Alignable: Road to Recovery Report (February 2021)

DATA INSIGHTS | COVID IMPACT/MONTHLY REPORT |

Cash Strapped SMBs, While 75% Of PPP Is Still Available

32% Of Small Businesses Have Only 1 Month Or Less Of Cash

Who’s Hardest Hit?

  • 47% Minority-Owned, 39% Women-Owned
  • 34% in United States, 31% In Canada
  • Retail, Restaurants/Bars, Gyms/Fitness, Entertainers, Designers

Table of Contents:

  • Current Financial Impact Levels
  • Recovery Impact: Cash Crisis
  • Reopening Status & Business Closures
  • Recovery Concerns
  • Customer Demand & Revenue Levels
  • Hiring & Anticipated Employee Growth
  • Alignable Research Center & Poll Demographics

Overview

Alignable has collected over 590,000 business owner responses since March 2020, 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 6,029 business owners from 1/30/21 to 2/1/21. 

This report was written during the first week of February and features a deep dive into the severe cash crisis hitting business owners now.


CORONAVIRUS IMPACT LEVEL

  • 68% Of SMBs Still Experiencing Negative Impacts
  • “Significant Impact” Felt By 46%
  • Coronavirus Lift Experienced By 15%

Overall, small businesses experiencing a negative impact from COVID-19 remained high and unchanged at 68%, with the percentage of business owners experiencing “significant impact” also remaining firm at 46%. Businesses reporting positive trends was flat at 15% of respondents. 

Covid Impact February 2021
68% of SMBs Continue to Feel Impact of COVID on their Businesses

Looking at the impact over time, we noticed little to no improvement since last month.

Covid Impact Over Time

Here are a few quotes from our polltakers that illustrate the range of impact small business owners are experiencing now.

Some effectively pivoted and are faring quite well.

However, many others desperately need more funds for a short-term fix. And for long-term improvements, they’ll require a change in consumer mindsets, which is likely dependent upon widespread vaccine distribution ASAP. Here’s more of what our members had to say:

“My income has dropped to zero.”

“I have an online editing and writing business and my customer base is completely gone, due to businesses being unable to continue advertising or marketing. Some have closed for good, while others cut back their marketing nearly 100%.”

“If you truly want the really small business like mine to survive, then realize that the government waited too long. The ships have taken on water and people like me are on their last legs. I need help fast. My company has nothing coming in.”

“Started a trucking business last year. Business was good, no shutdown for truckers, no quarantine for us, we were free to roam the country anytime, anywhere. But now in 2021, freight prices are down and fuel’s going up. Is this the beginning of the next recession?”

“2020 revenue was down 100%. January 2021 revenue is down 98%, but we’re celebrating the beginning of the crawl back.”

“A big part of my business to business are schools, churches, cities & corporate events. All are shut down.”

“Our governor’s mandates and lockdowns have caused more deaths and injury than the virus itself!”

“I think it's sad that the powers that be are more concerned with propping up billionaires, as opposed to the small businesses that fuel communities.”

“As Architects in the hospitality industry, the pandemic did hurt us, but our clients are active again and we are doing well. The biggest concerns now are political as we appear to be returning to the onslaught of regulations that really hurt our industry until a few years ago.”

“We have an event hall and have not held an event since February 2020. We have still managed to maintain our staff levels. We are currently leasing our event space for COVID-19 vaccinations.”

“I can tell you that my business as a financial advisor has not skipped a beat. In fact, with all the uncertainty, people are more motivated than ever to get their financial houses in order.”


RECOVERY IMPACT: CASH CRISIS

In this section, we’re focusing on the areas within the small business economy finding it most challenging to generate cash needed to get through to the other side of this crisis. 

We asked 3,316 small business owners to share the amount of cash they currently had on hand and how long they believed it would last. 

As a side note, to date in the U.S., roughly 75% of the allocated relief funding under the new PPP fund has yet to be allocated and 75% of the $80 Billion which has been distributed has gone to businesses who received funding in previous rounds. 

Our next poll will dive deeper into why so few of these struggling business owners are taking advantage of this program. We will report back later this month on our findings.  

Let’s look into understanding the cash crisis and where it’s being felt most acutely.  Overall, 32% of businesses report having a month or less of cash on hand with over 15% report having no cash reserves at all. 

Cash on Hand US vs. Canadian SMBs
Canadian SMBs slightly better off than U.S.

Our survey found slight differences between businesses in the U.S. and Canada, with Canadian businesses at 31% and U.S. businesses at 34%. In our earlier reports, we found minority and women-owned businesses had a higher likelihood of not receiving approval for PPP relief in earlier rounds and we wondered how their cash situation compared. 

We found 47% of minority-owned businesses had a month or less of cash reserves with 22% indicating they were running with no cash on hand.   

