As the coronavirus crisis stretches on with no immediate end in sight, most small businesses are now worried that they may not survive it.
The Society for Human Resource Management (SHRM), an organization for human resources professionals, has been monitoring the impact the COVID-19 outbreak has had on employers. While companies of all sizes are suffering from regional shutdowns, employee health concerns and declines in revenue, a recent SHRM survey suggests that small businesses are particularly at risk.
The outlook is not good for many small businesses, as slightly more than half (52%) said in late April that they expect to be out of business within six months, whether or not they make changes to their operations during the pandemic.
On top of that, 20% expected to be out of business within three months, and 12% expected to close their doors within just one month of the survey.
Reality dashes optimism
Throughout the pandemic, small business owners have put on a brave face. An earlier survey found a great amount of confidence among business owners who believed the measures they put in place to respond to the coronavirus outbreak would allow them to survive the crisis if it lasted about three months. However, business owners polled in that previous survey were less certain about the future of their organizations if the crisis were to last six months or longer.
The new SHRM survey looks at how small businesses have had to adapt thus far. A sizable percentage (42%) said they have had to close their business at least temporarily because of the pandemic. When it comes to types of businesses:
- 46% of service-based businesses such as retailers, food service operators and personal care providers have been forced to close
- 43% of businesses in physical-type industries such as construction and manufacturing have had to shut down
- 38% of businesses in knowledge-based industries such as professional services, finance and real estate have had to close shop
Almost two-thirds of respondents (62%) said they have witnessed a general decline in revenue since the beginning of the pandemic. Of those businesses:
- 47% reported revenue losses of between 10% to 30%
- 41% reported revenue losses of more than 30%
- 13% reported experiencing a total loss in revenue
Generally, the biggest of these losses have been felt by small businesses in service industries, the survey found. Specifically, roughly three-fourths of service industry small businesses lost more than 30% of their revenue during the pandemic, compared to some 50% of businesses in physical-type industries and 33% of businesses in knowledge industries.
Also, businesses with between two and 99 employees were more likely to report higher revenue losses than organizations with 100-500 employees.
Planning for recovery
Business owners have made a number of adjustments throughout the crisis:
- 14% of respondents reported laying off all their employees, while approximately 41% said they had laid off at least some
- 40% said they had reduced employees’ hours to avoid layoffs
- 76% reported letting temporary workers go
When it comes to layoffs, however, the good news is that 66% of respondents believe the job cuts will only be temporary.
Meanwhile, business owners aren’t entirely sold on government efforts to help local economies. Only 46% believe the federal government is doing enough for businesses, while 49% say their state government is doing enough. Yet many are taking advantage of government assistance:
- 67% of respondents had already applied for a COVID-19 relief loan or were planning to do so
- 68% were familiar with the Paycheck Protection Program, and nearly half said it had directly influenced their decision to keep or rehire employees.
A majority of small businesses — nearly 7 in 10 — believe it will take less than six months after the pandemic finally ends for business to return to normal.
Methodology: SHRM surveyed 375 small business operators between April 15-21. The survey sample consisted of 250 owners with companies that have between two to 99 employees, and 125 owners of organizations that have 100 to 500 employees.