Interesting Niches under a COVID Cloud| |
While aspects of the stock market continue to project economic optimism, we all know that most local businesses are not. In fact, many local businesses have absorbed economic damage and there will be a ripple effect. Some of this is evidenced by our current unemployment rate, which is 7.9%. Prior to the COVID cloud, unemployment was consistently below 4%.
Beyond the unemployment rate, many local businesses have been severely impacted. Let’s look at the largest components of local economies.
Real Estate Leasing (Commercial) – While the residential market is red hot in many parts of the country, the commercial real estate market is very soft, particularly in larger cities and shopping areas. In other words, many malls are experiencing major pain, entertainment venues (movies, theater, sports, etc.) are crippled, and large corporations are reducing their commercial footprint.
Retail and Wholesale Trade – Most aspects of the retail sector are way down, and online shopping (Amazon and others) is way up.
Restaurants and Food Service – Restaurants, catering and hospitality businesses are experiencing major pains. All aspects of the wedding business, graduation celebrations, and corporate hospitality are way down.
Vacation and Tourism – With the rapid decline in air travel and cruises, many destination areas for vacations are down as well. The impact of this is hard to see but we all know it’s painful.
So where are the silver linings? In other words, not everything is down.
Businesses that sell to Amazon – One hot acronym are Amazon FBA businesses. FBA stands for Fulfilled by Amazon as their assortment of products available to purchase has exploded. Amazon has one of the most sophisticated fulfillment systems (pick, pack, and ship) enabling small businesses to reach more customers.
Social Media Businesses – While travel and hospitality are down, many entrepreneurial independents have created a thriving business on YouTube, blogging, and becoming an influencer. Often, right from the comfort of their own home or apartment.
Technology Oriented Businesses – FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) are red hot and so are the next tier of providers. For that matter, most technology oriented businesses have not suffered like the industries above. If you think of things like Zoom, DocuSign, NortonLifeLock, Salesforce, Intel, Microsoft, and many other tech businesses, these are boom times as many employees are working remotely.
On a more local level, many tech oriented businesses are thriving from back office IT, application software developers, cyber security, refurbished devices (smartphones, laptops), social media support, online advertising, video content, podcasting, app development and even mobile apps.
Given this evolution during the COVID cloud, below are some niches we are seeing accountants starting to capitalize on:
IRS Back Taxes and Problem Resolution (unfortunately but a reality)
Accounting for Cannabis (as more states change legislation)
Accounting for Defense Contracting (federal spending on defense filtering down to smaller contractors)