Alignable: Road to Recovery Report (June 2020)
Small Business Insights:
Coronavirus Impact and Drive Towards Recovery
6 June 2020 / by Eric Groves – Alignable, Inc.
DATA INSIGHTS | COVID-19 IMPACT |
In This Report
- May Coronavirus Business Impact Levels
- Re-Opening Status & Anticipated Permanent Closures
- SMB Customer Demand
- Revenues & Ability to Pay
- Hiring and Anticipated Employee Growth
- Recovery Timeline
- Alignable Research Center & Poll Demographics
MAY CORONAVIRUS BUSINESS IMPACT LEVELS
- Impact level on business owners declined 11% to 74%
- Negative Business Impact reported as Significant for 67%
Since mid-March Alignable has collected over 412,000 business owner responses mapping the weekly spread of the Coronavirus Impact on Small Businesses across the United States and Canada. This month we’re shifting our focus purely from the impact to now also include the ongoing recovery progress of the small business economy.
Our weekly polls have captured impact on a state-by-state level across North America. At that time, roughly 60% of business owners were experiencing impact, and most affected were in the Northwest and Northeast states and the province of British Columbia.
By early April, overall impact exceeded 80% across North America and 60% of business owners were experiencing significant impact from the crisis. In some states, levels exceeded 90%.
In May, business owners reported an 11% decline in overall impact on their businesses. While encouraging, 67% of business owners reported still experiencing significant business impact.
“We are a small business that relies on events and some online business. We have not seen online traffic and none of our events are able to happen until they completely lift restrictions. We may not see that happen for a while. Hard to watch your business crumble. And I really feel for everyone else in the same situation.”
Lisa – Clothing Store Owner in Temecula, CA 5/23/20
These charts highlight how Coronavirus impact is still broad reaching with most recent poll results from 17,400 business owners across North America on May 25, 2020.
“Therefore, we are wearing our masks, social distancing, washing and being cautious about frequenting establishments. Hopefully, some financial help for small businesses will trickle down to us all. Sure it is inconvenient, but reopening the world without having a vaccine or even testing everyone is truly reckless.”
“Without consistent and wide-reaching guidelines for re-opening and mitigating the virus, another outbreak and shutdown is imminent and is most concerning.”
REOPENING STATUS & ANTICIPATED PERMANENT CLOSURES
- May Reopening’s lead to closure decline from 43% to 32%
- Closed: 3% reported as permanent closure while 29% intend to reopen
- Open: 28% reported operating at reduced levels with limited products or services available
Our May 25, 2020 survey of 14,828 business owners showed progress towards reopening of businesses with the percent of closed businesses declining 11% in May. This month, we also started to split open businesses into two groups [fully open (40%) and open with fewer products or services (28%)] to show the progress in getting back to fully open in future updates.
The majority of businesses which remain closed hope to reopen (29%) and the percent of businesses reporting their closed status as permanent remained unchanged from last month at 3%.
As businesses reopen many are adjusting their product mix and the business models to provide a safe environment for their customers and staff.
“We are thrilled that we are open again. We've had to reduce our open hours so that we can do cleaning, but we are ready and excited to have customers come and enjoy our beautiful Gallery.” Jane – Gallery Owner in Morro Bay, CA 5/23/2020
GREATEST RECOVERY CONCERNS
- Financial resources running out: 26%
- Customers being afraid to return: 25%
- Threat of re-closure with increase in Coronavirus cases: 17%
On May 25, 2020 we surveyed 13,760 business owners regarding their biggest reopening concern. The prolonged and unpredictable nature of the Coronavirus Impact clearly factor into how business owners will recover. Having sufficient financial reserves to get through this crisis is their greatest concern and something they have visibility into on a daily basis.
Their next two concerns were more out of their control: How, when and to what extent customers will feel safe returning to their businesses and whether or not the Coronavirus cases will spike again causing state and local governments to close businesses once again.