Cash Reserves - Minority Owned Businesses
Minority Owned Businesses in Greater Need of Relief

We learned that many women-owned businesses were also cash strapped with 39% running with a month or less of cash on hand, and 19% operating with no cash reserves at all in contrast to 29% and 13% for other firms. 

Women Owned SMBs - Cash on Hand
Women Owned Businesses Have Greater Cash Need 

When looking at the industry data, we found retailers (consumer goods) are experiencing the most severe cash crunch, followed by restaurants (food & beverage), creative categories (designers, entertainers, and artists), and gym owners and others in sports & fitness industries.  

Industries Hardest Hit by COVID
Industries in need of Greatest Amount of Relief Funding

While much of the information above probably does not come as a shock to those who have been following our reports over the past months, we encourage financial institutions and individuals in the government to double down on outreach to the groups highlighted above to ensure they have open pathways to relief. 

To provide more perspective on the cash crunch among small businesses right now, here are a few polltaker quotes:

“Our cash flow is so small, that our savings to replace cash flow is about gone. I do not know how we are going to make it, and we are senior citizens. We have managed our business for 50 years now. We NEED to work and keep our business going! Who is going to hire us at 72 and 76?”

“We have an inability to generate any positive cash flow until cruise ships are allowed to sail and travel restrictions are lifted.”

“The economic and social environment is in too fluid a state to warrant continuing with the business. We can’t let all of our cash run out waiting for things to change.”

“I am highly concerned with cash flow and all sorts of other issues. Our bar will be lucky to survive this.”


REOPENING STATUS & BUSINESS CLOSURES

  • “The New Normal” Shifts Out Past June

Economic recovery won’t start in earnest until we as a country get the COVID outbreak under control. While there are many encouraging reports, the timeframe for an anticipated return to some kind of normalcy is now later than members expected last month.

We surveyed business owners asking when they believe their businesses will reopen -- with the same level of products and services they offered prior to COVID. And 45% of our respondents predicted sometime after June 2021.  

When will SMBs be fully re-open
Most Businesses See Recovery Happening after June

The percentage of fully reopened businesses continues to decline – a disturbing trend first identified in October. Highlighted below, you can see the shift of businesses from a fully-open state to partially open, as well as those temporarily closed.    

Business Open Status by Month

Here are some sobering thoughts from polltakers about their struggles to stay open during the pandemic, or to even help their businesses survive – in some way -- during enforced shutdowns.

“Lost my business. And now I’m trying hard to hold onto my home and car.”

“I can't seem to fit in any category to get relief money. and will have to close a successful 40-year-old business soon.”

“As a non-profit, COVID has really hurt us in several ways -- one closing everything but the veterans food bank, but also not being able to have events for fundraising. Our operation is mainly for veterans and Gold Star Families -- it has been hard to get help, not only with funds, but also volunteers.”


GREATEST RECOVERY CONCERNS

  • Top Concern: Financial Reserves Running Out
  • Re-closure & Customer Fears Decline

We’ve been seeing a seesawing of sentiment around the top 3 concerns over the past 6 months.  This month, we saw concerns over financial resources jump back into the top spot, while re-closures and fears around customers returning seem to be on the decline.     

With the case levels starting to decline and vaccines finally getting broader distribution, it seems as though business owners have become more confident about their being a light at the end of the tunnel. Many are now focused on what it’s going to take to keep their businesses alive long enough to get to the other side.   

Greatest Recovery Concerns
Financial Concerns top the list this month

Here’s what small business owners said about their current state of affairs -- their latest concerns, hopes, challenges, and even a few triumphs against all odds.

“A large part of my business is connected to the performing arts, which are shut down completely and will be the last thing to reopen.”

“My business is B2B, if other businesses are hurting, they can't afford to use my services.”

“We depend on hotels and restaurants remodeling, making additions, and opening new venues. When will that ever start again, if they’re closing and cutting back?”

“Make Oregon’s Governor responsible for some of our city’s destruction! Arrest the individuals and post consequences! You are killing businesses. Hard working folks have been forced to close due to the negligence of city leaders who should prosecute vandals and criminals!”

“While I am no longer seeing clients in my office, I can see outdoor clients with their horses. My zoom classes have thrived during the pandemic with many more participants than I could have in a physical class. Also my distance healing communication appointments are growing, and I have a waiting list at times.”

“I actually opened on May 30, 2020. Class attendance has increased. (Though we’re still restricted in the number of attendees due to COVID). Retail sales are still slow but were good in November and December. Commissioned artwork has increased since opening. I have actually surpassed my goal for the first year open even with the pandemic. I am blessed.”


