The COVID-19 pandemic has shaken the entire world and has impacted almost all the sectors. However, the sectors that have faced the hardest hit are the SMBs or the Small and medium-sized enterprises.
Facebook, in partnership with Small Business Roundtable, conducted a survey to offer statistics on which businesses are still operational and which are not, where they are located, how are they dealing with the impacts of the pandemic and what’s going to be their situation going forward. The survey involved the response from approximately 86,000 people who owned, managed or worked for a small and medium-sized business (“SMB”), including approximately 9,000 operators of “personal” businesses.
Here are the key highlights of the report:
1. Small businesses are closing their doors and facing an uncertain future.
Facebook's report highlights some stats as to how many businesses have been majorly impacted by the COVID-19 lockdowns, with a look at the percentage of SMBs in each sector that is currently unable to operate.
As much as 31% of owners and managers reported that their SMB is not currently operating. This number even goes as high as 52% among personal businesses, the majority of which (55%) were led by women.
2. SMBs’ biggest challenges are access to capital and customer behaviour.
The responses recorded clearly indicated the two biggest challenges faced by SMB’s – Cash flow and customer behaviour. 28% of SMBs said the biggest challenge they would face over the next few months was cash flow, while, 20% said their biggest challenge would be lack of demand.
3. To adapt to the ongoing crisis, SMBs are turning to internet tools.
Business owners and managers are considering their options of turning to internet tools. As much as 51% of businesses reported increasing online interactions with their clients. 36% of personal businesses are now conducting all of their sales online as against 35% of businesses that have adopted the use of digital payments.
However, they worry about the risks of getting a loan or opening a line of credit. Despite their need for access to capital, 47% of open businesses were afraid of borrowing money thinking of how will they pay it back.
4. Small business owners are struggling to balance running a business and caring for their households.
As many as 47% of SMB owners and managers report feeling burned out trying to take care of business and household responsibilities at the same time. 62% of respondents report spending between one and four hours a day on domestic or household care activities.
33% of women entrepreneurs reported that household responsibilities were affecting their ability to focus on work “a great deal” or “a lot” than of men (25%).
5. Employees are facing dire economic circumstances.
2020 is essentially a write-off for everyone. Not only owners, but even employees are facing the burnt. As much as 74% of them don't have access to paid sick leave while 70% aren’t able to avail any paid leaves. These numbers are even worse in the hospitality sector where they are as high as 93%.
Another heatwave lies with respect to rehiring. Less than 50% of the employers reported of rehiring the same workforce when their businesses will reopen after the lockdown whereas while the same was true for 32% of personal businesses.
6. Still, SMB owners and managers remain optimistic and resilient.
In spite of all of this, there are some indicators of future potential, in addition to enduring owner optimism/hope. 57% of SMBs report that they are optimistic or extremely optimistic about the future of their businesses. And only 11% of operating businesses expect to fail in the next three months, should current conditions persist.
The ongoing lockdowns have forced businesses to explore their online opportunities. We sincerely hope that there are enough alternative routes to keep the SMBs running as we navigate through this economic crisis.
You can read Facebook's full, 36-page "State of Small Business Report", which includes a heap of more specific insights and data.