Alignable: State Of Small Business Economy -- Honestly, There's Big Trouble Brewing
DATA INSIGHTS | TREND TRACKER | There’s No Sugar Coating It…
The State of Small Business Economy: Honestly, There’s Big Trouble Brewing
National Small Business Week Update – Sept. 23, 2020
Pick Any of This Week’s Poll Takeaways:
- Anticipated Small Business Failure Risk Hits 42% for Q4
- 60% Still Suffering Negative Financial Impact: 48% Say It’s Significant
- 63% Would Apply for Additional Relief Funding If It’s Made Available
- Consumer Confidence Recovery Required More Than Another PPP
This week, we surveyed 6,325 business owners across a wide range of industries to get their take on the state of the small business economy. No matter how you look at it, things are pretty ugly.
Long-Lasting Financial Impact On Small Businesses
When the Coronavirus Crisis hit the U.S. in March, we started tracking it, expecting it to rise and then fall as the country tackled this problem. It’s been over 6 months and 60% of small businesses are still reporting negative financial impact with nearly half of that group saying it’s “Significant.”
While we’ve seen some encouraging trends with the impact levels declining, the impact has been too deep for too long. And it’s taking its toll on this massive segment of our economy.
How Significant Are We Talking?
To get an understanding for just how bad things are in the small business economy right now, we asked these small business owners to compare Q4 2019 revenues to what they were anticipating for Q4 2020, and the percentage of those revenues they would need to attain to stay in business into 2021.
Based on their responses, we determined that 42% of small business owners anticipated revenues below what they needed to stay in business. That figure is staggering.
Given our research last month, we knew that over 35% of Main St. retailers risked closing in Q4, and digging deeper into our new data, that number has climbed to 45% in just 30 days.
But what really shocked us was that 38% of business-to-business owners are also at risk of failure. Industries include: finance (25%), agriculture (32%), marketing (33%), manufacturing (36%), construction (37%), general business services (37%), energy/utilities (44%), and creative services (55%).
Would More Federal Relief Help?
Sure. But it’s not the long-term solution to the problem. The No. 1 factor slowing recovery is low consumer confidence caused by the increasing Coronavirus cases.
Based on the current level of discourse in the country, it seems highly unlikely we will see much change in consumer confidence until months after a safe vaccine is introduced.
When it comes to another round of federal relief funds, we found 72% of businesses experiencing negative financial impact would apply, if additional funding was offered. However, 37% of that group said they would only apply if the terms provided greater flexibility around using the money.
What we found most alarming was 47% of those who reported that COVID-19 had a positive impact on their businesses would still apply for additional relief funding, if given the chance.
Clearly, if Washington approves additional funding, the federal government should thoroughly identify those businesses actually in need of further relief.
Will Business Failures Trickle Down?
We also asked B2B owners the percentage of their clients that could close their doors by the end of 2020. Of that group, 20% expect more than half of their clients might shutter. And an additional 26% estimated that 25% to 50% of their clients were at risk.
This clearly illustrates the underlying pressures facing B2B businesses, because if too many of their clients shut down, their businesses will be in serious jeopardy if they don’t find new business quickly.
We Need To Do More
National Small Business Week is all about celebrating the opportunity and dream that comes from being a business owner. The Small Business Economy represents over 45% of GDP and is responsible for 65% of all new jobs created.
But more than that, the health of our local business community is the “canary in the coal mine” for the health of our local economies. Recovery is going to take a sustained and significant effort on the part of every consumer and business in the country.
We hope others will join us in our crusade (#MyMoneyStaysLocal) to raise awareness for shifting spending habits to local businesses.
About Alignable
Alignable is the largest online referral network for small business owners with over 5.5 million members across North America.
For more details on this latest Alignable poll, conducted from September 18 -- 21, 2020, please contact Chuck Casto at chuck@alignable.com. He’s happy to share the methodology behind the poll and arrange interviews with Alignable’s CEO and Co-Founder Eric Groves.
For past polls and coverage, please go to the Alignable News Center.
Comments (1-8)
I am surprised it is that low. The many issues we face as a small business are many, just look at the recent shutdown. Large businesses have remained open while we were forced to shutdown.
I have done an analysis of continuing to operate verses shutting down for a few months. As of now I am using my savings to keep the doors open. Rather than continue to inject funds. I plan to shut my doors in quarter 4 2020 and try to ride out the low customer confidence curve until increases and I can make a profit to operate a business. I am hoping after the first quarter of 2021. CB Electric is Back our doors are open for service calls, renovations, projects big or small or any type of questions you may have regarding electrical systems. Just Call Bob at xxx-xxx-xxxx or email at [email address].
Thank you for the survey and analysis.
I was only eligible for unemployment/ self employed pandemic unemployment as we had no payroll in 2019, being family owned/operated. I used pandemic to advertise on a larger scale but it's gone now & state runs out in a month for me. We've had 1 local bride + 1 internet bride + 2 local customers inquiring ( no biz yet). No prom, no other events leading to formal attire. Other 2 local formal shops only open for appointments too. It's rough. Only end in site for me shopping local is decision to open the state & get rid of masks. People don't "enjoy" shopping in masks. I don't go out because I'm hard of hearing & even w/ hearing aids, I cannot understand talking behind a mask. So it's all on line for me. Therefore non local mostly. Not hardly even out to eat. Hubby buys groceries regularly.
I agree if more funding became available I would apply for it. I’m still only open 4days a week. If customers had more confidence to shop it would help a lot. Where I am we depend on tourists, and locals. We are just not seeing many tourists.if numbers would go down it would help.thank god for my locals or I would not have any business
I own and run a dog day care and boarding facility. YOY is just heartbreaking to look at-we were full for Thanksgiving and the last two weeks of Dec by Sept of 2019, Not even half full for Thanksgiving. I have had to start using the EIDL loan(The PPP was used up months ago) While that will keep my doors open -I don't see 2021 as a banner year. Consumer are staying home and probably will for quite a while. At the same time, I do not argue with the critical importance of wearing masks, and doing everything we can to keep each other safe. I think the outlook is gloomy for my industry-however, I have heard some in other parts of the country are doing ok.
It is plain and simple, the "government" is killing us with garbage. As of 2018, 60% of the total population of the country, including children, suffer from degenerative disease, due to a worthless and hazardous "medical" system. Take control of your own health, learn about and use Natural Health Care. The more time you spend wearing a "mask" the more time you spend ruining your immune system so you can get sick from anything. Listen to what your own body is telling you, not a bunch of crooks on tv.
Great information, thanks!