COVID-19 Impact on Small Business and What You Can Do About It

COVID-19 Impact on Small Business and What You Can Do About It
Categorized as COVID-19 Relief Series Tagged

There’s a great deal of uncertainty for small business owners during this pandemic and the shaky economy. Many small businesses are pulling together hope and optimism. Others have shut their doors without much warning or notice. Here’s a rundown of some of the latest news and information for small business owners.

There Is Optimism Out There

According to the latest MetLife & U.S. Chamber of Commerce Small Business Coronavirus Impact Poll (PDF), there is hope among small businesses, even as the Coronavirus cases and death tolls rise. More and more businesses that closed their doors as a precaution in the early stages of the pandemic are now reopening. Here are some of the key findings from the report:

  • 86% of small businesses surveyed report they are either fully (52%) or partially (34%) open
  • 70%, though, are concerned about financial hardship due to prolonged closures
  • More businesses expressed concern over the lack of guidance on proper reopening procedures, up eight percentage points from late May (56% vs. 48% in May)
  • 24% describe the economy as “very poor” while 28% say the national economy is “good”

The bottom line is those small businesses are cautious but have a sense of guarded optimism for the near future.

Many Small Businesses Are Shutting Down

According to this Bloomberg article, larger companies are filing a record number of bankruptcies. Small businesses, however, might just be shutting their doors and not filing bankruptcy and not reporting the closure. Is that a pandemic of bankruptcies for entrepreneurs? It might be. 

Here are some key notes from the article:

  • The “wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce, and because owners of small firms often have no debt, and thus no need for bankruptcy court.”
  • Yelp! reports “more than 80,000 permanently shuttered from March 1 to July 25”
  • Restaurants lead the way in closures, followed by Retail & Shopping, Beauty, and Automotive businesses
  • A June NFIB survey reports that “a net 31% of owners reported lower sales in the past three months, while 7% reported higher sales a year earlier. In the same survey, only 13% of business owners said it was a good time to expand, a dip from 24% a year earlier.”

Remember, there is help out there. Don’t let your business close without getting the help it needs.

Did The Federal Assistance Money Help?

We have done a series of blogs about the economic relief that’s out there for small business owners, from federal grants and loans, private grants, and support organizations. Even with all that help, many businesses struggle as the help runs out. With Congress stuck (as of publish date) and unable to pass a stimulus bill, more assistance in the way of stimulus checks for your customers is up in the air. 

According to CNN, much of that loan and grant money has run out, and customers are not returning to normal numbers, leaving small businesses in a cash crunch: “When Congress created the Paycheck Protection Program in March, they didn’t expect parts of the country would be locked down this long. The loan was only meant to cover about 2.5 months of payroll costs. For the businesses who received one quickly in April, the money would have likely run out by July.”

And here we are in August! Plus, small businesses have tight rules around how they’re allowed to spend the money that was received from the PPP loan. They can’t use the money to help grow or pivot the business. They must spend it on payroll and rent/mortgage costs.

Are You Optimistic or Worried?

Whether you’re feeling optimistic or concerned about your business’ future in this pandemic economy, one thing is certain: uncertainty. None of us know how things are going to go. But we can prepare for the worst and the best. With a good business plan in place, along with contingency plans, you can make sure your business is not one of those filing for bankruptcy.

Call our office at 888-297-3321 to schedule a complimentary business review.