Alignable: Road to Recovery Report (December 2020)
DATA INSIGHTS | COVID IMPACT/MONTHLY REPORT |
15-Second December Summary
- 50% Of B2C Business Owners At Risk Of Failing
- Financial Impact Worsens As Case Counts Grow
- Customers & Revenue Decline During Critical Q4 Season
- Relief Needed Now For Worst-Hit Sectors
Editorial: Hey Congress… “Do Your Job!”
The Small Business Economy Needs Financial Relief Now
In This Month’s Report:
- Current Financial Impact Levels
- Reopening Status & Business Closures
- Recovery Concerns
- Customer Demand & Revenue Levels
- Hiring & Anticipated Employee Growth
- Editorial: Hey Congress… Do Your Job
- Alignable Research Center & Poll Demographics
Overview
Alignable has collected over 550,000 business owner responses, since mid-March, mapping the Coronavirus Impact and Recovery of the Small Businesses Economy across the United States and Canada. Unless otherwise noted, polls in this report were conducted among 9,204 business owners during the week of November 23, 2020.
This month’s report was written during the last week of November and features insights on business sentiment after the announcement of multiple vaccines completing stage 3 testing with success rates in excess of 90%. Will this change their outlook?
NOVEMBER CORONAVIRUS IMPACT LEVEL
- 68% Of SMBs Still Experiencing Negative Impact
- “Significant Impact” Jumps 7% To 50%
- Coronavirus Lift Experienced By 15%
- Positive Vaccine News makes 55% more Optimistic for Recovery
Overall, small businesses experiencing negative impact from COVID-19 remained flat at 68%. However, business owners experiencing “significant impact” increased 7% to 50%. Businesses reporting positive impact was flat at 15% of respondents.
When we look at the past seven months, we’ve seen a steady decrease in businesses reporting significant negative impact until last month where we saw the impact notch up for the first time. In November, the reversal was even more pronounced as business owners experiencing significant impact jumped 7% to 50%. The last time we were at or above 50% was back in June.
Looking at the chart below you can see how businesses who last month thought the crisis was heading in the right direction now feel differently.
This month, we feature a quote from a business owner highlighting the important role small businesses play in our lives and communities:
“Imagine what you love about your town, neighborhood or city. It usually revolves around your favorite bakery, bookstore, or coffee shop -- the dry cleaner that saved your suit, the florist you look forward to visiting at the end of a long day, the grocer who knows your name. Now imagine your neighborhood without them. That's why you shop locally.”
Vaccine Outlook Stirs Optimism for Recovery... Down the Road
The latest news about the delivery of a vaccine caused 55% of business owners to be more optimistic about their chances of recovery. At the same time, 48% are looking for their recovery to happen sometime after March 2021.
REOPENING STATUS & BUSINESS CLOSURES
- Number Of Fully Reopened Businesses Declines Further To 57%
- Shift To Partially & Fully Closed
- Slight Uptick In Permanently Closed Businesses
- 48% At Risk Of Closure By Year’s End
- Risk 12% Higher for Minority Owned Businesses
The change in trajectory noted last month continued into November with the percentage of fully open businesses dropping below 60% for the first time since July. While some of these businesses shifted to partially open status, we did see an increase for the first time in businesses that have closed temporarily and permanently.
This decline in fully reopen businesses (highlighted in red) can be seen shifting most noticeably into temporarily closed with intent to reopen status.
Looking at comments from polltakers, there’s a great deal of concern over the winter months – and some businesses already feel the negative, seasonal shift.
“This virus has been really tough on catering companies. Had to close March 11, 2020, through the end of July. Picked up work in August, September and October. I live on the East Coast and COVID has raised its ugly head again. Everyone’s moving inside for the winter. I had no catering work in November, and my clients are canceling for December. This is so sad. I have worked so hard to build my business the last 14 years. My business has gone from a half million to not even 2-hundred thousand. This is devastating for any business.”
“The biggest difference between Natural Disasters and COVID is that the Natural Disasters are covered by insurance. That’s not yet clear on the COVID side.”
“My racquetball recreational league and coaching business have come to a screeching halt. Racquetball is in an enclosed space and I do not feel safe giving lessons.”
“While a lot of small businesses are suffering due to lack of business, there are those of us small business owners {D.J. Services} that are making little to no money whatsoever due to restrictions on gathering sizes.”
“Our monthly bills have not stopped. Where does the money come from if you are not working through any fault of your own?”
