This pandemic has not only been a world health crisis, it also serves to be an economic crisis. While the world as we know it has been impacted significantly as a whole, among the hardest hit sectors looks to be small businesses. Mom and pop shops are the heart of all of our communities, and they are facing the ultimate challenge. Small to medium businesses generally operate at very tight margins as it is, and they don’t have the same safety nets that larger corporations are able to fall back on. While forecasts for the future are grim, it’s important to capture what’s happening in the moment. How are small businesses dealing with the impact of COVID-19 and how do they feel about their situations moving forward?
The State of Small Business Report, by Facebook and Small Business Roundtable, based on a survey of 86,000 owners, managers and workers in companies across the US with fewer than 500 employees, is a somber image of the struggle they are facing as they fight for their business to survive. The data also includes 9,000 operators of “personal” businesses (i.e. people who reported that they were “self-employed providing goods or services”). You can read Facebook’s full report here, but below are some of the key points.
Insights of impact
Facebook’s report provides insight as to how many businesses have been significantly impacted by the COVID-19 lockdowns, with a look at the percentage of SMBs in each sector that are currently cannot operate.
As per Facebook:
“According to the survey, 31% of small and medium-sized businesses have shut down [entirely] in the last three months. The situation is worse for personal business (52% of which report shutting down), hotels, cafes and restaurants (43%) and services like wellness, grooming, fitness or other professional services (41%).”
These trends have been in expected in some way, with high exposure businesses of course being forced to close their doors. The numbers also wrap some further context around the 36 million unemployment claims in the US over the past six weeks. The big question is, how many of these businesses will be able to recover and bounce back?
In general, the majority of small businesses remain optimistic with a respective amount of caution.
Lots of “maybe’s” here, but most significant is the lack of “no’s”. This definitely provides hope of most people getting back on their feet and resuming employment, with the economy getting back on track at some stage. Of course, the longer that businesses are forced to remain closed then the path to recovery is significantly more difficult.
Current impacts on revenue
In later notes of the report, Facebook provides some context as to current impacts on revenue, even for those businesses that have remained in operation.
2020 will certainly not be a year of growth for the majority of businesses, if any. However, there are some indications of future potential.
Digital opportunities for small business
More and more business are exploring online opportunities and going digital. This was already a trend, and the pandemic has catapulted all business into the world of online sales and e-commerce. This will most likely end up being the biggest long-term shift we see stemming from the COVID-19 shutdowns. While e-commerce accounted for only around 16% of total US retail sales in 2019, this number is expected to significantly increase in the next years. While retail is the most common e-commerce sector, the pandemic crisis may prompt more businesses to consider their options for digital operations, meeting consumers where they’re spending more and more of their time.
You can read Facebook’s full, 36-page “State of Small Business Report”, which includes a heap of more specific insights and data, here.
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