Alignable: Road to Recovery Report (April 2021)
DATA INSIGHTS | COVID IMPACT/MONTHLY REPORT |
Hope Gets A Shot In The Arm
- COVID Financial Impact Sees Major Reduction
- Resurgence Of Fully Open Businesses
- But Will Customers Return?
- And How Will Inflation Impact Recovery?
Report Overview
Since March 2020, we’ve collected data from our members to help them navigate the COVID Crisis. Our efforts have also informed some legislators, guiding them to enact beneficial policies. And our ongoing media work has encouraged major national outlets to focus on the needs, desires, and triumphs of diligent people fueling the most important segment of the world economy… small business.
Unless otherwise noted, this month’s data was collected from 3/27/21 to 3/31/21 among 10,440 small business owners surveyed. Other insights were derived from 600,000+ poll responses collected since March 2020, as we’ve mapped the Coronavirus Impact and Recovery of the Small Businesses Economy across the United States and Canada and tracked the impact of relief programs.
For more details about any of these findings, including the methodology behind our polls, please contact Chuck Casto at chuck@alignable.com.
CORONAVIRUS IMPACT LEVEL IMPROVES DRAMATICALLY
- “Significant Impact” Decreases By 20% To 38%
- But 75% Still Experience Negative Effects
Last month, the massive effort underway to distribute vaccines across the U.S. gave us hope we’d see a significant improvement this month and we were not disappointed. (Let’s face it, last month’s report showed some devastating trends, many of which have reversed, at least for now).
For the first time since the onset of the COVID Crisis, the number of small business owners experiencing significant, negative financial impact dropped below 40%. And this occurred in a dramatic fashion, dropping 20% in just one month’s time.
While the crisis is far from over, it was terrific to see the vast majority of this shift landed in the bucket of declining impact cited by 28% of those polled. That was a new record spanning a year’s worth of polls. And this declining impact doubled from last month to this one.
Side note: I was on a call recently with a business owner in Waterloo, Canada. He shared how, without vaccine production capability, Canadian citizens and businesses were in a much different position. While roughly 30% of the U.S. population has received at least one dose, this number is a scant 9% in Canada. We clearly have a long way to go before we can claim Mission Accomplished to this nightmare.
When we look at the overall negative impacts, we also see a slight reduction in businesses saying they feel like they are out of the woods.
And though 75% of businesses still report some negative impact, the shift from “significant” to “declining” is the big story this month.
Several polltakers’ comments reflected the changes displayed in this month’s data, while other opinions show that many SMBs remain on the brink (as nearly 4 out of 10 still say they’re severely impacted by COVID). Let’s look at the range of stories they shared:
“The real estate market is still strong so far in 2021. It should be a good year for buyers and sellers.”
“I've always worked from home on meeting platforms like Zoom, so my yoga work didn't change. I actually got additional clients because they were at home or needed a career shift. I'm expanding my reach, because I don't have to ‘be there’ to lead workshops, etc. I am contributing more money and time to charities and to political campaigns, as well.”
“There is nothing to recover from. My work never stopped.”
“Information Technology auditing never ends. In fact, it’s more important than ever. So I'm very busy. Work never stopped for me.”
“Fortunately, the pandemic has not affected the voiceover business much. The business has pretty easily moved to home studios, and in some cases, has provided more opportunities.”
“We are able to list and sell property. However, we can’t meet monthly to stay in touch with each other as we have before. That limits our teamwork and productivity.”
“I am self-employed, dealing with cancer, and have yet to get any financial help from the SBA!!!!”
“I am a musician and perform in a band. All of our venues closed and have yet to reopen. My fear is that many venues may never open again.”
“Clients are making less, so they’re not investing as much in my services.”
“My work as a court reporter is not returning as before.”
“I’m really worried about the government taking over all industries either outright or through regulation. And then we’ll lose all ability to operate in a capitalist market.”
“Without SMBs, our country will be gone in 5 years or at least be unrecognizable from what it was before this crisis!”
