It’s common knowledge that small businesses have been one of the hardest hit sectors of the economy since the novel coronavirus pandemic swept across the U.S. But just how bad is it for them now that the country is more than two-months into dealing with the virus, and how are they feeling about the future?
A recent survey conducted by Facebook in partnership with the Small Business Roundtable set about to answer these questions. The picture, unsurprisingly, is not pretty. Nearly a third of all small to medium businesses (SMBs) have shut down completely over the past three months, with the highest rates of complete shutdown happening among personal businesses (52 percent); hotels, cafes and restaurants (43 percent ); and services like wellness, grooming, fitness or other professional services (41 percent).
“Small businesses are the heartbeat of our communities — and they’re in real trouble,” Facebook COO Sheryl Sandberg wrote in a blog post, describing the report’s findings as a “sobering snapshot.”
The survey is exceptionally large, consisting of responses from 86,000 owners, managers and workers in companies across the U.S. with fewer than 500 employees. Also surveyed were 9,000 “personal” business operators, defined as those who were self-employed and provided goods or services but didn’t consider themselves an “owner” or a “manager” of an operation.
The report found that the two greatest obstacles SMBs face are access to capital and customer behavior, with 28 percent citing cash flow issues as their biggest challenge and 20 percent struggling primarily with a lack of demand for their products or services.
Despite these dire figures, SMB owners and managers remain remarkably hopeful. A solid 57 percent majority said they were optimistic or extremely optimistic about the future of their business, while only 11 percent said they expected to fail over the next three months should the present conditions continue.
The personal toll taken on owners and employees of SMBs also appears to be severe. Three in four employees said they don’t have access to paid sick leave, and 70 percent said they don’t have paid time off at all. Less than a fifth of overall employees said they had personal savings to help them get through this time, and only a fourth said they could rely on a second household income from a spouse or partner until they could get back to work.
For those who are out of work, even the prospect of getting their jobs back once the economy begins to return to more normal conditions is dicey, as less than half of owners and managers of small and medium-sized businesses — and less than a third of personal businesses — said they expected to rehire the same workers once they reopened.
About half of owners and managers, meanwhile, report facing burnout as they try to take care of their businesses and households at the same time.
The only remotely positive news from the report is that it found evidence of certain economic trends that are likely to be accelerated by the pandemic. More businesses, for instance, are exploring opportunities for online connection and making use of digital payments, both of which are key progressive steps towards the coming generation of consumption.
“That may actually end up being the biggest long-term shift we see stemming from the COVID-19 shutdowns,” wrote Andrew Hutchison, Head of Content and Social Media at Social Media Today. “With consumers forced to shop online, many will become more accustomed to the convenience of such, aided by the simplicity of digital payments. For those already working in the digital sector, that could lead to ongoing opportunities to help usher more businesses along this shift, with many, potentially, putting increased reliance on digital connection, and shifting their business models in line with what the next generation of consumers are growing to expect.”
Hutchison added that while this could have benefits going forward and eventually help SMBs expand their reach into new markets, the immediate future remains difficult and uncertain.
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Image Credit: Photo by Kelly Sikkema on Unsplash
Andrew Collins cut his teeth in politics as a congressional campaign staffer during the 2012 election. Since then he has worked in Washington, D.C. as the digital media manager and as a staff writer at the Franklin Center for Government & Public Integrity, and is a recent graduate of the Trinity Fellows Academy (class of ’17). His work has appeared in Politico, US News & World Report, The Chicago Tribune, The Daily Caller, and The Hill. He lives in Seattle, WA.