QuickBooks Data Highlights COVID’s Financial Impact on Small Businesses
At long last, it seems as though the United States is slowly putting the pandemic behind it as vaccination rates increase and mandates are rolled back. As that happens, however, many small businesses are continuing to pick up the pieces from what’s been a rough year for many. On that note, a recent report from Intuit QuickBooks shows just how much small businesses were hurt financially at the start of the pandemic and which industries have seen the largest impacts since.
For this study, Intuit QuickBooks partnered with Sand Hill Econometrics founder Susan Woodward to analyze customer data and net bank deposits (excluding loans or government assistance). In all, the report’s data comes from nearly one million small businesses, representing a variety of sectors. However, Intuit notes that the majority of businesses included have 10 or fewer employees.
Not surprisingly, the pandemic’s impact on small business cash flow was most dramatic in April 2020 as lockdowns began in many parts of the country. During this month, overall revenue dropped by 22%. That represents a loss of $4.6 billion among the businesses included.
Looking at what states were hardest hit during this game-changing month, New York — which was once the epicenter of the virus in the U.S. — ranked number one, with small business revenues falling 35%. Nearby New Jersey also ranked highly with a 31% dip while Michigan saw a 32% decline and Hawaii witnessed a 31% drop. Elsewhere, California (and particularly the San Francisco area) were also highly impacted as revenues were down 28%. Small businesses in two U.S. territories were also rocked as revenues in Puerto Rico and the Virgin Islands fell 34% and a whopping 45% respectively. On the other end of things, Arkansas saw the smallest decline, down just 4%.
Of course, while April 2020 was the most brutal month of the pandemic, it was also only the beginning. With that in mind, QuickBooks also compared small business revenues from April 2020-March 2021 to those of April 2019-March 2020 to determine which industries saw the largest financial impacts. Topping the list on a “percentage decline” basis was oil and gas, which dropped 20% as many Americans began working from home and traveling less. Also seeing a 20% year-over-year revenue decline was the recreation industry. Specifically, QuickBooks found bowling alleys to be among the hardest-hit businesses, with annual revenues down by one-third. Other highly impacted industries included local transport (19%), movies (15%), and hotels/lodging (12%).
While small businesses on the whole may have taken a hit during the pandemic, some industries actually saw revenues increase. For example, the finance and insurance sector saw revenues grow 14% year over year. In fact, revenues among mortgage bankers ballooned 30% when compared to the year prior. Additionally, agricultural services and fishing/hunting businesses grew 11% and 10% respectively. Some of the other resilient industries named included building and gardening materials (10%), utilities (10%), forestry (8%), and crop production (8%).
Although the worst is hopefully over for small businesses, there’s still a need for further assistance. Despite those in some industries returning to normal or even outpacing their 2019 revenues, others are still struggling. So, while there will likely be plenty of reasons to celebrate in the coming months, it’s important that the U.S. continues to support small businesses and help them get back on their feet after a truly traumatic year.