WILL INFLATION DEFLATE RECOVERY?
Each month, we ask our members about how much cash they have on hand along with what’s giving them the greatest concern about getting through the COVID crisis.
We saw an encouraging trend this month regarding cash levels -- with 30% of small business owners indicating they had a month or less of cash on hand. What’s encouraging about that, you might ask?
Well, last month, this percentage was 44%! And 30% is on par with the pre-pandemic levels.
When it comes to the cash needed for recovery, it’s important to consider how inflation might deflate the recovery. Here’s an early red flag we’ll need to monitor moving ahead. It’s one of the answers to our question about business owners’ greatest concerns (covered more fully below).
Over the past two months, we’ve seen a significant increase in concerns over the cost of supplies rising. Two months ago, 9% of those polled cited this as their primary worry. Last month, that number jumped to 12%. And this month, it has elevated again, reaching a new peak: 17%.
To rebuild our local economies, we’ll need to lead a massive movement persuading consumers to shift their purchasing behavior from major online providers back to locally owned businesses. While these business owners compete by tapping their personal experience and know-how, they also need to be able to access inventory and supplies at competitive rates to stay in the game.
Rising prices of supplies could hit these businesses more significantly than their much larger competitors. And if this happens, local recovery efforts could be threatened. (See more in our “Greatest Recovery Concerns” section below).
REOPENING STATUS & BUSINESS CLOSURES
- Light At The End Of The Tunnel -- Still Elusive
- But More Doors Are Opening Once Again
It’s almost as if President Biden read last month’s report and, shortly thereafter, proclaimed our suggestion "we need to get everyone vaccinated before May." Well done, President Joe. This is a major step in the right direction.
I also applaud efforts to reopen local economies (safely and based on CDC guidelines).
When we asked business owners, who have not reopened fully yet, when they expect to return to their pre-COVID levels of operation, the vast majority still believe it will be late summer at the earliest.
But the good news here is: the percentage of fully reopened businesses rebounded nicely this month after a five-month slide, jumping above 60% for the first time since October. That’s another major step in the right direction. (Compared to last month, that figure jumped from 45% to 62%).
To add more meat to the bones of this trend, here are a few comments from our members about reopening.
“We’re relieved we’re finally open again – and we’re seeing some customers slowly coming back.”
“We are hanging in there. As long as things stay open.”
“Currently, we have a 6-month backlog of jobs. It would be a lot better if the government got out of the way and let more people reopen their doors. P.S. -- We did not accept PPP funds, and quite frankly, we don't need them. We need an open economy.”
“Recent openings are promising, for sure. But I think the government should allow 100% of small businesses to open back up. Let’s get the country moving back in the right direction. Bailouts or handouts don’t work. The tax dollars they’re using will run out one day. The country needs tax dollars from small businesses.”
GREATEST RECOVERY CONCERNS
- COVID Cases Rise & Reclosures Take The Top Spot (Again)
- Consumer Concerns Seem Mitigated By Vaccine Distribution
- Worries Over Rising Supply Costs Nearly Double Over 2 Months
At this point, it’s no longer a surprise to see concerns over government-mandated closures rise as COVID case levels surge.
But, as vaccination levels continue to rise, we anticipate further improvements in financial concerns, as well as consumer confidence. And once consumer confidence steadily increases, we hope to see a massive change in consumer behavior, which can make a sustained recovery is possible.
The return of warmer weather and the ability to safely support local restaurants and access personal services will be critical to the recovery process, too.
As mentioned above, we’ll also keep an eye on inflation and the impact it has on the increased costs business owners in the most-adversely impacted sectors face.
Here are just a few quotes from polltakers, illustrating their concerns over rising costs.
“Government officials may pretend to give financial help, but they find ways to take it back such as higher gas prices. Already, the cost of everything is through the roof right now.”
“Suppliers are being extremely slow delivering materials and charging more for goods I need. That could eat into my profit.”