Almost Half Of Small Businesses At Risk Of Closure
This month, we took another look at the 4th quarter outlook to estimate how many businesses were on the brink of closure leading into 2021.
We asked business owners to estimate the percentage of 2019’s 4th quarter revenue they’ll generate in 2020. Then we asked them to estimate the percentage of their 2019 4th quarter revenue they would need to stay in business into 2021.
Overall, 48% of businesses estimated generating revenues below what they needed to stay in business. This represents a 6% increase since September where we reported 42% being at risk.
As we dove deeper into B2C and B2B, we found slight differences with 50% and 47%, respectively, reporting being on the brink. Some of the hardest-hit industries include:
- Travel: 62% at risk
- Gyms and Fitness: 61% at risk
- Beauty Salons: 60% at risk
- Restaurants: 45% at risk
- Entertainment: 43% at risk
Beyond these insights, 54% of minority-owned businesses are at risk of closing before 2021, compared to 48% of small businesses owned by nonminorities.
Read Special Report on Need for Financial Assistance
GREATEST RECOVERY CONCERNS
- Government Reclosures Loom Over Key Holiday Shopping Season
- Cash Reserves & Customer Confidence Round Out Top 3 Concerns
- Decline In Business Owners Feeling Good About The Recovery
Once again, the fear of reclosures due to rising COVID case levels is the No. 1 concern among small business owners.
With the case levels continuing to elevate across North America, it’s clear business owners are anticipating that new restrictions will be put in place, dampening any progress toward recovery. Hopes of a rebound in time to save many struggling retail businesses also grow dim.
Here’s what small business owners said about their current state of affairs:
“I'm just a small biz hanging on by a thread.”
“I have to close. I have been open the last seven years, and before the Coronavirus, my business was the best it ever was. Now I cannot make my bills. My heart is broken and I just gave my landlord my one-month notice.”
“Around 95% of my clients permanently closed their doors, putting me at risk of permanently closing.”
“I own two restaurants, one that seats 38 (normally 90), and one that seats 120 (normally 250). We are socially distanced and practice sanitizing. And mask-wearing is mandated. I shortened our menus which helped immensely -- less product to order and stock. Business was good in spite of all of the restrictions, but once November hit, the bottom fell out. We may be closing a few days a week and we’re shortening hours -- hoping we don't get shut down again.”
“Our charters are far and few between. We were seeing a slight increase and then weather conditions deteriorated and many had to be canceled. If there are lockdowns in other states, we will not have tourists coming to Marco for the holidays and beyond. This is a trickle-down effect that is devastating.”
“I don’t know if the tourism industry will ever recover from COVID, shutdowns, and Senior Citizens being afraid to travel.”
“My business is mainly dependent on my customers having expendable income. With the threat of a shut down again in my city, and possibly nationwide, I'm beginning to doubt whether I will be able to continue.”
“We are doing extremely well now, but we will lose business when COVID restrictions are lifted.”
“My small business has not really slowed down this year, I just had to learn to do things differently (electronically/virtually) for those that don’t want to meet in person and that has also worked out. I still have small businesses that are hiring me for bookkeeping and/or taxes. I currently have one employee (my daughter), and if this tax season is as hectic as last year was, then I may have to hire someone independent. I feel very blessed to still be busy during these difficult times and pray for those struggling.”
CUSTOMER DEMAND
- Customer Demand Continues To Decline
- Some Of The Most Fortunate Businesses Now Feel Negative Impact
- 26% Of Businesses Have Fewer Than 25% Of Their Customers Back
- Q4 Is Lining Up To Be A Disaster For Many
Recovery depends on customers returning to businesses. And, unfortunately, we lost more ground here again in November.
The percentage of businesses reporting that they had less than 50% of their pre-COVID customers return increased 3% from 43% to 46%. The loss of customers was felt across the board from businesses previously reporting a wide range of customer activity, even those who said 76% or more of their customers were back.
When looking at the outlook for December, a time when local business owners get a disproportionate share of their business, there is not much optimism across the 7,752 business owners surveyed. Across the board, business owners seem to be holding their collective breath while realizing things are likely going to get worse.
Our polltakers had a lot to say about customer numbers declining and hurdles they’ve encountered while trying to bring them back.
“I own a dance studio -- zero students, zero work since March with no sign of improving. What a disaster. After 35 years, this is the worst situation I have come across and utterly devastating to my business.”
“We are at a complete stop. No customers at all at this point.”
