State of Small Business Report Outlines the Struggle for Survival and Reopening
WASHINGTON – The economy is in crisis, but not everyone is feeling it the same way. One of the hardest-hit sectors is America’s small businesses. Over 99% of the nation’s 28.7 million firms are small and medium-sized businesses which contribute to local economies by bringing job growth and innovation, yet are struggling for survival during this period of pandemic and instability. Between loans, paycheck protection programs, and other relief measures, experts are analyzing small business concerns to identify the best approach to help small businesses to succeed.
The Small Business Roundtable recently released a State of Small Business Report, produced in partnership with Facebook, that outlines the struggles small and medium-sized businesses (SMB) are facing during the COVID-19 pandemic and as they are attempting to reopen.
The Roundtable surveyed approximately 86,000 small and medium-sized business owners, managers, or workers to better understand their current circumstances. About 9,000 of those surveyed reported that they were “self-employed providing goods or services” or that they “produce goods sold for personal income” but did not otherwise self-identify as an “owner” or “manager” of a business.
Circumstances for SMB are increasingly dire due to the nation’s uncertain economic atmosphere. In fact, 31% of survey respondents reported that their business had stopped operating altogether. Whether they closed to comply with government orders or halted business due to lack of clientele or financial challenges, these businesses — and their workers — anxiously await a reopening strategy. “Being furloughed from my full-time job and released from my part-time as a single mother of two kids is very stressful,” shared one respondent.
Small business owners said that they worried most over finances, including securing the capital necessary to pay rents and wages. Supply lines continue to be an under-appreciated concern, both due to limited supplies and delayed shipments. And customer behavior is also worrying, with a lack of demand cited by 20% of survey respondents. “We have lost almost all clientele, and cannot afford to pay for our home and bills,” one said.
Some businesses have adapted and seen success by turning to the internet, even if they admit the adjustment causes some growing pains. Fifty-one percent of SMB said that online client interactions were on the rise, with 36% of respondents claiming that they are now conducting all business online. Internet sales have helped these businesses to remain operational and reach a new base of clients during the pandemic, though e-commerce requires different skills. “My company [now] has WebEx meetings and team sites,” someone answered. “We were able to bring home our work set up, including chairs and standing desk.” But not everyone can work remotely; some industries require physical functions or in-person interactions.
In addition to the physical/virtual duality, SMBs are struggling to simultaneously manage both personal households and business functions. It is interesting to note that more women owners/managers reported that household activities were affecting their ability to focus on work, but the majority of respondents agreed that they were burning out with the concurrent responsibilities. “We have no income coming in and no way to cover our bills. Our landlords both personal and professional still need to be paid,” one said.
The only way to get the economy back up and running is to reopen, but that might not be easy. Setting aside continuing health concerns, owners and managers have a host of uncertainties and new fears to address as they consider reopening.
“My business needs the economy opened up,” said one. “Small businesses are suffering and no amount of stimulus money can replace a thriving and functional business.” Worried about paying rents, utility bills, and workers’ wages and salaries, SMB owners suggest that zero-interest loans or other financial assistance could help them to adapt and survive. Despite the need for capital, however, some SMB owners are afraid of borrowing money. Many report that they are unsure how they will be able to pay it back and say it’s challenging to figure out how to apply for a loan in the first place. Many SMB owners say they may need to use their personal savings to reopen.
And even in those businesses that have managed to stay open, employees are still facing economic uncertainties. “We need to stabilize our business for the long term in order to bring employees back from layoffs,” said one owner. Many of those workers fortunate enough to have jobs in businesses currently still operating, especially restaurant and hospitality employees, struggle without access to sick leave or paid time off.
Despite all of this, the State of Small Business Report still offers some slivers of optimism. Nineteen percent of owners and managers of closed businesses said they were still keeping workers and paying at least a portion of their wages. And even with current distressing circumstances, only 11% of operating businesses surveyed expect to fail in the next quarter.
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