Article #4 in a series exploring the business world’s response to the COVID-19 crisis. This series was inspired by the America Reopens Handbook, which was created by the BizBreakthru team and is available to members.
In our last article, we concluded the following after looking at some very thought provoking data from the Federal Reserve:
More than 80% of small businesses are currently facing an existential threat for which closure is an option under consideration. For these businesses, ceasing business operations is “on the table” and quite possibly being discussed.
Data collection around the impact of COVID-19 is still in the earliest stages, but we can talk about two additional early and ongoing surveys. The Federal Reserve Bank released the results of an April survey of organizations serving COVID-19 is having a significant disruption on organizations serving low- and moderate-income people, according to community organizations nationwide. Overall, the Fed survey found:
- Nearly seven of 10 respondents (69%) indicated COVID-19 was a significant disruption to the economic conditions of the communities they serve and that recovery is expected to be difficult.
- Income loss, business impacts, health concerns and basic consumer needs were the most frequently cited impacts of COVID-19.
- Over one-third of respondents (35%) indicated it will take more than 12 months for their communities to return to the conditions prior to the disruption from COVID-19.
- 72% of respondents indicated COVID-19 is having a significant disruption on the entity they represent, with 41% expecting to bounce back quickly after recovery begins and 31% expecting a difficult recovery.
- Nearly two of three respondents (66%) indicated demand for their services has increased or is anticipated to increase, and more than half (55%) noted a corresponding decrease or anticipated decrease in their ability to provide services.
- A quarter of respondents (25%) indicated their entity could operate for less than three months in the current environment.
Most respondents (64%) represented nonprofit organizations, with government (13%), private industry (7%) and financial institutions (5%) also represented. Another 11% were “other” types of entities. Of all respondents, 72% were direct service providers. So this survey was definitely skewed toward non-profits.
The Cowles Foundation for Research in Economics at Yale University surveyed roughly 8,000 small businesses specifically — mostly those with fewer than 10 employees — and found the following:
- By March 30th, 59% of survey respondents reported that they had already laid off a substantial portion of their employees. The passage of the CARES Act does not seem to have modified this trend, as businesses have continued to lay off workers.
- Business owners’ expectations about the future are in general negative and have deteriorated throughout the survey’s sample period. On March 28th, 30% of respondents believed their business would not recover within two years, but this number steadily increased, with almost 50% of firms reporting that their business would not recover within two years on April 20th.
The general assumption right now is that small- and mid-sized businesses are the ones being hardest hit by the COVID-19 pandemic, due to one basic limitation: cash flow.
From here, our future articles will focus on both management and leadership advice, including some specific recommendations on improving cash flow.
What data and statistics have you seen about COVID-19? How is it impacting your business? Let us know! Share your comments below!