America’s Small Businesses Are in Trouble

Resiliency May Be Pushing Its Limits

By Cheryl Russell

When the US Census Bureau masterminded, not one, but two new surveys to measure the historic impact of the COVID-19 pandemic—the Household Pulse Survey and Small Business Pulse Survey—it was commonly believed the pandemic would be a wrap by summer. The months of May and June would be sufficient to record the historic (and expectedly short-term) economic contraction caused by COVID-19.

The final week of data collection for the Small Business Pulse Survey was June 21-27, just as coronavirus cases again began to surge. Oops! Back to the drawing board. (The Census Bureau initiated a second phase in mid-August which will continue through October). As of the ninth and final week of that initial run, the nation’s businesses had appeared to show a level of resilience. They may have been knocked down, but they were not yet knocked out. Take a look …

Q: Overall, how has this business been affected by the COVID-19 pandemic?

In week 9 the survey, 38 percent of small businesses said the coronavirus pandemic had a large negative effect on their business. This was well below the 51 percent that reported a large negative effect in Week 1. Businesses were battered, but it seemed as though a growing share were taking the pandemic in stride.

Q: In the last week, did this business experience a change in operating revenues/sales/receipts, not including any financial assistance or loans?”

In week 9 of the survey, 43 percent of small businesses reported a revenue decline in the past seven days. While substantial, this figure was much lower than the 74 percent that reported a revenue decline in Week 1. Apparently, many small businesses had stopped the bleeding. Or maybe not.

The bureau notes on its Small Business Pulse site, “any published survey results were contingent on response.” Which businesses responded to the survey in the final weeks of data collection? Most likely the survivors, while the pandemic’s victims most likely went dark. Tens of thousands of businesses have, in fact, gone dark. Yelp, the online crowdsourced business directory, has been documenting the growing numbers of victims. Of the 132,500 business closures noted on Yelp since March 1, the majority (55 percent) had closed permanently as of mid-July.

The coronavirus pandemic “represents a shock to America’s small firms that has little parallel since the 1930s,” says a National Bureau of Economic Research (NBER) study. In late March/early April, the NBER researchers surveyed small businesses about their operations and outlook. If the COVID-19 crisis lasts 6 months, they asked, is it likely your business will still be in operation by the end of 2020? Only 38 percent said yes.