Alignable: Road to Recovery Report (September 2021)
Delta Variant Significantly Prolongs Small Business Recovery
- 80% of Small Business Owners Worried about Delta’s Impact
- Recovery Expectations Pushed Out Another Quarter
- Last Month’s Revenue & Customer Gains Disappear
- While Inflation & Hiring Challenges Escalate
Table of Contents:
- COVID’s Current Impact on Small Business Recovery
- Reopening Status
- Customers and Revenue
- Inflation
- Alignable Research Center and Poll Demographics
Overview
This month’s report, unless otherwise noted, features data collected among 2,864 business owners from 8/29/21 to 9/14/21, and historical data from over 645,000 poll responses collected since March 2020, as we’ve mapped how the Coronavirus Crisis has impacted the Small Businesses Economy across the United States and Canada.
For more details about any of these findings, including the methodology behind our polls, please contact Chuck Casto at chuck@alignable.com.
COVID RECOVERY HEADS IN WRONG DIRECTION
- Anticipated Recovery Shifts Out Another Quarter
- Significant Negative Impact Climbs to 34% (Up 12% in 2 Months)
- Business Owners Realize COVID Crisis is Far from Over
The surge in Delta variant COVID cases has 80% of business owners concerned about their ability to recover, up from 76% last month.
Their concerns continued to rise from what we reported last month with the level of concern rising across the board along with a noticeable drop in business owners who remain unconcerned. That figure is now below 20%.
These concerns were echoed in this month’s rendering of the level of impact business owners are feeling from the COVID Crisis below.
Here we see a noticeable shift with businesses reporting they’re starting to feel impact jumping 11% from 4% in June to 15% now.
Businesses reporting significant impact also saw a big jump from the June low of 22% to 34% just two months later. And the percentage of businesses reporting that COVID’s impact is declining dropped 18% from 32% to just 14%.
It’s clear the small business economic recovery is taking a major step backwards due to the significant increase in Delta variant cases.
The questions we’re looking to answer next month include:
- How will this uncertainty affect business owners’ projections for the remainder of 2021?
- Will their outlook impact inventory purchases? and
- What does this all mean for year-end sales, as well as hiring?
In their own words, here’s what many business owners had to say about the state of their current recovery. Many are seeing their businesses and livelihoods decline, while some are busier than ever.
“I'm out of business and homeless.”
“Business has just about come to a halt. Fear dominates consequences.”
“I have closed my business.”
“I decided to sell my business at half price and let someone else ride it back up.”
“Delivery times are killing us. Customers don’t want to wait 18 weeks for a door when the delivery times used to be just 2 weeks.”
“Doing card readings masked is awful and impersonal. And the virus keeps people at home and not at stores.”
“I sell real estate, so the effect has been both positive and negative. Buyers are worried. Sellers love the high prices. Staying safe among newcomers produces anxiety.”
“It’s up and down. Depends on masking and regulations – but I need employees.”
“Boat sales are up, though inventory is hard to come by.”
“Been very busy. My best year so far.”
“Busy. Busy. Busy!”
“Many competitors have shut down because of COVID. This has allowed us to expand with more contractors who work socially distanced.”
REOPENING STATUS UPDATE
- Delta Variant Reclosure Fears Remain High
- Fully Open Businesses Decline Again
- Customer and Revenue Improvements Halted
The percentage of fully open businesses declined again this month. The vast majority of the decline came from businesses reporting they were no longer fully reopen, but were now operating with fewer products or services. In June, 68% were fully open. That dropped to 62% this month.
The spike in COVID cases is once again stoking fears of government-forced business closures – which rank as the No. 1 concern among small business owners once more this month.
Inflation, including the ongoing battle with rising inventory and supply costs, is a close second.
Here are some quotes from business owners illustrating their biggest concerns. Many already feel significant negative effects of the Delta variant on their businesses and/or their communities. Though one member in the medical field says the Delta surges have increased business.
“The Delta variant is causing a lot of worry.”
“Many restaurants around us have closed. Masking or asking for proof of vaccines is hurting business.”
“Due to Delta, we were down 37% in August and are dead slow this month.”
“With the latest Delta scare, tourists are at an all-time low. Until COVID actually ends and tourism really comes back, my sales will remain low.”
