity, and we need to find ways to get them more instructional time throughout the year and more one-on-one time from tutors to help them catch up. |
What role does childcare play in education, particularly for the most vulnerable learners? |
There are two elements here. First, our previous research has found that significant learning gaps are created by the time kids go to kindergarten that are tied to the opportunities children have to develop in years zero to five. And those gaps typically remain for the rest of their school careers and lives. So yes, we absolutely have to make sure that the youngest children have some sort of developmental support before kindergarten. |
And the second is just the broader challenge for all parents. If school schedules shift as a way to cope with the pandemic, for instance, parents may need to be home during times that don’t mesh with their work schedules. This isn’t easy for anyone, but I really worry about parents who can’t afford to lose a shift at work to stay home with their kids. I go back to that margin of error I talked about. It’s stressful for everyone; it’s existential for some. |
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BACKTALK |
Have feedback or other ideas? We’d love to hear from you. |
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