COVID-19 has presented one of the biggest challenges in recent history.
The impact of the pandemic has been felt by organizations of all sizes, all across the globe – but small businesses were amongst the hardest hit.
In this post, we’ll examine the extent of the impact COVID has had on small businesses by looking at some important statistics.
The stats below show the scale of the problem, how the impact has varied across different regions and business sectors, and reveal the adaptations small business owners have had to make in order to successfully navigate the pandemic.
Let’s start by looking at the key statistics that provide a general overview of the ways in which COVID has impacted small businesses.
According to an article published by business wire, 48% of businesses that had between 1 and 4 employees were impacted severely by the outbreak of COVID-19. Only 37% of larger businesses with 20-49 employees reported severe impact from the outbreak. (Business Wire)
According to Small Biz trends, this decrease was mainly in revenue rather than customer growth. Despite customer numbers still growing, customers are unwilling to spend as much as they did in a pre-COVID world. (SmallBizTrends)
According to a Zen Business survey, 75% of businesses with between 1 and 25 employees would benefit in some way from the government relief bill. However, businesses with less than 10 employees expected to see less positive impact than those with more employees. (ZenBusiness survey)
The same study showed that a good percentage of small businesses expect to bounce back quickly from the effects of the pandemic. Around a ¼ expect to be back to normal in 3-6 months. (ZenBusiness survey)
Unfortunately, the majority of small businesses reported that the pandemic had a moderate or large negative effect on business over a year into the crisis. Interestingly though, 1.8% of small businesses reported that the pandemic has had a large positive effect. (Statista)
While the pandemic might be global, the impact has not been felt equally across different geographical regions. Local outbreaks and national lockdowns have meant businesses in certain parts of the world have been impacted more severely than others.
Here are some statistics that show how that impact has varied across different countries.
But, thanks to largely effective Governmental support schemes, the majority have been able to keep afloat. 99% of small businesses in the UK expect to survive assuming there are no more lockdowns. (Goldman Sachs)
This is similar to the percentage of businesses in the UK that saw revenues drop. This is interesting, given the fact that Australia has been one of the most successful countries at keeping the pandemic under control. Small businesses were twice as likely than large businesses to report a large decline compared to larger businesses. (Rba.gov.au)
Continuing the global trend we’ve seen so far, small businesses in Canada were disproportionately more likely to have experienced a loss of revenue. 32.7% saw revenues decrease by 30% in 2020 compared to the year before. In contrast, only 17.5% of large businesses (those with 100+ employees) reported the same. (Statistics Canada)
According to a survey by the World Bank from May 2020, only around 4-5% of business owners in Sub-Saharan Africa were receiving any kind of financial assistance, and only 6-10% of those in South Asia.
Comparatively, 30-32% of those in North America and 19-21% of those in Europe received financial help. This likely is a reflection of the wealth gap and comparative economic strength of these regions in relation to the rest of the world. (World Bank)
Next, we’ll take a look at some statistics that show the impact COVID has had on small businesses in the US by region. All the statistics below are taken from the latest figures (at the time of writing) from the Small Business Pulse Survey and is based on responses from April 5th – April 11th, 2021
New York (38.7%), D.C (47.3%). For comparison, the national average was 27.2%. (United States Census Bureau)
33.8% of small businesses in Idaho said that covid had had ‘little or no effect’ on their business – 12.8% more than the national average. Similarly, only 11.8% said they’d experienced a largely negative effect, 15.4% lower than the national average. (United States Census Bureau)
While still relatively low, it’s nonetheless surprising that over one-tenth of small businesses in Idaho benefited positively from the pandemic. This is larger than any other state and 5.2% higher than the national average. (United States Census Bureau)
Although the impact of the COVID-19 pandemic was felt across all industries, some small business sectors were worse hit than others by lockdowns, supply chain disruptions, and social distancing guidelines.
Here are some key statistics about how different sectors were affected by the pandemic.
Unsurprisingly, the small businesses accommodation and food services sector was amongst the hardest hit by social distancing and national lockdowns. Unlike businesses like small stores or businesses that could function remotely, many accommodations and food services businesses were fully closed or at least running at reduced capacity for over a year. (Census.gov)
53% of arts, culture and recreation businesses reported largely negative effects from the pandemic, making it the second worst-hit behind accommodation and food businesses. (States Census Bureau)
Closures were one of the main impacts felt by small businesses operating in the entertainment and arts. 70.8% of venues closed for at least one day, but many were forced to close for longer periods of time or run at reduced capacity due to social distancing guidelines. (United States Census Bureau)
Thankfully, not all businesses were overwhelmingly negatively impacted by the pandemic. For example, less than 5% of businesses in the utilities industry reported large negative effects. (United States Census Bureau)
These supply chain issues also affected businesses in the manufacturing, health, and social assistance sectors. (Census.gov)
Many small businesses were forced to make radical changes to their operations in order to adapt to the changing global circumstances. Here are some statistics that highlight the most common adaptations.
Thousands of small businesses across the globe wouldn’t have been able to navigate the pandemic without the help of government lifelines. In the US, the Payroll Protection Program (PPP) loans allowed businesses to keep their staff on the payroll. The vast majority of respondents in a CBIZ survey said they took advantage of these loans. (CBIZ)
Unfortunately, the majority of small businesses had to let go of at least one employee in light of the pandemic, according to data from Zen Business. Loss of revenue has forced businesses to take drastic action in order to cut costs so that they can continue to operate, and that has included staff downsizing.
According to the survey, 27.4% of small businesses laid off 2-5 team members, and 14% laid off over 11. Only around a quarter of SMEs didn’t report any layoffs due to the pandemic (Zen Business)
Despite widespread loss of revenue, 40% of respondents to a CBIZ survey said they planned to increase marketing spending over the following 6 months. Much of this marketing spend will likely have been allocated towards digital channels as small businesses seek to connect with consumers at home and capitalize on the boom in consumer social media use due to national lockdowns. (CBIZ)
This is according to a survey conducted by Score. Small businesses were forced to be agile and adapt their policies and practices in order to keep pace with the rapid upheaval of the business landscape and changing consumer trends. (Score)
In a survey conducted by Zen Business, 51.8% of small businesses with 2-10 employees reported that they now offer remote work as an option for employees. This change comes as 55% of small businesses were forced to go remote during lockdown due to lockdowns and government regulations. This trend towards remote enablement was one of the biggest adaptations made by businesses in all sectors. (Zen Business)
COVID-19 had a huge impact on the world as we know it, and has changed the business landscape more than anyone expected. Here are some predictions and statistics relating to how small businesses will recover and adapt in a post-pandemic world as we move on to a ‘new normal’.
According to an article published by census.gov, around a ⅓ of businesses expect to return to normal operation in 6 months or more. However, as governments roll out vaccinations, some businesses may be able to return to normal sooner than expected. (Census.gov)
The pandemic led to a business-wide adoption of remote work, and many small businesses have begun to recognize the benefits of working remotely. According to Zen Business, remote working could increase in small businesses by as much as 16.5%. (Zen Business)
Despite the pandemic causing many businesses to be forced to lay off staff, it seems that there is a light at the end of the tunnel. Almost half of businesses expect to expand their teams over the next year, which is a positive sign for employees and small business owners. (Small Biz Trends)
As you can see, COVID has impacted small businesses in many profound ways. But with widespread vaccine role outs, there is light at the end of the tunnel. Let’s hope that the next year sees small businesses bounce back and return to business as normal.