Business

Small Business Outlook

Small Business

Happy Small Business Week! As we celebrate you, small business owners, this week, I thought I’d look at some current surveys and reports, which reveal a lot about the state of small business today.

Signs of Recovery

The 3rd installment of the Small Business Recovery Report from Kabbage shows small businesses’ sales and profits are nearing pre-pandemic levels. On average, small businesses reported earning $51,200 in total sales and $37,000 in profits in the past 30 days of this year, compared to $63,900 and $48,900 pre-pandemic, respectively. In addition, survey respondents say they reclaimed an average of 80% of total sales and 75% of profits of what they earned before the crisis. However, the smallest small businesses reached only 55% and 57% of their pre-pandemic sales and profits, respectively.

The 8th Global State of Small Business Report from Facebook shows small businesses are still struggling, though there are “some signs of recovery.” The report shows:

  • 18% of SMBs globally are still closed
  • 36% have fewer employees than they did pre-pandemic
  • 60% experience difficulties paying business-related expenses
    • 33% say cash flow is one of their biggest concerns resulting from Covid
    • 26% struggle with paying down loans or debt 
    • 25% have problems paying bills
    • 25% also struggle with paying rent
    • 24% have challenges paying employee’s salaries

Facebook’s Sheryl Sandburg explains more here.

And the BizBuySell Insight Report shows the business-for-sale market continued to rebound in Q2, with closed transactions up 5% over Q1 of 2021. But while business sales transactions are up 38% over the same period of 2020 (the height of pandemic lockdowns), they are still 16% below Q2 2019 pre-pandemic levels. And the excellent news is the $320,000 median sales price in Q2 2021is 19% higher than Q2 2019 pre-pandemic levels.

Going Digital

The Facebook report says 88% of businesses now use digital tools compared to 81% in February. And over half expect their use of digital tools to be permanent. Some SMBs say their shift to online made the difference between staying afloat or going under.

The 5th edition of the Small and Medium Business Trends report from Salesforce reinforces the digitization trend, revealing that 83% of SMBs have moved some of their operations online. And of those, 95% shifted a portion of their operations online in the past year. Their reasons for digitizing:

  • Serve customers safely—43%
  • Cater to customer convenience—37%
  • Enable safer work arrangements for employees—32%
  • Increase productivity—30%
  • Stay competitive—29%

Specifically, a survey from DHL Express reveals 48% of SMBs’ e-commerce revenues increased in Q1 2021 compared to Q1 2020. 

Minority Report

New data released by Bank of America revealed that 85% of Black small business owners say recent social justice issues impacted their approach to running their business, and 94% now advocate for social change through their companies.

The survey shows Black SMBs are “resilient and optimistic” and over the next year:  

  • 84% expect revenue to increase
  • 82% believe their local economies will improve
  • 80% believe the national economy will improve 
  • 74% plan to expand their business

Salesforce’s SMB Trends Report shows that 59% of Black and 65% of Hispanic SMBs say financial support from their communities was vital to helping them survive.

And Facebook’s report says women and minority-owned businesses remain the hardest hit post-pandemic:

  • Globally, 20% of women-led SMBs reported being closed vs.16% of those led by men
  • In the U.S., minority-led SMBs were at least 50% more likely to be closed
  • Minority-led SMBs were also more likely to report lower sales compared to the same period in the previous year, with 44% doing so compared to 29% of other small businesses
    • Hispanic-led businesses were the most likely to report being closed at 24%

An Adobe study reveals entrepreneurs in general feel stretched across business priorities, employee needs, and community involvement.    

Among minority- and women-owned small businesses:

  • Minority-owned (67%) and women-owned (49%) small business owners feel more stretched for time at work than non-minority-owned (52%) and male-owned (38%) business owners.
  • Minority-owned (34% vs. 16%) and women-owned (20% vs. 10%) also feel more pressure to contribute to their local communities. Minority-owned (45% vs. 30%) business owners (46% vs. 28%) also dealt more with employee burnout and turnover.

As a result, the Adobe survey indicates more minority-owned (64% vs. 46%) and women-owned (54% vs. 44%) business owners were more stressed from trying to keep their business afloat.

Help Wanted

The pandemic has led to much tumult in the workforce, and small business owners are currently struggling to retain key employees. According to the BizBuySell Insight report, many small businesses are still struggling to rebuild their pre-pandemic operations. In fact, 47% of those surveyed who are dependent on labor have difficulty hiring or retaining employees, “forcing them to choose between raising wages or cutting business hours in an attempt to keep pace with customer demand.” The report says 81% have raised wages to attract and retain employees, while 17% say the labor shortage is due to their inability to compete with higher salaries.

The Bank of America survey shows Black SBOs supported their employees by changing their approach to employee wellness, including:

  • Allowing employees to have a more flexible work schedule (50%)
  • Allowing employees to work remotely (40%)
  • Broadening wellbeing programs to include behavioral and mental health programs (32%)

And the report from Kabbage shows small businesses are struggling to fill open roles in their companies, with 28% saying it is difficult or very difficult to hire new employees. Interestingly, 19% say job candidates can’t accept job opportunities due to the obligations of caring for children or family. As a result, 30% report it can take five to six weeks to fill a job opening, while 15% say it takes longer than eight weeks.

This staff shortage has led to business owners working three to six additional hours per day than they did before the pandemic.

On the other hand, 50% of the business owners surveyed in the DHL Express report say staffing is not a challenge.

Entrepreneurship Beckons

We first reported an uptick in startups about a year ago. And now a new study from MBO Partners® shows that 2021’s economic recovery and changing attitudes about work has driven an increase in the number of independent workers to 51.1 million, “an unprecedented 34% rise in workers taking the leap to independent careers.” MBO Partners calls this the “Great Realization” and says women have responded to the “shecession” by seeking work that enables them to earn income in a way that fits into their demanding schedules. In fact, 55% of the new independent workers identify as female.

The MBO study also says, “the pandemic reinforced a growing view that traditional jobs are less secure. And 68% of full-time independents believe working independently is more secure than having a traditional job.

Independent working is being embraced by the young, with Gen Zers and millennials comprising  68% of the new independent workers who started their businesses in the past year.

It’s been quite a year for small business owners, and if you need help navigating through the recovery, a SCORE mentor can help. Find one today!

Reprinted with permission from – score.org – By Rieva Lesonsky

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