By US Chamber,
Amid growing concerns about a “second wave” of the pandemic, the small business recovery sputtered in recent weeks, according to a new poll of small business owners taken July 9 – 16 and released today by the U.S. Chamber of Commerce and MetLife.
After retreating from record lows earlier this spring, key measures like perceived business health and cash flow have stalled, and the number reporting concern around reopening guidance has increased. Nevertheless, small business owners remain unyieldingly optimistic with regards to future revenue and bullish on hiring and investment plans, the survey found.
Small businesses reporting good overall health (55%) is down 14 percentage points from the end of 2019. The number of small businesses that say they are in poor health (18%) has held flat in this month’s report and is roughly double the number that reported the same prior to the pandemic. Additionally, those reporting they are not comfortable with their cash flow (45%) are doing so at a level three times higher than pre-pandemic levels.
“The survey indicates small businesses have reached stable, but significantly lower perceptions of their health and of the health of the wider economy compared to before the pandemic began,” said Tom Sullivan, U.S. Chamber vice president of small business policy. “It’s a long road to recovery. Their cash flow concerns, in particular, indicate many small businesses still face serious challenges meeting their monthly expenses like payroll, utilities, and rent.”
Despite the stall around key measures of business health on Main Street, there are a couple of bright spots for small business owners. According to the poll, 86% of small businesses report that they have fully or partially reopened since the pandemic began and the number of fully open businesses climbed 11 percentage points from May.
More than half expect next year’s revenues to increase (53% vs. 50% in May and 47% in April), while 18% expect them to decrease. Small businesses are now more likely to report plans to increase investments in the upcoming year (35%), up eight percentage points from May. This is nearly double the number that report plans to reduce investments (18%).
“We know concerns remain among small businesses as they contemplate future spikes and a potential second wave of the virus,” said Jessica Moser, senior vice president, Small and Specialty Business at MetLife. “But the fact that 55% of owners say that their businesses are in good health and 53% say they expect next year’s revenue to increase, leaves room for some cautious optimism for the future.”
Though staffing levels are currently in flux for some due to COVID-19, long-term staffing expectations look more positive than previous reports. Six out of ten (60%) of small businesses report maintaining the same size staff over the last year (down from 67% in May) and 20% report increasing staff over the same period (up from 13% in May). However, more small businesses anticipate increasing staff in the next year, up seven percentage points (30% versus 23% in late May). One caveat with staffing is nearly three in ten small businesses (29%) have adjusted their employee salaries or hours in response to the pandemic.
Looking Ahead and Reopening Adaptations
Many small businesses (78%) remain concerned about the impact of coronavirus with two-thirds (65%) concerned about having to close again or stay closed if there is a second wave of COVID-19. Concern around a second wave is particularly high among small businesses that already had to temporarily close (85%), those in the South (72%), and in the service industry (72%).
Seven in 10 small businesses report adjusting business operations to prepare for a second wave of Covid-19 and subsequent business interruptions. The most common preparations include evaluating long term staffing plans or making plans for future layoffs (30%), purchasing additional supplies to prevent shortages (32%), updating their website and/or social media profile(s) (29%), and increasing e-commerce or digital payment options (25%).
Small businesses are also looking for more guidance on reopening. This month, more expressed concern over the lack of guidance on proper reopening procedures, up eight percentage points from the previous report released in June (56% vs. 48%).
“As America’s businesses look to reopen safely and keep their employees and customers healthy, employers are facing unprecedented new challenges and are looking for certainty from our elected leaders. Main Street needs assurances from Washington that small business will remain a priority in rebuilding America’s economy.” said Sullivan. “It’s a long road to recovery, but SBA loan assistance and nation-wide liability protections will help small businesses get back up and running at full speed.”
More than half of small businesses (56%) believe it will take six months to a year before the small business climate returns to normal, in line with late May’s 55%. Another 7% think that it will never return to normal.
The Small Business Coronavirus Impact Poll is a special monthly coronavirus report, separate from the quarterly MetLife & U.S. Chamber of Commerce Small Business Index. To read the full report, visit uschamber.com/sbpoll.
For small business resources on the coronavirus, please visit uschamber.com/co. The latest resources, step-by-step guidance, and insights to help American businesses, workers, and families is available at uschamber.com/coronavirus.