Small businesses are vital for a strong local economy

Small businesses are vital for a strong local economy

All that people are talking about these days is that 2020 is the strangest year in recent history -- and the markets seem to be as bizarre as everything else. We have seen the fastest 30% drop in S&P500 history and we are now showing the fastest recovery. So, the question I keep hearing is ”why is the equity market so high and my investment portfolio doing well when the economy is in such bad shape and unemployment high? It doesn’t make sense!”

In fact, these two conditions are quite different. The market is looking past the pandemic and showing confidence in a vaccine and a return to normalcy. Anything 'tech' has surged as the anticipated rate of change to online solutions has accelerated. Furthermore, interest rates are at all-time lows, meaning stocks provide the best possible long-term return profile and protection against inflation.

It’s important to separate stock market performance from overall economic and community health. The reality is that smaller local businesses -- including restaurants, small retail shops, and ‘mom and pop’ companies -- have been the hardest hit. Although they don’t have a significant influence on stock markets, these businesses are huge drivers of local economic performance and community resiliency.

Consider this: research from the Institute for Local Self Reliance in the US reveals that 'small-scale, locally owned businesses create communities that are more prosperous, entrepreneurial, connected, and generally better off.' Moreover, small businesses donate as much as 250% more than larger businesses to local non-profits and community causes according to data compiled by Score, a network of mentors for small businesses. Clearly, these vital businesses deserve our full attention.

I’ve always tried to support local businesses where I live and work, and I know that right now it is more important than ever. If you’ve been stockpiling Toque like I do to complete the spine images (look at the spine of this issue), pull them off the shelf and leaf through them again. There are incredible local businesses profiled here that haven’t seen the gains of the stock market -- and they are working harder than ever to make it through.

With our help, hopefully most of them will.