“Fuel prices are increasing along with taxes and fees, and shipping charges are going up, while I’m dealing with shortages of supplies I need for my business. Our tax and spend representatives say one thing and do another.”
CUSTOMER DEMAND
- Customer Demand Rebounds From Last Month’s Hit
- The Million Dollar Question… Will Customers Return?
Recovery happens when customers return. It’s what really matters.
This month, we saw a quick recovery from the jolt we experienced in last month’s report. I would say the overall sentiment now is that the sense of panic is over.
But many are still waiting to see if there’s really light at the end of the tunnel or if that’s actually a train racing toward them.
If you’re reading this report, here is where I make my personal plea.
Please change your buying behavior back to local businesses now and encourage others to join you. I’m not saying you can’t buy anything from Amazon (heck I do, too). But do you think you can shift 25% of what you typically spend at major online retailers back to locally owned businesses?
That could make a huge difference in your local recovery (especially if everyone you know in town does it, too).
That doesn’t sound too hard to accomplish, right? (I didn’t think so!). For more information on what we all can do to make this happen, visit this page on our website: www.mymoneystayslocal.org.
Shifting focus back to our latest data, across the board, we saw a correction back to where we were in January -- where 45% of all businesses were still experiencing customer levels 50% or less of where they were prior to COVID. (But that is an improvement, as last month, that number was 56%.)
When we asked about expectations for a month from now, we found most business owners are still not ready to bet on customers returning in droves. Here’s the 30-day outlook from small business owners we polled:
Supporting these statistics, several polltakers weighed in on ongoing issues around customers returning to their businesses.
“Getting customers is a primary concern. Plus, it’s hard having to start up again.”
“I am looking for all new customers at this time. They’re hard to attract.”
“I’m having to turn some customers away, because they're not complying with our safety guidelines. That doesn’t help my business.”
So, unfortunately, we have a long way to go to attract customers back to many businesses, especially those on Main St.
Let’s hope the numbers of new and returning customers are up next month, as more people are vaccinated and feel safer going into stores and spending money locally.
Side Note: I found listening to Ted Cruz during the hearings on extending the PPP loan program fascinating. For some reason, he stood out as a huge opponent to providing relief to business owners. What was he thinking? His comment about the situation was so naïve, that I just had to share it. He claimed that all we need to do is reopen all businesses, because businesses in states where this had already happened were “thriving.” Would love to see the data you have Mr. Cruz that supports that assertion.
And he’s the ranking member of the GOP on the Small Business Committee! Maybe he should take a few moments to understand what is actually happening to small business owners struggling to survive, while vacationing at the Ritz in Mexico.
Don’t worry, we are equal opportunity critics when it comes to our representatives in Washington. We feel many Democrats and Republicans alike are acting as if they’re clueless about the plight of small business owners. And we’re doing everything we can to help illuminate them.
Within the next week, we’re planning to release a special report on the ineptitude of the PRO Act, which was passed by the House in October and is widely supported by Democrats. We’re calling it the oncoming “PRO Pandemic” and it’s looming big on the horizon. Please stay tuned.
Returning to this month’s data, here’s where many small business owners stand regarding their revenue levels, which always fuel a great deal of discussion among members and the media, alike.
REVENUE LEVELS
- Revenue Historically Trails Behind Customer Levels
- 48% Are Collecting Less Than Half Of Their Pre-COVID Revenues
Again, this month saw a return to the levels we were seeing in early 2021. So, there’s no really big news here to report, other than the continued trend of revenue lagging behind customer recovery. And 48% of small businesses continue to operate at revenue levels that are half or less of what they were able to earn before COVID.
Here’s the revenue data showing a return to January levels, in most cases. As we (hopefully) start to see customer levels improve, we anticipate seeing revenue levels follow, just at a reduced level. We have our fingers crossed for next month.
Here’s what small business owners had to say about their ability to generate revenue this past month. As usual, we’re seeing both ends of the spectrum.
