Small Businesses Recover From The Pandemic, But Issues Await
With the world reopening, consumers are returning to small businesses in person, bringing forth a new host of opportunities and challenges alike. In its “Road To Recovery Report,” online referral network Alignable shares the results of a survey of almost 6,000 small-business owners in the U.S. and Canada on the impact of the coronavirus. The survey, conducted in July, found that COVID’s significant financial impact on small businesses declined significantly—less than 22 percent of businesses reported significant impact in June, down 27 percent from the previous month.
Alignable’s data shows that in June, the share of businesses experiencing the pandemic’s most significant financial impact dropped below 25 percent. Many businesses owners were describing its impact as in decline (28 percent) or over (seven percent).
The data also showed that businesses were recovering—33 percent of small businesses reported that revenues were at or above pre-COVID levels. A majority of businesses surveyed, approximately 60 percent, expect business to be at that level by the end of 2021, 77 percent of businesses expect to be there by the middle of 2022 and 88 percent anticipate being back by the end of 2022. However, seven percent of businesses surveyed don’t believe their revenue will ever return to pre-pandemic levels.
Three-quarters of businesses (76 percent) told Alignable in July that they are fully open, and the number of businesses saying that they are temporarily closed dropped to five percent.
Alignable has found that at its high, the pandemic affected more than 90 percent of small businesses. Going forward, how well their recovery continues depends on certain volatile factors—the cost of supplies and inventory, businesses’ ability to pass along increased costs to customers, and the cost and availability of labor.
The survey found that 80 percent of businesses are dealing with increased supply and inventory costs, with 27 percent of them reporting increases of 25 percent or more. Rising prices significantly impact businesses’ margins if they can’t pass these costs on to customers. However, due a range of factors, such as the desire not to alienate customers, many businesses owners are hesitant to do so. Subsequently, while Alignable found that while 27 percent of businesses have seen their prices increase by 25 percent or more, only seven percent have been able to raise their prices to the same extent.
Labor is also presenting a challenge, with 27 percent of business owners surveyed saying that labor is significantly more difficult to find than it was prior to COVID. For some industries, the effect is more significant—74 percent of restaurant owners say help is hard find, as do 66 percent of small-business owners in transportation, 63 percent in the automotive industry, 62 percent in manufacturing, 59 percent in the beauty industry, 56 percent in construction and 47 percent of retailers. For those that have been able to fill open positions, 44 percent have had to raise their wages.