Small Business Covid-19 Impact
As we head into 2021, many small businesses are struggling. Not just a health crisis, the coronavirus has had a devastating effect on people, jobs, and small businesses. But despite everything that’s been thrown at them, “business owners remain resilient and flexible as they navigate in an evolving business landscape,” according to the 2020 Bank of America Small Business Owner Report (SBOR).
The report shows Covid-19 was not the only challenge for small business owners this year. Sharon Miller, head of small business for Bank of America, says other top concerns include “the political environment, health care costs, and consumer spending.” And of course, Miller adds, “Access to capital remains a central issue—34% of the business owners we surveyed applied for a Paycheck Protection Program (PPP) loan in an effort to keep staff on payroll and to maintain operating expenses.”
How Small Businesses Weathered Covid-19
The SBOR from Bank of America shows how resilient many small businesses are as they faced the challenges of the coronavirus pandemic:
- 38% remained open because they were essential businesses
- 37% adapted their operations to comply with social distancing regulations so they could stay open
- 10% pivoted to remote operations
- 8% closed temporarily
A report from QuickBooks, What’s next for the small business economy, also shows how business owners adapted to the health crisis:
- 34% cut costs
- 28% relied more on e-commerce
- 27% allowed more employees to work from home
- 22% developed new products or services.
- 14% adopted new business models
The Art of the Pivot
Not all businesses were able to pivot successfully. According to data from Womply, some industries fared worse than others. Restaurants and travel-related industries saw average revenue plummet, while retail and service industries faced inconsistent changes in revenue. Womply’s research shows over 60% of bars closed their doors or stopped transacting entirely.
But the SBOR shows small business owners pivoted in a variety of ways:
- 61% developed new products and services
- 45% instituted enhanced sanitation practices
- 37% changed their primary revenue stream
- 33% limited hours of operation
- 25% shifted to an online/digital strategy
Miller says, “Business owners have a more guarded business and economic outlook heading into 2021. Optimism toward the national and local economy declined to levels last seen in 2016 while hiring and revenue projections are at record lows since 2012 and 2013, respectively.
In the next 12 months, according to the SBOR, only 39% think their local economies will improve, while 37% expect the national economy will get better. And 59% anticipate the coronavirus will impact their bottom line for two years or less, while 19% expect it will continue to affect them for 3-5 years. Even more positively, 70% of business owners plan to keep their staffing levels stable next year.
The BizBuySell Insight report for Q3 shows that business owners don’t expect the economy to rebound anytime soon. They expect the small business economy to pre-pandemic levels:
- Within 3 months- 4.5%
- 4-6 months- 11.5%
- 7-12 months- 21.6%
- 1-2 years- 37.4%
- More than 2 years- 15.3%
- Not until a vaccine is readily available- 9.7%
Business owners surveyed in the SBOR say the factors that may help them recover from the impact of COVID-19 include: increased consumer confidence and spending, improved public health confidence, debt forgiveness, and government relief programs.
In the meantime, if you want consumers to shop in-store, Consumer Reports’ CR American Experiences Survey shows an increasing number of consumers are adhering to safety guidelines—and want small businesses to follow them too:
- 68% are more likely to support local businesses that follow recommended safety and social distancing guidelines
- 81% think business owners have the legal right to deny entry to customers who do not abide by social distancing and safety guidelines
- 68% say practicing social distancing should be a legal requirement for businesses
The Optimism of Startups
Ironically, startup entrepreneurs are thinking positively. The QuickBooks report reveals that 72% of people who plan to start a business within the next 12 months feel optimistic about their prospects, and 28% say the onset of the coronavirus accelerated their plans. And over half of those startup entrepreneurs plan to hire at least one employee within their first 12 months of doing business; 23% say 100% of their employees will work remotely.
BizBuySell reports that 27% of people looking to buy a business are newly unemployed and plan to take control of their future by starting a business.
Over half the business owners (55%) surveyed in Alignable’s Road to Recovery Report for December started feeling more optimistic when hearing the news about the delivery of vaccines for COVID-19. And 48% think the recovery will happen after March 2021. By the end of Q1, they expect to see hiring return to 90% of where it was before the pandemic hit.
And Miller says the SBOR shows, “Entrepreneurs are optimistic and anticipating a strong post-pandemic environment that will support small businesses [with] 79% of business owners believing small businesses will return to be the backbone of the U.S. economy and 69% saying consumers will have a greater appreciation for small businesses.”
If you need help navigating the COVID-19 crisis, get in touch with a SCORE mentor today.
By Rieva Lesonsky. Originally posted on SCORE.