Report: Pandemic Impact on Small Businesses

The COVID-19 pandemic has devastated many small businesses. More than 40% expect 2021 to be just as bad. These survey results contain statistics and comments from small business owners about the pandemic and what government can do to help.

The COVID-19 pandemic has wreaked havoc on most small businesses. Throughout the US and the rest of the world, required, months’ long business shutdowns, restricted re-openings, the need for social distancing, and fear of catching the virus have led to sales declines, supply chain interruptions, employee layoffs, and sadly, in some cases, permanent business closings.

Worst hit, of course, are businesses such as gyms, theaters, and restaurants that have had to stay closed longer than others and those which, on reopening, have only been allowed to serve a fraction of the people they had in the past due to the need for social distancing and other safety measures.

But what about other types of small businesses? How is the pandemic hitting them? And what steps are various types of businesses taking to sustain or even grow their business in the face of the pandemic?

To find out, we surveyed business owners about the effect of the pandemic on their businesses. We also provided a means for respondents to comment on various questions. In addition, we sent out a request for small businesses to talk about what they’ve done to pivot and keep their heads above water – or even do better during the pandemic. 

What percent of small businesses lost sales due to the pandemic?

Of the more than 200 businesses that completed the survey, a jaw-dropping 77% indicated a decline in sales due to the pandemic. Of those, 29% indicated they had such a huge decline in sales that they either had to close their business or may have to do so soon. The comments some of those individuals left in addition to their multiple-choice responses tell a grim story that cut across many types of businesses. Here are a few of them:

“We had to shut down for three months: mid-March through mid-June.

“Haven’t had only but two photo session since February”

“Transportation load pay dropped. It was not worth running a load.”

“We are down 85% over the same period in 2019.”

“I clean houses and all of my clients have chosen to do it their self or get a family member.”

“We had two stores… and have had to close both. Have put the remaining inventory in several antique and consignment stores, trying to get rid of it and at least try to recover some cash.”

“Contract commercial work ended in March 2020.”

“Some of our clients have shut down temporarily, so we can do no work for them.”

“Revenues dropped to zero.”

“I’m drowning.”

In addition to the 29% who had to close or believe they may have to close soon, 36% said they had a big decline in sales, and another 11 percent said they had a slight decline in sales. Of those businesses who have not been negatively impacted by the pandemic, 14% said the pandemic had no effect on their business, 4% indicated a slight increase in business and 5.26% reported a significant increase in business. 

How do our results compare with other surveys that have been done? The United States Census Bureau Small Business Pulse Survey results for 9/27/20 to 10/3/20 showed 75% of small businesses report a moderate to large negative effect on business due to the pandemic. A poll of the members of the Alignable small business social network around the same time revealed that 34% of poll respondents reported that they would not be able to pay their rent in full for October 2020.

Related: Small business bankruptcy – an option when you can’t pay bills

What types of small businesses are hardest hit by the pandemic?

We sorted our data by responses that indicated they might have to close their business, and then looked at the types of businesses associated with those responses.  Among them were the businesses one would expect to be hard hit such as salons and personal care services, restaurants and food services, clothing stores and boutiques, staffing firms, an educational service franchise, and businesses that relied on tourism. But the pandemic cut a wide swath across many other types of businesses as well.

There was a clear ripple effect, for instance, affecting small businesses like daycare and cleaning services whose clients were now working from home or out of work and no longer needing them. Some B2B services such as web design, consulting, and bookkeeping were impacted, too, presumably because their target customers were hit. Other types of businesses that indicated a huge or large negative impact on sales due to the virus included a plumbing supply firm, landscapers, a remodeling company, a printing company, an auto repair firm, manufacturers,  a co-working center, and a crime scene remediation business.

What changes have businesses made to keep going during the pandemic?

The small businesses that responded to our survey instituted a wide variety of changes to contend with the pandemic. Employers took a variety of steps including having employees work from home for several months, allowing flexible working hours to limit the number of employees in the workplace at one time, and laying off or furloughing employees. One respondent mentioned having to work seven days a week themselves and needing to hire employees because their former employees received more money from unemployment benefits than they did going to work and didn’t want to return.

Many mentioned taking steps to safeguard employees and customers such as installing sneeze guards, wearing masks, making hand sanitizer available, keeping store doors locked, and limiting the number of customers in the shop to one at a time.  Requiring appointments and adding curbside service were other steps businesses took. 

Not surprisingly, many mentioned cost cutting, both in the business and in their personal lives. Slowing payments to vendors, renegotiating lease payments, and even reducing the number of phone lines were among the other cost-cutting tactics mentioned in addition to reducing staff.

To retain customers, some said they increased their marketing efforts, and others said they moved some or part of their operations online.

What kinds of businesses have not been negatively impacted by COVID-19?

Some of the respondents experienced little negative impact or actually saw business increase during the pandemic. Some were businesses that were related to, or could easily pivot to environmental sanitization or producing needed products like masks and hand sanitizers. Others started selling online or delivering services online. Still others sold products or services that their customers needed regardless of the pandemic. One example: a business that sells crickets and roaches to reptile owners.

