One-third of small businesses not operating during pandemic

Facebook and Small Business Roundtable surveyed 86K business owners, employees

Published May 18, 2020 by Sydney Lake

Nearly one-third of small and medium-sized businesses aren’t operating because of the COVID-19 pandemic, according to results released Monday from a national survey conducted by Facebook Inc. and the Small Business Roundtable (SBR). Approximately 86,000 people who own, manage or work for a small or medium-sized business were surveyed. 

“Small businesses are the heartbeat of our communities — and they’re in real trouble,” Facebook COO Sheryl Sandberg and SBR Co-Executive Directors John Stanford and Rhett Buttle said in the report. “Since the first shelter-in-place orders, it has been clear that many businesses were going to take a big hit, but now we can hear from the people behind the businesses just how big a hit they are taking.” The SBR is a coalition of small business and entrepreneurship organizations that focuses on improving entrepreneurship in the U.S.

Of those surveyed, approximately 9,000 are operators of “personal” businesses — people who reported they were self-employed or that they “produce goods sold for personal income,” but did not otherwise self-identify as an owner or manager of a business. More than 50% of those respondents have shuttered their business as a result of the pandemic.

Access to capital and customer behavior are the biggest challenges small and medium-sized businesses are facing, according to the report. “I was trying to grow a business. With the pandemic that has not happened,” an unnamed survey respondent wrote. “I was able to make a few sales. All regular avenues of sales were closed and access to new accounts were closed as well. I need the country to reopen to succeed.”

To adapt, small and medium-sized business owners are increasing online interaction with customers to tackle the lack of demand during the next few months. More than one-third of respondents said they’re conducting all of their sales online and have expanded digital commerce.

But because many small and medium-sized businesses are now being run from home, nearly half of survey respondents said that they’re struggling to run a business and care for their households simultaneously. More women owner-managers reported that household responsibilities were affecting their ability to focus on work than men, according to the report. 

Employees of small and medium-sized businesses face major challenges, too. Of the employee survey respondents, nearly 75% don’t have access to paid sick leave or paid time off. And for hotel, cafe and restaurant employees, those statistics reached nearly 94%. Not even half of small and medium-sized business owners and managers reported that they would rehire the same workers when their businesses reopen.

“We need to stabilize our business for the long term in order to bring employees back from layoffs,” an unnamed survey respondent wrote in their survey response.

“Still, [small and medium-sized business] owners and managers remain optimistic and resilient,” the report says. More than half of the respondents reported that they’re optimistic about the future of their businesses.

“The survey shows the people who operate, manage and work for [small and medium-sized businesses] are resilient; among them, there is hope and optimism about the future of their businesses,” Sandberg, Stanford and Buttle said. “They’re finding new ways to reach their customers online, they’re making adjustments to how and when they do business, and they’re working hard to meet their family obligations at the same time.”

Subscribe to Virginia Business.

Get our daily e-newsletter.