Pedestrians pass a vacant storefront on Franklin Street in downtown Boston. Photo by James Sanna | Banker & Tradesman Staff

Dark storefronts on Main Street. “Retail space for lease” signs. They are hard to miss these days. The number of small business closures exploded during the pandemic and unfortunately, that trend continues five years later. Sales are failing to keep up with ever increasing costs, and that’s putting more small businesses at risk.

Numerous recent national studies and rankings have shown that Massachusetts has a cost problem: a high cost of living for our residents and a high cost of doing business for employers. Customers are feeling the financial pinch at home, and for consumer-serving small businesses like stores and restaurants, that translates into lower sales. Add higher operating costs to the equation and small establishments are increasingly operating in the red.

To better understand the challenges confronting our small businesses, the UMass Donahue Institute’s Economic & Public Policy Research Group recently completed a study surveying members of the Retailers Association of Massachusetts and other small business organizations to determine the economic status and needs of our Main Street small businesses. The results were concerning.

New Survey Carries Message

Considering the unprecedented challenges of the last five years, we asked whether government has eased the ability of small businesses to survive and thrive, or has government only exacerbated the challenges? Based on the survey of 635 small businesses across the commonwealth, it is clear why we have seen more dark storefronts, and why there are clear concerns we will see far more.

The most ominous message from the study was that 51 percent of respondents were very likely or somewhat likely to close within the next five years.

Over the prior five years, 49 percent reported flat or reduced sales, while profitability decreased for 44 percent of respondents, or stayed the same for 30 percent. Operation costs increased for 91 percent of respondents, and 76 percent confirm that their costs are rising faster than sales.

The top five cost challenges to small businesses in the study were: the general cost of living, the cost of electricity for heating and cooling, interchange fees for credit/debit card payments, mandatory payroll taxes (including unemployment insurance and paid family and medical leave) and health insurance premiums. All those top cost challenges are influenced or can be influenced by state public policy.

Small businesses assign some level of blame to government for much of their financial challenges. When asked to agree or disagree with the statement that, “generally speaking, government tends to do more to disadvantage small businesses than it does to help small businesses,” 73 percent agreed.

Bill Rennie

Inaction Not an Option

Shifting consumer habits and sales due to mobile commerce purchases and remote work are changes that many small businesses must deal with.

Thirty percent of sales for the recent holiday season occurred online: a dramatic increase over last holiday season. In-store sales remained flat. And although some employers are bringing workforces back to the office, some level of remote work is bound to continue.

Yes, small retailers need to adapt to new shopping and work patterns, but we must also lower the costs of doing business in the commonwealth.

Small stores and restaurants need lower costs and higher sales to make it here in Massachusetts.

There are certainly ways the government can help by lowering mandated payroll and operating costs to prevent more business closures. In turn, reduced taxes on consumers will put more money in their pockets to then spend back into the local economy. Both for current small business owners and the next generation of risk takers, increased sales and lower costs are the only pathways to a successful future.

Protecting, preserving and promoting the future of our downtowns and small businesses should be a core value and priority of our local, state and national governments, and the challenge has never been greater. Sometimes that takes introspection, and a very hard look at how government has made success less obtainable. The next generation of risk takers, entrepreneurs and small employers deserve nothing less.

Bill Rennie is senior vice president for the Retailers Association of Massachusetts.