“My 30-year-old business is in an office complex and has a Hotel and full-service Athletic Club on our campus. At any time, there were between 2,000 to 3,500 people working Monday through Friday. That number now conservatively would be less than 1/5th of what it was. Because of the pandemic, companies only require truly essential employees to work on campus. This has ground my business to a standstill. I only come for appointments, and I require a minimum to cover my expenses. I am averaging 4 days a month out of 20.”
“COVID has hit our business hard, no one is working, so no one is boarding. People are staying home and trying to train their own dogs. What we're seeing an uptick in is dogs that have stress and anxiety because they didn't get out and get socialized properly. We’re offering more "board and train" options, and more virtual classes. But, it is hard to teach handler mechanics through a screen.”
“We’ve closed our business.”
REVENUE LEVELS
- Revenue Declines Across The Board
- A Shift To Less Than 25% of Pre-COVID Revenue
- 47% Report Revenues Below 50% Of Pre-COVID Levels
For economic recovery to occur, revenue levels need to return to pre-COVID levels. This requires businesses to be open, and most importantly, customers to return with the purchasing behavior they had prior to the crisis.
For the businesses fortunate enough to be open, the chart below highlights revenue lagging behind the percentage of customers returning in all segments -- other than those at both ends of the range.
Most noticeably, in the 25% to 50% and 50% to 75% segments, we saw a reversal from last month. At that point, revenues had been higher than customer levels, but now, this month revenue dropped below customer levels.
The chart below shows the revenue collected as a percentage of pre-COVID levels. For the first time since May, we saw a significant uptick in the percentage of businesses reporting revenues 25% or less, and at the same time, a reduction for those businesses at the highest level (>90%).
As we head into the time of year where many businesses generate 30% of their annual revenues and use that money to pay down debt and replenish inventory, it’s not hard to understand why 50% of B2C businesses are feeling that they're at risk of closing.
“A lot of my services were actually designed to be online -- I am a yoga teacher who was moving from studio to online work pre-COVID. However, I suspect ‘Zoom fatigue’ will mean people's interest in my online services will wane.”
“Our wedding business is inherently forward-looking, and couples currently lack confidence about likely conditions in the coming year.”
“My clients are older and not usually online shoppers. They have always loved going out for lunch & shopping for entertainment. But now they're shopping a lot online. It’s sad to think of our storefronts closing, partly because of this shift."
HIRING & ANTICIPATED EMPLOYEE GROWTH
- Hiring Levels Decline Further
- Owners Anticipate Further Reductions In Employees On Payroll
- Improvements Anticipated By The End Of Q1 2021
Employees on payroll decreased to below 80% of Pre-COVID levels with further reductions anticipated over the next 60 days.
For the first time in our polling, we extended the range to include what business owners are expecting for the end of Q1 2021.
Fortunately, they are hopeful to see hiring return to 90% of where it was a year prior.
While hiring seems flat and projections for the near future are down, several comments came from members who are bucking the trends and are in growth mode. Yet, some of them say it’s been hard to source the right people to hire.
“Finding employees is my biggest concern!!! We’re seriously short-staffed and no one wants to work right now.”
“Business is great. I hired a new tech assistant a month and a half ago and will likely need to hire more.”
“We run a transportation service. Business has been very positive and we’re having a record year. We might have to hire more people soon.”
Editorial
Small Businesses Are On The Brink
Hey Congress… “Do Your Job”
As an entrepreneur, I’m a big believer that, if you’re going to take a job, you should do it to the best of your abilities. Over the past 9 months, I have witnessed first-hand the devastating impact COVID has had on so many hard-working, dedicated small business owners.
More than half a million of them have answered our polls, candidly telling us what’s happening and how much they’re struggling.
That’s why I have a serious obligation to get vocal about how something needs to be done to make those in Congress much more accountable to the people they serve.
Our latest poll shows almost 50% of small businesses are at risk of not making it to 2021, due in large part to the mismanagement of this crisis by those in power. Even with the promise of a vaccine for all, the best-case scenario for many of the worst-hit sectors is a rebuilding process commencing halfway through 2021.
Consider the at-risk businesses by sector:
· Travel-related businesses: 62%
· Gyms: 61%
· Beauty Salons: 60%
· Restaurants: 45%
That tells us that 45% to 62% of these businesses fueling our communities might just vanish in 2021.
Now think about all of the people who work at these businesses (and many others) who are struggling to pay rent and put food on the table.
What will happen to them if something isn’t done…and done quickly?