CUSTOMER DEMAND

  • Recovery Requires Consumer Confidence & Behavior Shifts
  • Customer Demand Remains Unchanged
  • Correlation Between Case Levels & Consumer Confidence

We’ve highlighted in many past reports how the recovery of local economies will require both a surge in consumer confidence along with a massive shift in consumer behavior. 


This month, I’m going to digress just briefly into what I feel very deeply about… the sift of our purchasing power back to locally owned businesses.

When I think about all of the things I love most about where I live, I list the great downtown shopping district, locally owned restaurants featuring locally sourced produce, the great bike paths, and our wonderful first responders who keep us all safe.

For these to return and flourish in the new normal economy of 2021 and beyond, we’ll need to break the mold of convenience shopping for everything online.  For more information on what we can all do to make this happen, visit this page on our website: www.mymoneystayslocal.org. Once again, thanks for letting me digress a bit.

Back to the data. 


The percentage of businesses reporting that they had less than 50% of their pre-COVID customers return remained unchanged at 46%.

Customers Returning Over Time
Customers Still Not Returning to Locally Owned Businesses

It seems as though we are in a bit of wait and see holding patten at the moment with slightly more optimistic outlooks for the next 30 days, but nothing off the charts. 

Customers Returning Next 30 Days
Not Anticipating Much Improvement this Month

I went searching for some data around consumer confidence and found this chart in a recent BDO report where they included a chart from a recent Bloomberg conference.  I then compared the chart to the case levels reported by the WHO across the Americas and it seems there is some correlation between the case level trends and consumer confidence.  With case levels continuing to decline, vaccine distribution on the rise, and warmer weather on the horizon, one can make the leap to continued improvement in consumer confidence on the horizon. Let’s hope that happens sooner rather than later.

Consumer Confidence with Case Count Insert
Bloomberg Consumer Confidence Index mapped against COVID Case Counts from WHO

Several polltakers weigh in on issues around customers returning to their businesses.

“Our company’s revenues are down 85% YOY. The media has clients scared to death to come to our furniture store.”

“The Biz has been affected negatively in the short-term, because clients and customers have connected less in person. But I believe that, in the long-term, it could become an advantage, as many have learned to use technology in a far greater manner!”

“Customer confidence in their future cash flow is low right now.  And so discretionary spending, which our business is based on, is significantly restricted. We need customer confidence to elevate to bring them back and make them feel comfortable spending their money.”

“Some customers fear coming in for therapy. And our business is best in a face-to-face setting; instead of virtual. Many clients are not suitable for virtual counseling, and some do not have the Internet or the needed equipment or technology awareness.”


REVENUE LEVELS

  • Returning Customers Are Still Spending Less
  • 76% Operate Below Pre-COVID Levels
  • 51% collecting 50% of Pre-COVID Revenues

With the continued shift of businesses from fully-open to partially-open and temporarily closed,  it’s not surprising to see the percentage of businesses operating at levels of revenue below 25% of Pre-COVID levels. 

We also continued to see a decline in overall revenue levels for those most fortunate in this crisis with the percentage of businesses operating with >90% of their Pre-COVID revenues declining below 25% for the first time since June 2020. 

Revenue vs. Pre Covid Levels
Revenue Recovery Continues to be Major Challenge

Each month, we also compare the revenues collected to the number of customers who’ve returned to get a feeling for the spending levels of customers who have come back. 

Unfortunately, this chart continues to indicate that spending per customer trails pre-COVID levels. 

Customers vs. Revenue Returning

What we’re looking to see as an indication of a shift in consumer behavior is for both of these curves to start shifting left and for the revenue levels to rise above customer levels for groupings on the right side of the chart. 

As you would expect, there’s no shortage of small business owners who are quite verbal about their disappointing revenue losses from 2020.  However, some managed to turn “going digital” into a substantial money-making venture, or other market trends are working in their favor. Here’s a look at what a few members told us, in their own words.

“I hate to sound jaded; however, I see now why people are scared to branch out and try to take on a business of their own. There’s simply no protection for the little guy who just wants to make his way in the world by doing what he or she loves. I knew I would never get rich doing what I do; however, I did believe that I could survive. And that is becoming increasingly difficult.”

“I am a psychotherapist in private practice. The COVID-19 event wiped out 50% of my practice, cutting my revenue significantly. People were fearful to be in the same room with someone who sees other people and could be a carrier. I have not been able to get new clients to understand that it is safe and I’m safe, so it’s been difficult.”

“The continued shutdown of the Canadian border will bankrupt our business if it doesn’t open before the summer.”

“I sell honey and I’m having supply chain failures -- the bees have no idea there is a 'pandemic.' But if I can’t get bottles to distribute my honey, then my business is DOA. What supplies are available are rapidly becoming economically nonviable.
And now freight is starting to go through the roof.”