“As a dentist, business has been good. Our PPE is effective, and we managed to serve an increasing number of clients. I’m looking forward to mask wearing in public coming to an end eventually, though. It’s bad for the periodontal health of teeth. Mask breath is real.”
“My home improvement business is going very well. Almost too well, as we can’t keep up with demand.”
“I design and install new bathrooms and with more people working from home, more clients are taking the plunge and upgrading their bathrooms. They tell me they’re sick of looking at them and want something new. Happy to oblige!”
“We make sales calls on manufacturers and we haven't been able to make any in-person sales calls since February 2020. 80% of the staff we call on are working remotely from home. It’s hurting our revenue.”
“We're a member dues financed organization, and our members are closed, so they can't pay their dues.”
“The requirement of union contracts by the State of California has killed business for many independent contractors. They’ve closed for good, destroying many peoples’ income.”
“Since March 2020, international travel has been nonexistent. We have no revenue coming in.”
“I hate to sound jaded; however, I see now why people are scared to branch out and take on a business of their own. There’s simply no protection for the little guy who wants to make his way in the world, getting by doing what he loves. I knew I’d never get rich doing what I do, but I did believe I could survive. That is becoming increasingly difficult.”
“I can't seem to fit into any category to get relief money and will have to close a successful business I’ve built over 40 years. It’s heartbreaking, really.”
HIRING & ANTICIPATED EMPLOYEE GROWTH
- 82% Of Pre-COVID Employees On Payroll
- Optimism Building Towards A Late Summer Recovery
Our members have reported flat employee levels for the past five months with a slight increase anticipated over the next two months. However, by the end of August, small businesses expect to achieve 98% of Pre-COVID employment levels.
Though small business hiring has been flat for a long time, employers continue to remain optimistic looking forward. However, that’s nothing new. Historically, when we’ve looked out 6 months, business owners since last fall have anticipated being at employment levels in the mid-90s. And, as you can see above, those predictions have yet to come true.
That said, let’s hope they’re right this time – looking toward a very promising employment picture in August.
Polltaker comments responding to hiring questions indicated that a greater number of people are trying to hire more people as restaurants and retailers reopen and expand their offerings. However, finding the right employees who want to work has been problematic for some.
“Restaurants like ours are having a hiring spree, because so many people got laid off early in the pandemic and found other professions. Now, we’re having trouble finding replacements for the spring and especially the summer.”
“Hiring good employees is what I’m most concerned about.”
“The government is giving enhanced unemployment benefits, which incentivizes many to choose to stay unemployed rather than join the workforce. Nearly all commercial stores and restaurants in my area are hiring and can't find enough employees due to these circumstances.”
“My travel agency business is slow, but it’s starting to turn a little. And I am still looking for any prospects who would like to train as associates for the travel industry. Things should pick up for us in the summer and fall.”
WRAPPING UP…
As we come to the end of this month’s report, we continue to be cautiously optimistic as we look toward the summer of 2021. As we highlighted in last month’s report, massive and expedited vaccine distribution remains the key to recovery, in both the U.S. and Canada.
We’re hopeful Canadian officials can find new ways over their current hurdles to secure the vaccines they need, so everyone across North America can make a major dent in this pandemic and start down a solid path to local business recovery.
As always, thanks for reading.
And please, the next time you’re contemplating a major online purchase, ask yourself if it’s something you might find by taking a short trip to a locally owned business! And as restaurants reopen near you, please go out to breakfast, lunch or dinner, observing proper safety precautions.
The restaurant industry has been devastated, but has already shown some early glimmers of rebounding due to special government funding and extra investments in high-quality outdoor dining and delivery options.
Please give your local restaurant owners the boost they need, so they can generate momentum to experience some sort of recovery later this year.
To see more polls we’ve conducted since March 2020, please go to the Alignable Research Center.
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with over 6 million members across North America.
We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.
For more details about any of these findings, including the methodology behind our polls, please contact Chuck Casto at chuck@alignable.com.