87% of Small Businesses Say COVID-19 is Hurting Their Business
When turning on the news these days, you’re likely to be hit with a barrage of numbers — from stats regarding the latest COVID-19 infections and deaths to the astounding unemployment figures. Although this data might not always be encouraging, it does help paint a picture of what’s currently happening in our country. With that in mind, the finance site WalletHub recently conducted a survey of small business owners to see how they were holding up in these trying times.
Sadly it comes as little surprise that the vast majority of business owners surveyed reported that the current pandemic has had a negative impact on their operations, with a whopping 87% asserting that the situation has hurt their business. What’s even more alarming is that 35% of respondents said that, under the current conditions, their businesses would be forced to close in less than three months. As for employees, one-third of small businesses said they had already been forced to lay off workers while 36% planned to do so.
In terms of government response, 68% stated that they didn’t think that enough was being done to support small businesses in this crisis. That said, it should be noted that WalletHub’s survey was conducted between March 25th and March 27th, with the CARES Act only being signed into law on that latter date. In addition to the much talked about stimulus payments being sent to some taxpayers, the bill also included $350 billion in relief for small businesses and their employees. Speaking of those funds, 63% of owners surveyed expected that they’d likely seek them out.
Despite the challenges their businesses may be facing, the majority of owners understand the need not to rush to reopen. According to the survey 79% of respondents stated that the need for preventing deaths from COVID-19 outweighed the importance of getting the economy up and running again. In fact 40% said they believed even more restrictions should be implemented to prevent the spread of the disease.
Commenting on the survey’s results, WalletHub CEO Odysseas Papadimitriou said of the 87% figure, “There are a few clear reasons for this. For one thing, hardly any business is unaffected. It’s not like just a sector or two of the economy has taken a downturn. Most businesses are going to zero revenue, and most businesses can’t survive long without any cash flow. Like most consumers, most businesses have too little saved and too much debt to hunker down and ride out this type of shock to the system without outside intervention.” Papadimitriou also briefly pivoted to personal finance, offering this advice for employees: “Everyone should make a plan for what to do in the event they lose their income, just in case. This whole event should really hammer home the importance of having an emergency fund.”
As we’ve said again and again, the COVID-19 pandemic has brought with it unprecedented economic conditions. Unfortunately that means that the “backbone of the economy” is being hit the hardest. Therefore, during this time of crisis and after we pull through, it’s important that those who can help support their local businesses and other small operations do so to the best of their abilities.