“I am out of business. Too expensive to start up again.”

“When people can go safely back to work, and have some disposable income again, authors like myself will see a sales uptick. YEAH!!”

“As a violin teacher, I am teaching all of the students I had before COVID, and I have three new students, as well. I’ve been positively impacted, because now I am teaching online rather than in person.”

“Our department store was impacted negatively in March, April, and May, when we were closed from March 15 to May 10. We rebounded well from mid-May throughout the balance of the year. We had a ‘no exception’ mask rule and had to deal with a lot of anti-mask issues, but the positive side, is that it increased our business. We gained customers who shopped with us because we had the mask rule and they felt safe coming in the store. We were also able to ramp up online business, which has gained momentum. The greatest impact was to our soda fountain business, which became curbside only. However, we made up for that decline with increased sales of apparel and gifts.”

“My business is installing wood floors – and it is going through the roof. All things home improvement are on fire. Fairfield County, CT is in a bubble and not as financially affected as others. The volume of people moving here is the reason.”

“We run a huge corn maze. As a seasonal business, we were very fortunate that we had a good year in 2020. We open again in September 2021, so we hope that most people will be vaccinated by then. We should have as good a season as last year, if not better.”


HIRING & ANTICIPATED EMPLOYEE GROWTH

  • 80% Of Pre-COVID Employees On Payroll
  • Slow Improvements Anticipated
  • 10% Increase Estimated By The Beginning Of Q2

The final stage in recovery will be as employee levels recover to Pre-COVID levels.   The chart below highlights the current levels of employment by month since May.  Here you can see the climb in employee levels we saw towards the end of summer 2020, the significant drop leading into the holiday shopping season along with the current state where businesses report currently being 82% staffed relative to where they were roughly a year prior. 

Employees Returning to Pre-Covid Levels over Time
Little Improvement in Hiring Levels

Businesses continue to anticipate steady recovery as they look towards the second quarter and beyond with hiring levels anticipated to start to approach Pre-COVID levels by the summer of 2021.

Hiring Outlook
Improvement Seen Happening Late Q2 2021

While many small business owners are not hiring now, and trying to keep the staff they have busy, others are expanding different aspects of their business or trying to tackle a backlog of business. Those owners are trying to hire to support the demand they’re experiencing with varying results. Here are a few stories reflecting these trends:

“Currently, we have a 6-month backlog of jobs building fences for customers, it would be a lot better if the government got out of the way. P.S. -- We didn’t accept PPP funds. And quite frankly, we don't need them. What we do need is an open economy – and we need to hire more people to help us with the projects we already have.”

“Despite COVID, we’re still going strong as online travel agents. In fact, we’re looking for new people to train.”

“My business is growing, it’s almost too good. Might be time to get some help.”

We continue to be cautiously optimistic as we look forward toward the summer of 2021.  As we highlighted in last month’s report, massive vaccine distribution remains the key to recovery.

We in the U.S. are starting to feel a bit more optimistic about how we are progressing. However, many of our members are located in Canada where they are struggling to gain access to vaccine supplies.

We’re hopeful they too can find ways to secure what they need, so we can all make a dent in this pandemic and start down the path to local business recovery.   

Thanks for reading. 

To see more other 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 latest polls, please contact Chuck Casto at chuck@alignable.com



2 Comments 76 Views

Comments (1-2)

Data!  Interested parties will notice what their part is in sustainable practices.  What feels like the GIANT may be the very opposite of what we need to pay attention to.  So my question is, "What GIANT are you paying attention to?"
I love how you are rallying the troops to be clear on a collective perspective.  As I read through some of the individual's current perspectives I could see that there are some that may have an opportunity that they are blind to.  The innovation we have seen from the shift in business owner's perspectives has been outstanding across the globe.  Alignable has contributed to helping provide a new perspective for small business owners in articles such as this and the groups that have been established. The collaboration leading to innovative ideas within the group discussions as well as those shared on the wall is impacting exponentially in ways we will never know of.  What is important here is that we have this platform to express and notice how each of us can help the other.  

What I love here is that business owners are encouraged to introduce themselves first before introducing their business!  What kind of brilliance is that!?  Starting with heart!  Who are you?  What about you do I want to do business with or refer someone to you for!? The community on Alignable is built on trust. The idea is, I trust you now to help me with a concern I have.  Collectively those in the network pour out ideas, a huge brainstorm happens and the heart selects.  That's the golden opportunity.  To engage with recovery. One step at a time. Collaboratively. First with self, abundantly through others, and exponentially in circumstances.

Thanks for the collected data.  The panoramic view paints a picture of the collective here on Alignable.  A micro of the macro. Keep recovery in perspective and each door you walk into, as you meet the next business owner, "What will you say?

The statistics in this article are mind-boggling!