Main Street

The term "Main Street" refers to independent small businesses in America, similar to the general name for the main commercial street of small towns countrywide. It refers to the informal speech of economists. In England there is a similar concept called the High Street.

The concept of Main Street is contrasted with the concept of Wall Street, which is used to describe big business and high finance. The products, fashions, and brands that are getting or losing popularity on Main Street have a significant impact on those people who are involved in big business and big finance. Identifying major trends takes them quite a lot of time.

The concept of Main Street in a broader meaning is used to describe the historic business districts of American small towns or their traditions. Also, the Main Street name is the most common in the United States.

Understanding Main Street

In March 2020, there were 31.7 million small businesses in the U.S. They form the basis of local Main Streets America-wide. This data was reported by the U.S. Small Business Association.

Small businesses have been severely disrupted by the coronavirus pandemic and some of the small companies from the 2020 data may not have survived. Data for September 2021 have not yet been reported.

From a financial perspective, Main Street is contrasted with Wall Street as an individual small investor and a professional security trader.

From the Wall Street traders' point of view, Main Street investors are doing something they don't understand. From the perspective of Main Street investors, Wall Street traders are crooks.

Unfortunately, both of these parties depend on each other and they cannot conflict. Wall Street needs individual investors for the genesis of capital and commissions. For a higher rate of return and offering a savings account or a municipal bond, Main Street needs Wall Street.

Types of Main Street businesses

A non-chain store located on the main street or in the central district of a small town is called a "main street" store. The goods or services are usually provided individually to tourists and locals. Such stores are often located in picturesque places.

Central Street is generally composed of small businesses. These businesses have been hit hard by the pandemic, especially restaurants and pubs. But the economy is recovering gradually in 2021. For now, most of Main Street is occupied by growing craft businesses. This industry is represented by coffee shops and breweries.

Pharmacies, hair salons, off-grid stores, clothing boutiques, cafes, bookstores, bakeries, and specialty stores such as toy stores are small businesses.

Main Street vs. Wall Street

Main Street can be represented by a small independent investment firm providing financial planning and investment services to local professionals and families, and not one worldwide known Wall Street investment firm serving corporations and large investors with enormous value assets.

Some believe that what is positive for Wall Street affects Main Street negatively. For example, Wall Street's ability to innovate and earn income is discouraged by Main Street's investor protection rules. However, Wall Street's increased risk-taking and short-term results are supported by trading strategies and reward practices.

The financial crisis of 2008 was a dramatic example of Wall Street and Main Street collaborating, resulting in the Great Recession. When Main Street lenders and borrowers created a real estate price bubble, it burst on Wall Street. That's why it's so important that Main Street and Wall Street interact with each other, but not closely.

Divide between Main Street and Wall Street

During a recession, the cost of goods on Wall Street can skyrocket, and small businesses on Main Street can experience difficulties. Take the March 2020 pandemic as an example. At that time, people were actively surfing the Internet to order household goods, food, medications, and enjoy their leisure time. Many Central Street stores and cafes were closed, not working or partially working (takeout).

Wholesale shopping and shipping started to make money for Walmart and Target corporations. It became difficult for small stores to compete. The profits of small stores in tourist towns or areas depend directly on incoming tourists. Even in villages and towns with strong local economies, retailers were fighting the competition from Big Box and Amazon stores.

Investing in Main Street vs. Wall Street

You can not only spend your money in the local market, but also invest in small entrepreneurs and Main Street businesses. Peer-to-peer lending and crowdfunding sites help in this purpose. For example, the investment platform Mainvest and the crowdfunding platform Localstake.

The same rules of investing on Wall Street are applicable for Main Street investments. The only difference is the investment tools. In addition, investing in small businesses has higher risks than investing in the more reliable securities portfolios of large corporations.

Major stock market participants like Amazon, Walmart, Apple, and Google are moving it. This could result in the growth of even your neighborhood stores on Main Street. People can't invest in small businesses (a toy, a book or a local grocery store, or a barbershop), they are not represented in the stock markets. But crowdfunding for peer-to-peer lending allow people to do that.