At the risk of jinxing the recovery (I’m a bit superstitious), small businesses seem to be emerging from the downturn the coronavirus pandemic unexpectedly thrust us into. Underscoring this is the just-released Bank of America 2021 Small Business Owner Report (SBOR), which surveyed small business owners in March, as it became more evident life would start returning to normal.
Overall, the report reveals business owners are more optimistic and confident about the economy than they were last fall. In the next year:
- 60% of business owners expect their revenue to increase, up from 34% in fall 2020
- 56% are confident their local economies will improve, up from 39% in fall 2020
- 50% anticipate the national economy will improve, up from 37% in fall 2020
- 21% plan to hire, up from 13% in fall 2020
Getting Back to Normal
Most (79%) business owners expect their local communities to more quickly return to normal due to the increased availability of coronavirus vaccines and/or herd immunity. And a lucky 15% say their businesses are already back to normal.
Sharon Miller, head of Small Business at Bank of America, calls small business owners the “resilient backbone of our economy and local communities.” Underscoring that assessment, an overwhelming majority of business owners surveyed say their financial situation is strong (39%) or fair (54%). Only 7% say it’s poor.
Economic Concerns Remain
Business owners are as concerned now as they were last fall about the U.S. political environment (71%) and health care costs (64%). But they’re less worried about the coronavirus pandemic (55%, down from 75% in fall 2020) and consumer spending (46%, down from 56% in fall 2020). And they’re more anxious about commodities prices (59%, up from 42% in fall 2020), corporate tax rates (52%, up from 44% in fall 2020), and interest rate increases (46%, up from 35%).
Pivoting to Survive
In order to stay open during the pandemic, 55% of business owners pivoted made operational changes to their businesses, and 62% of them anticipate making those changes permanent, including:
- Continued enhancement of sanitation practices (54%)
- Further building a digital sales strategy (32%)
- Accepting more forms of cashless payments (27%)
- Maintaining shortened hours of operation (22%)
Digital tools and strategies helped 62% of these companies survive, including:
- Interacting virtually with customers (47%) and employees (36%)
- Banking online or in mobile apps (36%)
- Accepting digital payments (30%)
- Enhancing their social media presence (26%)
With so many small companies experiencing sales declines during the pandemic, 68% needed to tap into other sources of funding
- Personal savings (48%)
- Business and/or personal credit cards (34%)
- Paycheck Protection Program loans (33%)
- Personal economic stimulus checks (23%)
- Business lines of credit (20%)
COVID-19 took a heavy toll on small business owners’ health and wellbeing—with 39% saying it impacted their mental health and 34% reporting it affected their physical health. A whopping 85% blame the pandemic for creating extra stress around running their business.
But, as we know, entrepreneurs are resilient and found healthy, productive ways to cope, including making time to unwind and do activities they enjoy (46%) and prioritizing time with friends and family (40%). They described their state of mind during the pandemic as:
- Determined/resilient (52%)
- Stressed (48%)
- Anxious (43%)
- Hopeful (38%)
Buying a Business
Paradoxically, small business ownership became a “haven” for Americans seeking security in times of uncertainty, according to the BizBuySell Insight Report for Q1. Workers who were unhappy with their jobs or looking to take control of their future (37%) decided to buy a business (19% of those buyers were newly unemployed).
BizBuySell expects this heightened demand to remain but says there needs to be “a resurgence of supply” for the market to bounce back. According to the business brokers they talked to, this relies on revenue recovery for businesses, so the owners are ready and willing to sell.
Some owners, especially baby boomers who are counting on their earnings to last throughout their retirement, may be waiting for their businesses to attain their pre-pandemic market value before selling.
How long will that take? BizBuySell says that will require a sustained recovery, which 65% of brokers estimate will take between six to 12 months. Optimistically, with the pent-up consumer demand driving post-pandemic sales, the recovery could come sooner than expected.
Hiring is an area that is still concerning to entrepreneurs. Many (43%) tried to hire people during the pandemic, and 47% of those had difficulty finding qualified employees. And while 21% plan to add staff in the next 12 months, 25% say the pandemic caused a shift in the types of employee roles and skill sets that are important to their companies. Small business owners are looking for employees with work experience (49%), integrity (46%), passion for work (43%), and the ability to learn new skills (38%).
Committing to Social Justice
In addition to dealing with the challenges of the coronavirus, the SBOR shows entrepreneurs are more committed to social justice issues. Indeed, 53% say they are committed to advocating for social change through their businesses, and 31% say recent social justice issues impacted their approach to running their companies, including:
- Openly communicating their commitment to equality (34%)
- Seeking vendors who promote diversity, equity, and inclusion (28%)
- Seeking more minority- and women-owned vendors (28%)
- Giving back to local community groups to support social causes (28%)
- Hiring diverse employees (27%)
And they cite the benefits of committing to social justice, including:
- Boosting employee morale, satisfaction, and retention (31%)
- Attracting customers (29%)
- Gaining a competitive advantage (25%)
- Attracting employees (24%)
- Positive impact on the bottom line (24%)
There’s a lot to unpack in the Small Business Owner Report and a lot of best practices to consider adopting. SCORE is here to help. Check out the Small Business Resilience Hub. According to the SBOR, 22% of the small business owners relied on a mentor to help them navigate the pandemic. Your SCORE mentor can help you navigate the recovery—and beyond. Call your mentor today—and if you don’t have one, you can find a SCORE mentor here.