6 months into COVID-19, the small business economy is "ugly"
Nearly half of small businesses are at risk to fail by the end of this year, and the pressure on retailers is extending to business-to-business owners as well.
Low consumer confidence related to COVID-19 continues to plague small businesses. In a survey of 6,325 small business owners conducted by Alignable between Sept. 18 and Sept. 21, 60 percent said they continue to experience negative financial impacts related to the pandemic, and nearly half of those said the impacts are significant.
While some encouraging trends have begun to emerge and impact levels are showing signs of declining, Alignable said the situation is ‘ugly.’ The survey found a high degree of pessimism among small business owners, with 42 percent saying they expect fourth-quarter revenues to come in below what they need to stay in business.
Alignable, which began tracking the financial impacts of COVID-19 on small businesses in March, estimated last month that 35 percent of Main Street retailers were at risk to close during the fourth quarter. Just 30 days later, that figure is now 45 percent.
The pressure on retailers is extending to business-to-business owners as well. Twenty percent of B2B owners think more than half of their clients could close their doors by the end of this year. As a result, many B2B owners are also at risk to fail, with creative services providers, energy/utilities, general business service firms and construction companies at highest risk to shutter by the end of this year.
Small business owners said low consumer confidence is the biggest problem impacting their financial wellbeing. More than one-third of respondents who have been negatively impacted by the pandemic said reducing COVID-19 case levels would help them the most.
Business owners also said additional federal relief programs would be helpful, and almost three-quarters of respondents who have been negatively impacted said they would apply if a new relief package became available. However 27 percent of that group would only apply if the terms attached to the aid were less restrictive.
Interestingly, 47 percent of small business owners who reported the pandemic has had a positive impact on their business also indicated they would apply for available federal relief if they could. Alignable said the government should put checks in place to ensure businesses that truly need assistance the most would have access to aid packages.
Business owners also favored state and local programs that encourage support of local business, but about 15 percent of small business owners said the only thing they think they can do about the current situation is ride it out.
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.
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