At the onset of the outbreak in mid-March, our poll of small business owners highlighted the dire cash reserve situation felt by the majority of business owners.
At that time, 37% of small business owners reported having less than a month of cash on hand, while another 31% said they had only one to three months of cash available.
Now almost 3 months into the impact that puts over 65% of businesses at financial risk.
Here’s what business owners in a variety of industries had to say about their recovery concerns:
“The biggest challenge will be our customers getting over the fear of going out to eat. There is too much fear in the media about how many have died because of this virus and not enough of how many have recovered.” Phillip, Restaurant Owner in Sierra Vista, AZ
“My profession, bodywork/massage therapist, has been effected drastically and will continue to until there is an effective treatment. The availability of the proper PPE supplies, and all the extra steps required to work with clients is daunting. Clients will be wary of making appointments.” Gwenn, Massage Therapist in Bloomington, IN
“I cannot publish my next coupon magazine until small businesses are open again and some time has gone by to rebuild their revenues. I will be polling my customers in the next couple of weeks to get their thoughts on when they will feel comfortable in spending money on advertising again. They will be the drivers as to when I get back to work.” Chuck, Publisher in Wenatchee, WA
CUSTOMER DEMAND RETURNING?
- 56% report less than 50% of customers have returned
- June outlook shows some progress
Over 7,000 business owners responded to this month’s poll on the percent of pre-Covid19 customers who’ve returned in May. Only 16% experienced a return to pre-Covid levels while 56% have seen less than 50% return.
We asked how many customers they anticipated for June and if this would differ should they be able to return to fully opened status in both scenarios they saw a little cause for optimism.
“The Wedding Industry is almost non-existent. People are too afraid to celebrate.” Maxine, Bridal & Event Coordinator, Houston, TX
“All lodging in my town is supposed to be closed. Maybe 90% are. We are closed and hoping to open in July.” Judie, B&B Owner, Crestone, CO
“Even though my business would significantly benefit from some assistance due to the increase in operating cost associated with PPE and extended time per patient for additional safety protocols, my business does not qualify at all for any government assistance. I was in the process of a purchase of the business for the past year and the purchase finalized during they pandemic. As a result, since I did not have any employees on my payroll in February, I cannot get payroll assistance. The former owner of the business did qualify and received a loan for payroll protection but it is non-transferable. As a result, I have personally not taken a paycheck in over 5 weeks in order to ensure my employees are paid.” Julie, Veterinary Hospital, Sanford, NC
“You might think we’re lucky to stay open during this episode of virus propagation however, we are bleeding slowly with increased operating costs (20%) PPE & FOOD), salaries (20%) hiring more staff, decrease of income (15%). All this to say that we will not be able to hold much longer unless we can accept new clients sooner than later. Of course, it can only be done safely.” Albert, Senior Living Center, Rockland ON
REVENUES AND ABILITY TO PAY
- Revenues for 36% of businesses below 25% of Pre-COVID levels
- June Payments to Creditors & Landlords 52% will Pay in Full
Over 76% of businesses are currently experiencing revenue levels less than Pre-COVID19 levels. With 36% of businesses operating with revenues 25% or less. As many of the main street businesses re-open they will be limited in their ability to generate revenue due to new capacity and distancing regulations.
This survey of 15,400 small business owners on May 25, 2020. It’s clear there are many dependencies between business owners where the inability of one to generate revenues filters down through the local economy.
“People remain hesitant to come into our showrooms even though we insure all employees and customers wear masks, keep a reasonable distance where possible, and disinfect our counters, tables, door handles etc. We're hoping that this fear will subside soon and people will go back to somewhat normal activities soon. Saratoga racing without spectators this season could have a devastating effect to our area.” Thomas – Carpet Store Owner in Latham, NY
Looking forward into how May Revenues will impact June payments. Our recent survey of 12.126 business owners found just over 50% will be able to pay their creditors and landlords in full in June. With 28% able to pay 50% or less of these expenses.
