Few small businesses are likely to emerge from the pandemic unscathed, and a majority expect to see their revenue fall in what’s shaping up to be a challenging year.
As companies adapt to the coronavirus outbreak that’s causing disruptions to normal life across the world, financial services company TD Bank surveyed small business owners to see how they’re handling the crisis. The survey found that while nearly half (47%) of small business owners have been able to avoid closing their doors even temporarily during the pandemic, that hasn’t been enough for many, as they are still seeing significant declines in earnings.
Lower expectations among business owners
Throughout the pandemic, small businesses have grappled with new uncertainties. In fact, one earlier survey found that more than half of small businesses didn’t expect to survive the pandemic.
Among all small business owners surveyed by TD Bank, 58% said they expect their revenue to be lower in 2020 than it was in 2019. More than a quarter (26%) said they expect their revenue to remain the same, while just 16% said they expect their revenue to rise this year.
The smallest businesses are likely to be impacted the hardest, the survey suggested. Business owners of companies with annual revenues of $500,000 or less were more likely than companies with higher revenues to say they expect a decline in revenue of 10% or more. In fact, more than a third of businesses with these lower revenues (38%) expect a decline of 10% or higher.
Some businesses have sought to offset expected losses through the Small Business Administration’s Paycheck Protection Program (PPP), with 43% of survey respondents saying they applied for a PPP loan. Of those who were successful in getting one, 60% bring in $1 million or less in annual revenue.
Lack of crisis planning
One reason that businesses may be having a tough time recovering from the COVID-19 crisis is a lack of disaster planning. Most respondents (81%) said they did not have a crisis or disaster plan in place before the pandemic hit. On top of that, nearly a third (31%) said they made no changes to their strategy or business operations once the pandemic started having an impact.
However, a majority were somewhat proactive: Among respondents, 69% made some adjustments in response to the pandemic. The most popular change was having employees work from home, cited by 28% of respondents.
When asked about other changes made due to the pandemic:
- 27% said they had cut their operating hours
- 20% instituted temporary or permanent layoffs
- 18% increased spending for additional cleaning
- 13% switched to virtual operations
Additionally, an earlier survey found that some small business owners put a pause on new hiring in order to conserve cash.
When it comes to the future, the business owners surveyed by TD Bank noted that other external events have the potential to affect their business operations. When asked about their top near-term challenges:
- 69% said the health of both the local and national economy
- 25% said getting paid on time without delays of more than 30 days
- 24% cited the presidential election and potential regulatory changes that could result
- 21% pointed to supply chain disruptions
Methodology: Market research company ENGINE INSIGHTS surveyed 750 U.S. small business owners on behalf of TD Bank from June 5, 2020 to June 11, 2020. All businesses in the survey sample had less than $10 million in revenue and 250 or fewer employees.