What is an Essential Business?

an Essential Business

You’ve likely heard the terms “essential business” and “non-essential business” mentioned on the news quite a bit lately. But these are technically not new concepts. So what is an essential business and nonessential business? And what do these terms mean to small companies today?

Currently, concerns surrounding the coronavirus pandemic have caused cities and states around the country to order the closure of various nonessential businesses in the interest of maintaining public health through social distancing. But those that are considered to be essential are largely able to remain open. And though rare, a similar concept could also apply to a variety of other situations, from natural disasters to community unrest. So it’s important for small business owners to understand what each of these terms refers to so they can comply with local guidelines and make decisions that are in the best interest of the general public.

How the States are Responding

The federal government has not yet ordered nonessential businesses to close en mass. But many states that have been impacted by the virus, including California, Washington, New York, Pennsylvania, and Ohio, have taken this step. Cities like San Francisco and Philadelphia have also followed suit with their own requirements. Some have mandated closures, while others have simply recommended or released guidelines stating what businesses should remain open and which ones should close to facilitate effective social distancing procedures for customers and workers.

The definitions of “essential” and “nonessential” vary slightly by location. However, the general idea is that businesses that provide products or services that customers actually need during this time are allowed to remain open, while those that provide products or services that are more “want” than “need” are expected or recommended to close.

Whether you’re thinking about a potential closure for your small business or just want to understand more about how these decisions are made during a pandemic, you’ve likely wondered “what is an essential business” at some point over the past week or two. So here’s a guide to some of the most common essential and nonessential business types.

What Is an Essential Business?

The exact definition of an essential business in this instance varies from state to state and city to city. However, there is a lot of overlap in the guidelines and mandates that have been released during the coronavirus pandemic. Put simply, an essential business is one that provides products or services that people rely on every day or that may be necessary for some during this time period. These include:

  • Grocery stores
  • Pharmacies
  • Medical offices
  • Big box stores
  • Convenience stores
  • Banks
  • Mail and shipping businesses
  • Hardware and home supply stores
  • Pet supply stores
  • Laundromats
  • Gas stations
  • Home service professionals (like plumbers, electricians, and HVAC techs)

How This Varies State to State

Additionally, there are some businesses that are considered essential in some states and not others, as well as those that are allowed to operate in certain instances as long as social distancing practices are followed. If your business falls into one of these categories, check the guidelines released by your specific state to make sure you follow their recommendations. These include:

  • Construction firms
  • Warehouses
  • Hotels
  • Agriculture businesses
  • Farmers markets
  • Law firms
  • Insurance services
  • Food processing companies
  • Food banks
  • Companies or organizations that support underprivileged individuals
  • B2B firms that provide needed services to essential businesses
  • Preschools and childcare centers that serve children of employees in essential industries

What Is a Nonessential Business?

In general, nonessential businesses include those that provide something beyond the basic necessities. They might offer retail goods, entertainment, or general recreation. Some of those that have been forced to close in select cities and states include:

  • Bars, restaurants, and nightclubs (aside from carryout and delivery)
  • Theaters
  • Casinos
  • Gyms and fitness studios
  • Clothing stores
  • Malls
  • Hair salons, nail studios, and spas
  • Sports venues
  • Art, music, and event venues
  • Museums
  • Amusement parks

It’s important to note that the closure of these businesses in most instances only applies to their physical location that’s open to the public. Clearly, some of these nonessential businesses, like amusement parks, can’t really operate remotely. However, some of them, like clothing stores, can ship products to customers or provide related services during this period. And states and cities haven’t set any rules or guidelines to regulate or prohibit these practices.

Office Based Businesses Not Ope to the Public

Additionally, office based businesses that aren’t open to the public haven’t been ordered to close on a mass scale. However, many have been advised to close or have taken proactive steps by allowing employees to work remotely. So if your small business operates out of a physical office, it may be worth considering whether or not the products or services you provide fall into any of the categories above. And if possible, allowing employees to work from home during this time may be beneficial to everyone involved.

It’s too early yet to tell what the exact impact of these closures may be on the small business landscape as a whole. Small businesses across the country fall into both of these categories. So while independent boutiques may be forced to close, neighborhood grocery stores may be straining to keep up with demand for needed items. There are a lot of independently owned doctors offices and home service providers that are able to remain open. But generally, those in the retail, recreation, and entertainment space are likely to be hit pretty hard in a negative way, depending on how long these rules and guidelines last. There are also some businesses or opportunities within the gig economy that are especially in demand during this time, like grocery and food delivery services.

It’s clear that closures on this large of a scale should have a major impact on the economy, since both small and large businesses across industries are likely to lose significant revenue. Though the public health concerns of this crisis are most important, small business owners also need to find ways to provide something essential during this time period, or bring in revenue from sources that don’t require having a physical location with an “open” sign on the door.

Image: Depositphotos.com

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends and has been a member of the team for 12 years. Annie covers feature stories, community news and in-depth, expert-based guides. She has a bachelor’s degree from Columbia College Chicago in Journalism and Marketing Communications.