If you are in Congress, your job is to work together with your peers to solve problems faced by the nation. It’s time for you to Do Your Job and get relief to the people and business owners in this country who pay your salaries!
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with over 5.5 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 press@alignable.com.
FOR ADDITIONAL COVID-RELATED POLLS & INSIGHTS FROM ALIGNABLE:
Comments (1-10)
I thought was going to address the question "do we need more federal funding" and ended up here. The answer is "NO" but we do need to the federal and state governments to get their "foot off our neck" and get things opened back up to business as usual. Now we know this is a virus, it is here, it is not going away no matter how many vaccines are produced, we know how to treat it now, and the numbers are not as bad as the media would like us to think. Check out worldometers.info. The news makes it sound like if you catch this you are dead - false. My 87 yr old family member who tested positive shortly before Thanksgiving is over it already, wasn't even really sick, just headache and lethargic. Open up everything, if you are not comfortable going out, stay in, if you are not feeling well stay away from others (like most of us have done all our lives), don't go visiting someone who is sick - all of the stuff we, as responsible adults, have been doing forever (without the cdc telling us)
Our business, which includes 12 restaurants in 4 states and did employ 1000 employees and musicians cannot survive much longer with the current restrictions imposed by the health department in Shelby County. If our Congress doesn't get out a new stimulus package before year-end there is a good chance we will not make it into the new year. We are a 30 year old company and have weathered many storms, nothing comes close to this though.
Gavin Newsome & CA Legislature,
OPEN California immediately. The vaccine is here, the death rate is under 1%, the treatments have improved. Many other States are OPEN. The cure 'shutting down economy' CANNOT be worse than the Covid virus, and so far the Sacramento response has been way worse than the virus. We need our business's open, full time jobs, and not Big Gov. hand outs.
Do your job being the solution and not the problem, or find a new line of work. JOBS NOT HAND OUTS.
Thank you, Randy Laine
We don't want to be saved.
We want to be left alone.
I don’t want a loan! If my REALLY SMALL BUSINESS does not rebound in a really huge way, how do I pay back a loan? Additionally, I’ve been denied by both of the loan programs already. We Small businesses need grants that are not based on income. My business costs are not dependent on income or income amount. They still have to be paid no matter what. Not one of my accreditations or licenses has issued waivers. They All want their renewal fees on time and this includes state, federal and private! I have already had to refund $4500 in paid commissions due to Covid cancellations that the agents could not pay. Now since they have no business I can’t get my money back ($3000). I was fortunate enough to get a small grant from the city, but it did not last long. I’m also receiving $189 per week from Unemployment until Dec 26th. I’m really not sure what I will do when that ends in a few weeks. I am a minority female owned firm. I started my business at home to keep my expenses low. I’m not sure how I will hold on however. I have 1 group booking for 2021 that will not pay out until the Summer of 2021. The cruise lines still do not know when they will really start so my cruise income is totally at $0. All of the big companies and Travel Suppliers got millions in help. What about us?
I personally would like to Thank the Alignable Team for sharing this information so I do not feel like a small business struggling alone.
We will all work our way through these difficult times.
Allowing our small businesses to have an opportunity to collaborate on this networking platform again demonstrates the power of being "Stronger Together."
I too would like to see Congress get their work done supporting the small businesses that have afforded them their opportunity to be a part of our government.
Very challenging to stay in operation. However, more sizable Grants will help. Obtaining grants that will help with payroll would be extremely helpful. Based on my experience. Grants have been very helpful. We just need need Grants that will help cover Payroll for about a month or two. Try to stay away from loans. We need to support for more sizable Grants.
The negative impact to business is not the virus but the flawed response of the state governments to the virus with business killing edicts that do nothing to slow or stop transmission. Every knee jerk discriminatory action taken has been at the state level. The most recent spike in Pa has not been from the restaurant or bar business yet the state is considering another shutdown. The states efforts to help small business has been dismal at best. They continue to do the same thing over and over expecting different results. They have failed to protect the most vulnerable.
we elected these people,when will they do what is needed?
As a small, woman owned business built on creative practices with no need to utilize financing in my ten year history, this pandemic slammed my career. Every card in the deck was already stacked against me. Then I had the unfortunate situation of being involved in the SBA EIDL applicant data breach and sent my identity and credit nightmare sailing into oblivion with no assistance or forgiveness on behalf of ANY institution. We have had to close our doors, sell equipment to pay bills, spend our time split between marketing strategies and exhausting possible financing solutions. For a company built on principles of giving back and assisting others in building their brand, we struggle through the bleakness.