A Year in Review — How the Pandemic Affected Small Business
At the beginning of 2020, the world underwent a massive change simultaneously, but mostly alone in isolation. Life as we knew it would never be the same and a year filled with a variety of challenges would ensue.
The year was particularly challenging for small businesses across the country, and owners have proven how important it has been to adapt to changing circumstances. Small business is the backbone of the economy, accounting for nearly half of the workforce.
Although small business is essential to many sectors, many companies did not survive the pandemic’s entirety.
The Pandemic’s Effect on Small Business
For those small businesses that are forced to close, the losses can be devastating. What happens when you sell your business during a pandemic? It’s certainly not the best time to sell your business. Many small business owners are left without an income and no hope of selling. A quick look at a few stats yields some grim numbers. According to Forbes: “The Yelp Economic Impact report, which tracks business closures through Yelp customer review listings, found that an estimated 163,735 businesses have closed in the U.S. since March 1. The numbers represent an increase of 23% since July 10, when the count of closures sat at 132,580.” And CNBC reported that “Yelp data shows 60% of business closures due to the coronavirus pandemic are now permanent”
Some businesses have found ways to survive, even if only temporarily, while other industries have suffered great loss. A CNBC report: “7 months into the pandemic, small business owners don’t know how much longer they can hold on: ‘We are in survival mode’ More than 82% of the jobs lost since February have been service jobs, according to the U.S. Chamber of Commerce. Retail jobs are down 4% while leisure and hospitality jobs are down about 25%.”
PNAS research on the impact the Pandemic has had on small business outcomes concluded: “In our sample, which is skewed toward the retail sector, we found that 43% of businesses were temporarily closed and that employment had fallen by 40%. This represents a shock to America’s small firms that has little parallel since the Great Depression of the 1930s. Our results suggest that many of these firms had little cash on hand toward the beginning of the pandemic, which means that they will either have to dramatically cut expenses, take on additional debt, or declare bankruptcy.”
A Glimmer of Hope for Small Businesses
Because of this adversity, many have discovered more effective methods of conducting their business that will serve them for decades to come.
Choosing to take the lessons learned and implementing tools and tactics garnered through the most trying year in generations sets the businesses still standing a clear competitive advantage.
Maybe you learned that your business should be more receptive to market fluctuations. Perhaps you realized how quickly consumer needs can change and how to adapt to them. Maybe, you discovered how essential it is to work closely with your personnel to overcome challenges together. Perhaps it was all of the above.
Whether your business found new ways to serve your clientele, operated with minimal staff, or discovered new avenues through which to operate, you likely found hope and strength to continue doing business, even though it wasn’t always “business as usual’”
For businesses that have been able to remain open, there is hope. Research reported in the PNAS Academic paper concluded : “Among firms with at least 20 employees, 71% expressed that they were either very likely or extremely likely to survive, which may indicate greater access to outside resources despite having a higher expense base.” And
“…whether firms will be open on December 31, 2020. Overall, more than 90% thought it is at least somewhat likely that they would be open. More than 63% reported that it is very or extremely likely that they would be open—which we later use as a measure of the probability of being open.”
Whatever the case, you hopefully determined that this too shall pass. Small business owners train themselves to be stronger for whatever they may face in the future. Although the pandemic is still negatively impacting small businesses across the country, there is still much opportunity to continue adapting and finishing strong.
Small Business Moving Forward
Although the pandemic is still negatively impacting small businesses across the country, there is still much opportunity to continue adapting and finishing strong.
In the coming editions of The Monthly, we will release keys to small business owners preparing for the new year and exploring options for their businesses as we move further into the 2020s.
Learn more about the process of selling your business here.