Impact of COVID-19 on Small Businesses Snap Shot
Our parent company, Paychex, conducts weekly “snap polls” to gain insights into business attitudes during the COVID-19 pandemic. Three hundred business owners across the U.S. were asked about how they’re managing their business, supporting employees, staying financially fit, and planning for re-opening. Here’s what they had to said as the country begins to get back to work.
Getting Back to Business As of June 15, 2020, 49% said they are fully open and operational; 42% said they are open on a limited basis; and 9% said they are closed but plan to reopen. Of the businesses that are closed, 12% plan to open this month, 27% plan to reopen in July, and another 27% said they plan to reopen after July. Nineteen percent of businesses are still waiting on conditions to improve before they reopen, and 15% said they’ll reopen as soon as they’re allowed to.
Top Priorities While Reopening
The top priorities for businesses as they reopen include:
- Managing business as usual (25%)
- Maintaining customer relationships (22%)
- Reducing/eliminating expenses (11%)
- Adapting the business to meet evolving phases of reopening (10%)
- Reopening the business (8%)
PPP Loan Status
By mid-June, 34% of respondents had applied for a Paycheck Protection Program (PPP) loan. Of those who applied, 64% had received payment, 15% were approved and awaiting payment, and 10% had submitted paperwork and are waiting for approval. Of those with an application approved or pending, 46% said it’s critical to their recovery, and that they would go out of business without it; 46% said it’s important but they’d survive without it. Of those with an application approved or pending, 60% said the PPP will help them retain or rehire all employees; another 28% said it will help them retain or rehire at least half of their pre-COVID workforce.
Impact of PPP Flexibility Act
When asked how impactful the PPP Flexibility Act would be for their business, most business owners said it would be very impactful: 90% said the extended forgiveness period (from 8 to 24 weeks) will make a big impact, while 79% said the reduction to minimum required use of proceeds for payroll costs will be impactful. Additionally, 82% of respondents said the loan repayment term being extended from two to five years will be impactful, and 80% said the payroll taxes being deferred will be impactful.
As businesses begin to open their doors, they’ve reported these top three challenges:
- Too few customers are returning (26%)
- Customers are uncomfortable coming into the business (20%)
- Getting the word out they’re open (18%)
To entice more customers to come back, 28% of businesses surveyed said they are publicly communicating their safety and social distancing practices, and 22% are doing the same about their cleaning practices. The top three promotional tactics businesses are using to bring customers back are:
- Word of mouth
- Phone calls
Perhaps somewhat surprisingly, 35% have not used any promotions to notify customers that they have reopened; another 35% said they aren’t advertising any differently than they were before the pandemic.
Another challenge facing business owners as they reopen is being able to ensure the health and safety of their customers and employees. The top five tactics business
owners said they are using to ensure customer and employee safety include:
- Cleaning the workplace more thoroughly/often;
- Requiring the use of PPE such as gloves and masks;
- Limiting the number of customers to support social distancing;
- Separating employees from each other; and
- Allowing employees to work from home.
Permanent Workplace Changes
According to the survey, 24% of businesses will allow employees to work from home permanently post-COVID; this increases steadily with business size, as 36% of businesses with 50-500 employees plan to make this shift. From an industry perspective, professional services businesses are far more likely (36%) to institute permanent work from home policies than their peers in other industries.
Businesses also plan on permanently increasing their use of technology to improve employee productivity (23%), and 18% said they plan on offering flexible employee scheduling moving forward.
While 30% of businesses surveyed said they are already profitable, the remaining business owners said they are using or plan to use these top five tactics to operate profitability amid the new normal:
- Advertising more to bring in new customers;
- Using more technology to boost productivity;
- Selling online more;
- Offering new/different products or services; and
- Hiring/rehiring/recalling fewer employees and/or paying employees less.
While the COVID-19 pandemic has caused significant disruption for small and mid-sized businesses across all sectors, they are adapting and evolving in many ways as they reopen, with customers at the forefront of their minds. As they implement new business tactics to bring customers back, they’re also instituting new—and even permanent—workplace policies and procedures to better serve their employees, and to help keep both customers and staff safe.
Overall, businesses recognize that they are in this together, with 70% of those surveyed saying they are making an effort to support other local businesses during this time.
Whether your business is getting ready to re-open or remained open as an essential operation, check out our Back to Business guide for insights and recommendations on ways to adapt your business model, attract customers, increase operational efficiency, and more.
About the Survey
U.S. business owners with 2-500 employees were surveyed in three waves from April 17 to May 4. Each survey has a 5.66% margin of error. The findings in this article are from survey data collected June 12-15, 2020.