One of the things that stood out as we looked at the types of businesses that did well versus those who were negatively impacted was that a general industry designation wasn’t a predictor of which businesses had severe loss of sales and which didn’t. For instance, there were respondents in manufacturing, consulting, marketing, and transportation who indicated an increase in business and companies in the same industries that had a loss of sales. It is possible that these respondents served different niches within their industries than the ones who were badly hurt by the pandemic and/or they took more steps to retain or grow business such as using online meetings for consulting.  

Government pandemic loan program usage

The US offered two different funding programs to help small businesses struggling through the pandemic. They were the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) grant and loan program. But a significant percentage of our respondents either didn’t apply for funding or applied and didn’t get it. Of the 44% of US respondents who said they did apply for PPP funding, 23% did not get a PPP loan. Only 37% of our US survey takers applied for the EIDL grant and loan, and of those who did, 38% received funding.

Some commented that they didn’t apply because they weren’t sure how the loans worked; others thought they wouldn’t qualify because of the size or nature of their business. Others indicated that the applications seemed like a lot of work for the relatively low dollar amount they would be entitled to under the PPP program. Some simply didn’t have good enough credit to qualify for the loans.

Of those who did get funding, some got funding from both the PPP and the EIDL programs. A few respondents entered the amounts of the loans they got. The highest amount that anyone entered was $10,000. One who received $10,000 said it covered only weeks’ worth of expenses. One who received $5,000 said the $5,000 was a “drop in the bucket compared to what we needed.” Neither of those two indicated whether the money they received was a forgivable amount from the PPP or the EIDL grant or if any of the money was through a low-interest 30-year EIDL loan.

What else should the government do?

One of the questions we asked on the survey is what, if anything, small business owners think the government should do to help them during the pandemic.

As you might imagine, there were responses that represented a wide range of viewpoints both on government assistance, government policies, and the pandemic, itself.

In some ways, the two shortest responses were possibly the most representative of the majority of disparate viewpoints. Those were:

Give us some money.”  

Keep out of the way”

Money, or more specifically, the need for money, was the most frequent response. Respondents expressed a desire for the government to help them get through the pandemic by providing money in the form of grants, interest-free loans, or low-interest loans. Making loan programs easier to apply for and making them more available to business owners with lower credit ratings was also cited. As one respondent put it,

They should know that the credit score goes down because we have no money to pay our bills.”

A number of respondents suggested the government should forgive all PPP loans made to smaller businesses without additional paperwork. The amounts suggested for automatic forgiveness ranged from up to $50,000 to up to $150,000.

Others called for moratoriums or rent reductions for commercial renters who couldn’t open their businesses and a ban on foreclosures on commercial properties that are struggling because they lost renters. Still others suggested tax credits and tax deductions for struggling small businesses. Then there was a person who felt nothing more should be done:

“We have too big of a debit now why would I want to add to it. We end up paying for it in the end with higher taxes or other means they deem necessary.”

Some of the respondents used this section of the survey to enter their viewpoints on government handling of the pandemic, business shutdowns, and the health impact of the virus. Much like the discussions one reads in social media, there were opposing viewpoints expressed. Here are a few of them:

“Get control of the pandemic.”

“Let them open and run. Stop piling on expensive regulations.”

Not lie to us about the economy.”

“First of all Government should stop with the lies about COVID, get off the masks and to let the body to recover on a natural way.”

“Provide free weekly testing for EVERYONE and have a national mask mandate with huge fines.”

“For anyone to believe they can stop a virus is bordering on insanity. You might retard its spread somewhat, but you never stop it until we reach herd immunity.”

Allow all businesses to open, to have restrictions on how many patrons, masks to be worn, to offer incentives to reopen and help with cost associated with possible construction.”

“Fix the economic problems by managing the health problems properly.”

“Take the pandemic more seriously at the health and CDC level.”

What’s the small business outlook for 2021?

“Up in the air” might be a good phrase to describe the outlook for 2021 of the small businesses that participated in our survey. Of the people who answered the question on their outlook for 2021, 14% don’t expect any change; 46% expect declining sales and/or possible closure. On the flip side, 40% of businesses reported they expect anywhere from a slight to major increase in sales in 2021. 

Additional comments that were left with the 2021 outlook question and in a final comments section on the survey, for the most part, tended to express respondents’ overall uncertainty and pessimism.  

“Nobody knows when we will get rid of this Pandemic, and people will continue doing business online for own safety.”

“Worried that I might lose the business”

“We are a business dependent on air travel, conventions and events such as weddings, entertainment, nights on the town, sporting events. With all of these events not resuming, in some cases until mid 2021, business will not only look
different, some of it will be gone for years”

“If I am able to remain in business, I do not see a lot of upside.”

Summing it all up

Small businesses are doing everything they can to try to adapt to the “new normal” and keep their businesses afloat until such time as business might return to normal. However, a vast majority are not only hurting financially but also feel frustrated and powerless to do much to improve their situation soon. As one respondent put it,

“May God help America because no one else seems to know what to do other than shoot from the hip and hope to hit the target.”

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