31% of SMBs Closed from Coronavirus Pandemic, Facebook Study Finds
The coronavirus (COVID-19) has delivered a devastating hit to small and mid-sized businesses (SMBs), a joint study backed by Facebook and the Small Business Roundtable of 95,000 SMB owners, managers and workers, including self-employed operators, found.
For SMBs, the pandemic is not only a public health crisis, it’s also an economic emergency the likes of which hasn’t been seen in 80 years. As of April 2020, nearly one-third of SMBs in the study said their business wasn’t operating. And, for the smallest businesses, mostly run by women, more than half are closed, the State of Small Business Report said.
“Think of your favorite small business. It might be the corner shop where you grab coffee on the way to work, the barbershop where you get your hair cut, or the restaurant you take your kids on special occasions,” said Facebook chief operating officer in a blog post. “Now imagine how much you’d miss it if it disappeared. Small businesses are the heartbeat of our communities and they’re in real trouble.”
Still, among SMBs, a sense of resilience persists that the future will be brighter. Even amid the worst global pandemic in a century, SMBs are hopeful and optimistic that their businesses will survive, the survey discovered.
Here are the top level results:
Small businesses are closing their doors and facing an uncertain future. 31% of owners and managers reported that their SMB is not currently operating. Among personal businesses, that number rises to 52%, of which 55% were led by women.
SMBs’ biggest challenges are access to capital and customer behavior. 28% of SMBs said cash flow is the biggest challenge they would face over the next few months. 20% said their biggest challenge would be lack of demand.
To adapt to the ongoing crisis, SMBs are turning to internet tools. 51% of businesses report increasing online interactions with their clients. 36% of personal businesses that use online tools are conducting all their sales online. 35% of businesses that have changed operations have expanded using digital payments.
Small business owners are struggling to balance running a business and caring for their households. Nearly half (47%) of SMB owners and managers report feeling burned out trying to take care of business and household responsibilities at the same time. 62% of respondents report spending between one and four hours a day on domestic or household care activities. More women owner-managers (33%) reported that household responsibilities were affecting their ability to focus on work “a great deal” or “a lot” than men (25%).
Employees are facing dire economic circumstances. Large majorities of employees don’t have access to paid sick leave (74%) or paid time off (70%); among hotel, cafe and restaurant employees those numbers rise to 93% and 94%, respectively. Only 45% of owners and managers of SMBs reported that they would rehire the same workers when their businesses reopened. The same was true for 32% of personal businesses.
Still, SMB owners and managers remain optimistic and resilient. Nearly 60% of SMBs report that they are optimistic or extremely optimistic about the future of their businesses. Only 11% of operating businesses expect to fail in the next three months should current conditions persist.
The report is the first in a monthly series covering the crisis facing American businesses. While the studies were planned before the virus hit, the social media giant and the small business advocate expected the results to paint a rosier picture. “ Instead, it brings home the scale of the crisis that our economy is facing and helps point to where help is most needed,” Facebook said.