That said, there are some indications of cautious optimism from business owners who serve businesses in the most hard-hit sectors:
“Business was much better than expected this past week but this is the first week it has come back. I am not sure this boost will continue as people were anxious to get deliveries for the holiday week. Whether it stays strong remains to be seen.” James, Trucking Service business in Calverton, NY
OPERATING EXPENSE IMPACT
- New COVID Related Expenses incurred by 27% of businesses
- Reductions include Creditor and Employee Expenses
As businesses re-open they’ll be facing additional incremental expenses to create a safe environment for themselves, employees, and returning customers. Of the 13,155 business owners surveyed 27% report additional COVID related expenses.
Two areas business owners have seen reductions in expenses are related to creditor payments as well as lower employee expenses.
Businesses listed a wide variety of impacted expenses in the “Other” category so we turned their responses into a word cloud to provide some context around the expenses impacted.
“Adequate and proper PPE products needed at reasonable cost, especially cleaning products and face masks.” Bob, a medical professional in Fort Myers, FL
“Remodeling is very expensive and buying supplies for each individual child is costly. Taking safety precautions and health is my biggest concern for the future.” Martha, runs a school in Westwego, LA
“Business is very bad as the taxi industry has taken a serious hit. People are not travelling and as such clients cannot earn and do not have funds to pay their insurance premium and some also even have mortgages on their cabs/medallion and are finding it difficult to survive in the taxi business.” Sew, transportation industry in Brooklyn, NY
HIRING AND ANTICIPATED EMPLOYEE GROWTH
- 53% of Pre-COVID employees currently off payroll
- Businesses anticipate 70% of workforce on payroll by January 2021
- June re-employment estimated at 7%
Survey of 12,500 business owners as of May 25, 2020.
As of May, Small business owners employed 46% of January employees and were anticipating a 7% increase to 53% by the end of June and 24% increase by January 2021 bringing the overall anticipated employment level to 70%. In some cases, employers looking to re-employ found staff reluctant to come off un-employment support.
“It is very hard to get back employees that are getting that extra 600.00 per week. I have lost 90% if my employees and am having to scramble to find people for serving and cooking in the restaurant. Why look for work when you are getting over 700.00 a week on unemployment.” Bob, Restaurant Owner in OH
“Just trying to get through this and keep my employees safe and employed. We have not laid anyone off and did NOT reduce their wages economy needs to open.” Mel, HVAC company in PA
“Good News... before coronavirus the most in home appointments we had set were 40 in one week. Last week we set 85 in home appointments! The effects were very hard for several weeks. We are meeting the consumers safety needs and we are seeing a bounce back in the areas we serve. Now Hiring!” Josh, Home Services in KY
COVID DISASTER RECOVERY TIMELINE
Economic recovery after Natural Disasters has been well documented by FEMA and other experts across the globe. Borrowing from one of their frameworks, leveraging our learnings to date from the data we’ve collected and the discussions we’ve been a part of on Alignable…
It’s clear to us the economic recovery from the Coronavirus is going to take years to accomplish, is going to be community driven, and is going to require a sustained concerted effort by local government, business owners and consumers alike.
We’re going to need a renewed and sustained movement in support of local businesses for our local business communities to fully recover.
“Buying local and supporting your business neighbors is very important during this time of uncertainty. So many businesses small and large will never be the same, even if they survive this crisis. If we all (small business owners and workers who still have a job) would just take a quick moment to look our customer's in the eye say 'thank you, your business is greatly appreciated' it may keep that customer coming back.
On your worst day a smile goes a long way. It can change someone else's day.
To all, be healthy, and stay safe.” Mary Ellen, Retail Business in Norwalk, CT
Here’s how our visualization of how we believe the recovery might look like in the months / years to come.
Based on FEMA’s Natural Disaster Recovery Framework and insights gathered from Alignable Coronavirus Insights Polls and Forum Discussions.
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: