To assess the economic impact of the COVID-19 pandemic on small and medium-sized businesses (SMBs), Facebook and the Small Business Roundtable conducted a survey in April 2020 of 86,000 people who own, manage or work for a business with fewer than 500 employees. The results are sobering:
- 31% of SMBs surveyed were not currently operating
- 28% of SMBs said their biggest challenge is cash flow
- 47% of owners and managers are burned out from balancing business and household responsibilities
Yet, in spite of the challenges facing SMBs, 57% of owners and managers are optimistic or extremely optimistic about the future of their businesses. And only 11% of businesses still in operation expect to fail in the next three months, should current conditions persist.
Furthermore, many SMBs have pivoted to a digital-first strategy, with 51% reporting increased online interactions with clients and 35% expanded the use of digital payments.
Keep reading for a summary of key findings, or click here to download a copy of the full report.
In early April 2020, Kahn Media conducted a survey of the impact of stay-at-home orders on U.S. consumers. Click here to read the results.
Nearly one-third of small and medium-sized businesses ceased operations due to pandemic-related stay-at-home restrictions.
- Overall, 31% of SMBs shut down during some or all of the three-month period before the survey (January, February and March).
- Shutdowns were more pervasive for self-employed businesses (52%), hotels, cafes and restaurants (43%) and services like wellness, grooming, fitness or other professional services (41%).
Two-thirds of closed businesses expect to reopen in the future.
- Among the one-third who do not expect to reopen, 34% said it’s because they can’t pay their bills or rent.
- Among businesses that do expect to reopen, 41% of owners and managers say they plan to use personal savings to do so while 39% do not know where they’re going to get the money to reopen.
Three out of five businesses (60%) are struggling with their company’s finances.
- Leading financial concerns focused on paying salaries and wages (29%) and paying bills (28%). For hotels, restaurants and cafes, those numbers rose to 44% and 54%, respectively.
- Overall, 40% of businesses reported negative cash flow (more going out than coming in) over the previous 30 days. That increased to 49% for service-oriented businesses and 55% for construction-related businesses.
- Three-fourths (76%) of owners and managers are very or somewhat concerned about their cash situation over the next three months.
- Nearly half (45%) of operating business owners/managers said zero-interest loans or other financial assistance would help them adapt to the current crisis.
- Half (50%) of businesses reported applying for emergency funding from government sources, 11% applied for traditional bank loans and 6% applied for private-sector capital grants.
Due to disruptions in the economy, many small and medium-sized businesses have faced supply challenges.
- Overall, 40% of SMBs reported difficulty with supply challenges, which increases to 67% among retail businesses and 50% among hotels, cafes, and restaurants.
- Businesses reported limited supplies of specific products (61%) and delayed shipments (56%).
- To keep supplies flowing, 13% of businesses have used new suppliers, 18% delayed orders and 24% adjusted their delivery schedules.
Businesses have been vigilant and proactive about keeping customers, employees, family members and communities safe from the coronavirus.
- 51% report increasing online interactions with clients to reduce the spread of the virus.
- 48% reported cleaning offices and work spaces more frequently.
- 45% have provided gloves, masks, hand sanitizers or other protective equipment to their workers.
- 47% have faced shortages of sanitation or cleaning supplies.
The vast majority (79%) of businesses have changed their operations to accommodate clients and customers.
- 35% have expanded the use of digital payments.
- 23% have begun offering curbside pickup.
- 24% have begun offering home delivery.
The internet has helped many businesses continue to operate during the pandemic.
- 56% of business leaders that use online tools said their company makes at least half their sales digitally.
- 37% use digital payment tools.
- 23% use digital ordering tools.
- 16% use service delivery tools.
Work-from-home scenarios do not work for all small and medium-sized businesses.
- 51% report that a majority of interactions between clients/customers and employees/workers need to be conducted in the same physical location.
- 35% of operational business owners/managers report that they can not work remotely, which drops to 17% for information and communication businesses but increases to 67% for hotels, cafes, and restaurants.
To reopen successfully, businesses need access to capital and they need customers.
- For closed businesses to reopen, 57% said they need the government to allow operation and another 20% need to secure funds.
- 47% of open businesses are afraid of borrowing money because they’re not sure if or how it would be paid back.
- Only 28% of surveyed businesses have a line of credit or a loan from a financial institution.
- When business leaders considered their greatest challenges over the next few months, 28% cited cash flow and 20% said lack of demand.
Balancing the needs of their business with the needs of their household is a challenge for many owners and managers.
- 47% feel burned out trying to take care of business and household at the same time.
- 34% report that it has been difficult to pay their household’s usual expenses in the last 30 days.
- 29% are concerned about bringing COVID-19 home.