“Coming out of COVID, events, in general, were up and down. And now due to Delta, they’re down again. No certainty. It’s so hard to plan for large parties and events.”
“Part of my business is in Japan. That country has a vaccine shortage, and the economy has tanked!”
“I’m a travel advisor, so the impact has been great. People were starting to travel or think about travel, but now with the Delta variant, they’re backing off. The bookings I have made are not until 2022 or 2023.”
“I run a medical facility and due to the increase in cases from the Delta variant, the demand for COVID testing has gone up rapidly. I've added staff to handle more demand for corporate on-site testing. I've also added more antigen and PCR testing with same-day results.”
Customers & Revenue
Customers
Last month, I had an inkling the improvements we’d been seeing in customer and revenue levels might be short-lived. Unfortunately, this month’s results validated my concerns.
Below you can see the reversal in the percentage of businesses reporting less than 25% of pre-COVID level customers returning. Each month we look at the overall trend of this report where shifts from the left to the right are seen as progress. This month we see a reversal with the far right giving ground to the far left.
Here’s the customer level chart:
We get a glimpse of the future some by asking business owners to forecast what they think the next 30 days have in store. Shifts from the left to the right indicate optimism. But here, too, we see a shift in the opposite direction and an indication at least in the short-term, that business owners are not anticipating much in the way of progress towards recovery.
Revenue
Unfortunately, revenue generation followed the customer trend with a noticeable shift from the right side of the chart back towards the left. Fewer businesses are generating revenues at levels close to where they were prior to this crisis. Right now, 43% of all small businesses have half or less of the monthly revenue they earned prior to COVID.
As business owners try to navigate a path to recovery, they have to take into account all of the knowns and unknowns coming their way. Last month, we reported the great unknown of the Delta variant had caused business owners to shift in one-months’ time their anticipated recovery out by a full quarter.
Now, a month later, we see they are anticipating that their recovery will shift out another quarter -- or half a year in just two months’ time.
Time Series on When Revenue Will Recover to Pre-Covid Levels (June through August 2021) - see how expectations have shifted out roughly a quarter each month.
Here are some comments from our polltakers reflecting the drop in customers and revenue for many, while some are enjoying a spike in business.
“My business has never recovered from the first round of COVID, and I still have not been able to get help.”
“The government has killed my business.”
“I can no longer hang on. I’m closing my business on Sept. 30th.”
“I put my businesses on hold at the beginning of the pandemic – and they’re still on hold.”
“My jewelry is not a necessity, so it’s not in demand.”
“We had to lay off workers because of COVID and we can’t hire them back, because there’s still not enough work to cover them.”
“Our town is rural. Many have moved here recently & many also vacation here. Sales are up!”
“Housing is everything right now and since the variant is causing mask-wearing again despite vaccination, it is again spurring owners to want or need more space. So it’s actually helping my real estate business.”
“I represent disabled clients who want to obtain Social Security Disability benefits and COVID has increased the number of people who cannot work due to health reasons. That means I’m busier than ever helping them.”
Inflation’s Impact on Cash Generation
The three rather volatile areas we’re keeping an eye on with regard to inflation are:
- The cost of supplies and inventory
- The ability for businesses to pass along increased costs to customers
- The cost and availability of labor
Cost of Supplies & Inventory
Business owners reporting higher costs of supplies and inventory shifted up slightly with 85% experiencing higher costs in comparison to pre-COVID levels.
Passing Costs Along to Customers
Of the 85% experiencing higher inventory and supply costs, under half (44%) have been able to increase prices.
As you can see from the distribution of this chart relative to the one above, the vast majority of businesses are taking the hit from higher costs in the form of lower margins and cash generation.
Many simply don’t feel comfortable passing along the cost increases to their customers, at least not yet.
Employee Costs
When it comes to hiring, this month’s survey found 62% of business owners were still having difficulty rehiring or finding new employees, up another 3% from August, and 12% since July’s report. The labor shortage is only getting worse for many small business owners.
This month, we also released our Edge Report on the hiring industry. I highlights some of the latest innovators providing Gig Hiring Applications. And it summarizes our survey on the best and worst hiring applications from employer and employee perspectives. Be sure to check those out.
