Small Businesses Feel Biggest Impact of Coronavirus Pandemic
Forty-three percent of those say the impact was significant to severe, according to the CBIZ Main Street Index
The survey was conducted by
“While we have known small businesses were impacted by the pandemic, the index begins to quantify the uncertainty around this sector,” said
The data was assessed as a whole, as well as on a company size, regional and industry level. Key findings include:
- Overall business health has been drastically impacted - Over half (51%) of respondents reported a significant decrease in sales due to the pandemic. More than 17% said they are seeking extensions on recurring payments like rent, and less than 60% of these businesses have been granted such extensions. Survey results also demonstrate geographic differences, as businesses in the West experienced a more dramatic impact, with those in the Midwest seeing less of an impact.
- Current valuations are also feeling the impact, while future growth potential remains uncertain - Twenty-two percent of respondents indicated a shift in business valuation due to the pandemic. In the immediate-term, 68% of respondents indicated concerns around revenue loss, while 32% were concerned about a prolonged sales cycle.
- Smaller businesses have been disproportionately impacted - Nearly 48% of businesses with 1-4 employees have experienced a significant or severe impact. For businesses with 20-49 employees, 37% noted a significant or severe impact.
Effects were felt across industries with some more impacted than others - Industry-level analysis shows Accommodation & Food Services,
Arts & Entertainment, Educational Services and Transportation sectors were among the most dramatically impacted, whereas the Professional Services, Insurance, Financial Services, Government and Construction sectors were among the least impacted.
- Small businesses took advantage of lifelines - Nearly 85% of respondents took advantage of the Payroll Protection Program allowing them to bolster their businesses during the downturn and keep team members in place for the anticipated bounce-back. Diving deeper, 96% plan to maximize PPP loan forgiveness. Meanwhile, 9% have had difficulty accounting for PPP loans received.
- The road ahead is still uncertain, but there are signals of optimism - Over a quarter (27%) of small-to-mid-sized businesses indicated they would be reducing staff in the next six months, and 17% believe they may need to apply for additional loans and outside funding. Even so, some businesses are investing in themselves, with over 40% planning to increase marketing spending and nearly 20% noting they will grow their workforce.
Noftsinger added: “Despite the headwinds for small- and medium-sized businesses, we are pleased to see this important sector remains optimistic for the next six months, and the indication of reinvestment is encouraging.”
For a more in-depth review of data from the CBIZ Main Street Index, please visit the CBIZ website.
*Note: Not all of those surveyed in the CBIZ Main Street Index are clients of CBIZ.