To succeed, small businesses must be adaptable to unexpected change. The current economic crisis surrounding the coronavirus outbreak is and will continue to test this ability unlike anything experienced in the modern age. While those operating small businesses mostly had an optimistic outlook toward 2020 prior to the crisis, this view greatly changed in just a few weeks’ time.
This article will highlight the outlook of SMB owners entering 2020, how the crisis has affected the outlook of small businesses for this year, and what the future holds for SMB’s.
The Outlook of Small Business Owners Prior to the Coronavirus Crisis
Prior to the outbreak of the virus, Guidant Financial along with companies associated with the Small Business Trends Alliance (SBTA) surveyed more than 3,000 current and aspiring small business owners from across the United States. They found there was a generally positive outlook toward 2020.
- 60% surveyed exhibited some degree of confidence while less than 20% expressed a lack of confidence.
- A whopping 76% of small business owners expressed overall happiness with their operations while less than 15% expressed unhappiness.
- A further positive sign was the fact that nearly 80% of the small business owners surveyed indicated that they were profitable.
The Service Corps of Retired Executives (SCORE) also completed a survey of small business owners for 2020. None of these businessowners could have seen the challenges on the horizon.
- Of those surveyed, 75% thought that their cash flow situation was good.
- 86% expressed the belief they were to some degree prepared for the challenges that lay ahead of them in the coming year. These same business owners said the possibility of an economic downturn in the future was their biggest challenge, with 67% saying they thought that such a downturn was likely.
In yet another study completed before the coronavirus outbreak slammed the U.S. economy, the National Retail Federation (NRF) predicted that retail sales in 2020 would increase somewhere between 3.5% and 4.1%, eventually reaching nearly $3.9 trillion.
How the Outlook of Small Business Owners Has Changed Since the Coronavirus Outbreak
As the situation relating to the coronavirus outbreak unfolds in real time, circumstances change dramatically and daily. It’s difficult to gauge how the crisis is affecting the outlook of small business owners at any given moment.
On March 13, the National Federation of Independent Business (NFIB) released the results of a survey conducted by its Research Center in regards to how the crisis was affecting small businesses.
- It found that only about 25% of small business owners had so far been adversely affected by the crisis.
- Though nearly half of those currently unaffected indicated that they believed that the crisis would adversely affect them within the next three months if the outbreak caused worse economic disruptions in the areas in which they operate.
- At the time of the survey, of the businesses that have been adversely affected by the crisis, about 40% of them cited a slowing of sales and another 40% cited supply chain disruptions.
Its simply amazing how quickly things changed. Not even a week later on March 19, Goldman Sachs released the results of a survey which showed some incredible findings compared to the NFIB just a week before.
- An overwhelming majority (96%) of small businesses have been affected by the novel Coronavirus.
- More than half (51%) will only be able to continue operations for a maximum of 3 months.
- Almost 70% of business owners do not know how to attain (emergency) funding.
Considering the growing sentiment, the potential of the crisis to have an everlasting impact on an overwhelming majority of small businesses in the United States is evident.
The Future of SMB’s in the Face of COVID-19
Despite many small businesses closing their doors each day as the virus spreads and thousands are forced to self-quarantine, there are still reasons to be hopeful. According to DoughRoller.net, a proposal is in the works by the SEC to make it easier for businesses to gain access to critical capital. The complexity of the current framework takes resources from smaller companies that would otherwise delegate it towards direct investment in their own growth.
Some states are offering disaster assistance, and many are pushing for unemployment benefits in addition to the recently approved tax deferments. If action is taken soon, it could significantly soften the blow small businesses have endured.
With the SBA increasing their Disaster Loan Assistance up to $2 million for those suffering losses due to the coronavirus, small business owners don’t need to feel like they’ve been left behind.
Some small business owners have shown a remarkable resilience and agility toward the immense challenges that they now face.
What remains to be seen is how SMB’s will weather the storm as this crisis worsens considerably. As in any disaster, think how to rebuild once this is over as creativity and adaptation are key to survival.
By Leo Gutierrez Aside from working as a PR and SEO strategist, Leo Gutierrez is a finance and tech blogger in his spare time. Leo studied international politics at Arizona State and creative writing at Scottsdale Community College. For fun you can find him attached (by cord of course) to his Super Nintendo. Reach out to Leo via his twitter @A2ZLeoG.