Here’s the data on hiring challenges:
And here’s the data on how employee costs have changed: 55% of businesses report pay rates for employees are higher than pre-COVID levels.
Our poll-takers had a lot to add to the conversation around hiring. Here are just a few of their comments:
“No one is applying for work. Everyone is on unemployment. I may be joining them, soon, as I can’t generate enough revenue to keep going without workers.”
“Income is up, but it’s difficult to source labor.”
“It’s very difficult, these are strange times. Not as many people are career-minded in the market today, even for a high-salary position. We’re having to do job fairs and spend a great deal on ads, so it’s more costly by far and we have very little response from qualified workers.”
“Having side jobs under the table while collecting unemployment seems to be the standard choice among workers these days, due to government policies and handouts. No one wants a regular job.”
“My employees need affordable housing nearby – that’s hard for them to find with rent going up.”
“We’re the biggest employer in town and we pay our employees more than other places – that’s why we never have trouble finding help.”
“We still can’t afford to hire anyone. Delta’s causing added uncertainty, too, about our needs for the future.”
With declining revenues, increasing costs for inventory, supplies and employees, and the escalating labor shortage, it’s not hard to understand the shift we’re seeing in the recovery outlook.
As always, we hope you are finding our ongoing research helpful in understanding the challenges facing small business owners not only here, but across the globe.
We encourage everyone when making a purchasing decision to think about spending money with a local business owner first. Your local merchants need you more than ever and they’re working hard to make their stores safe, while boosting your shopping enjoyment. #OneMainStreet
To see other polls we’ve conducted since March 2020, please go to the Alignable Research Center.
Now, For Some Really GOOD News!
This report has been sobering, to say the least, so we figured we would end on a positive note. Here goes!
As many of you know, we host contests for our members to celebrate the most supportive, giving and helpful small business owners guiding their peers toward greater prosperity – in good times and bad. And given the current state of the recovery, we all need these altruistic, community-oriented business owners more than ever.
That’s why I want to put them in the spotlight as small business superstars fighting to help their communities recover:
- The No. 1 winners in our latest contest, Alignable’s National Main Street Mentors Search, are Jill Cone of AZ Metals in Mesa, AZ, and Gunther Kramer of Gecko Websites in Waterloo, ON.
- And here are the rest of the Top 25 Business Mentors in both Canada and the U.S., who emerged after a whopping 132,000 peer votes and testimonials were reviewed.
- And, of course, we had nearly 2,000 local winners, too, who we’re celebrating for their impressive hometown efforts. To find local winners in your community (or in one near you), go here: www.alignable.com/my_town/votes.
We are so proud of each and every one of our winners and the members who took time to vote for them, exchanging praise and encouragement.
And please remember to click on the links to reach out to our winners, offering your congratulations and networking with them, too. I’m sure they’d love to hear from you – and they could have some great ideas to help your local recoveries, too.
To learn more about the contest and the top winners, see their releases here.
Thanks again for reading!
ABOUT THE ALIGNABLE RESEARCH CENTER
Alignable is the largest online referral network for small businesses with over 6.5 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, please contact Chuck Casto at chuck@alignable.com.
Comments (1-7)
This is very insightful information. It is helpful to compare the results of the surveys over the previous 18 months. Thank you for sharing.
This is a lot of information and data to review and digest. And it is telling in so many ways for the recent future...
I'm not liking the news, but appreciate the report
I do not see business saving revenue starting in the next 12 months. I started organizing easy going in-person complimentary events in May 2021 to maximize re engagement with my participant base and to attract new participants. I switched virtual events to "no cost" at the same time. My base is now building but will they transition with me if and when fees are reinstated?
Great update, and very thorough! Thanks for sharing with us. Hoping my industry has an uplift soon:
New Pandemic Proof Live Show Venues Considered by Developers.
With the number of surgeries down due to Covid, the cost of medical plastics up 60 percent and the cost of shipping up 700 percent in the last year, we had no choice but to raise prices. We are still waiting to see the effect on over all revenue.
Another major hit for us is the the amount of time required for new product development. Covid has extended that time at least 75 percent.
In a way the delta variant was not as widespread as the omicron variant. It was actually after the omicron that we started seeing revenue return to pre-covid levels.