Small businesses are feeling somewhat more optimistic,
adapting operations to the new economic and public health normal as coronavirus
cases continue to rise around the county. But even in the face of progress, the
worst is far from over for Main Street, which is facing an unprecedented and
rocky recovery.
Small business confidence ticked up in the third quarter of
the year, to 53 from a record low of 49 in Q2, according to the
CNBC|SurveyMonkey Small Business Survey. Even with the rebound, the confidence
reading is the second-lowest score in the survey’s history and eight points off
where confidence stood to start the year.
“This is not the V-shaped recovery we were hoping for.
Things are certainly better than they were last quarter, but far off their
marks from what we had seen earlier this year and last year,” said Laura
Wronski, research scientist at SurveyMonkey. “These small businesses are going
to have long-lasting effects from this pandemic.”
The operating environment on Main Street has been bleak,
even with government loan assistance like the Paycheck Protection Program meant
to offer a lifeline to struggling businesses. The House Small Business
Committee last month reported 110,000 small businesses had closed permanently
and another 7.5 million across the country were facing the same fate. Enhanced
unemployment benefits that gave consumers more spending power in recent months
also expired at the end of July, which stands to impact businesses of all
sizes.
Just 36% of businesses say that current operating conditions
are “good” in this quarter’s survey, which is a major improvement from last
quarter’s 18%. But nearly one-fourth say conditions are bad — three times the
number who said conditions were poor to kick off the year.
The survey was conducted from July 20-27 among more than
2,000 small business owners nationwide.
“I think that small business owners see that economics are
opening and we are not going to be moving backwards,” said Karen Kerrigan,
president and CEO of the Small Business & Entrepreneurship Council, a Main
Street advocacy group. “They see a light at the end of the tunnel.”
More business owners are also reporting they will be able to
stay afloat for a longer period of time, with nearly two-thirds reporting they
are able to continue to operate for more than a year under current conditions,
doubling from May. The outlook has been buoyed, at least in part, by government
assistance, but the PPP expired Saturday for businesses who have not yet
applied for a loan. Lawmakers in Washington, D.C., have yet to reach any
agreement over a new aid package for Americans, including new loan programs and
second-draw PPP loans for businesses in need. President Trump’s executive
orders signed over the weekend, which include unemployment assistance, a
payroll tax hiatus, student loan relief and eviction protection, do not cover
small business.
“These business owners have learned to do more with less,”
Kerrigan said. “And do more with technology, which has allowed many of them to
operate more efficiently to innovate more and think of new ways to serve
customers, while also cutting costs.”
A quarter of entrepreneurs surveyed who had to lay off or
furlough workers due to shutdowns have hired workers back, with a third saying
they’ve hired some workers back, and 15% reporting they have not hired anyone
back and do not plan to.
The pandemic has altered business operations in a major way
for many. The survey finds that nearly 70% expect the pandemic will likely have
permanent impacts on the way they run their businesses, with more than half
saying they’ve had to spend money on new virus-related safety measures. A third
say these new precautions are eating directly into profits, but only 9% have
passed those costs on to customers.
“People are making changes to adjust for all of the turmoil
in recent months,” Wronski said, and she added that optimism may be increasing
simply because we know a bit more about Covid-19 as a nation than we did in the
previous survey period.
“A significant minority of businesses [13%] report that they
are still shut down, and most who have laid off workers have hired back some or
all of them,” said the SurveyMonkey research scientist. “Last quarter,
businesses were shut down and most were sheltering in place — we didn’t know
all that we know now about how to prevent the spread of Covid. As a country, we
don’t have the virus under control, but we have more information on what we can
all do as individuals—wearing a mask, keeping six feet apart — to keep everyone
safe. Taking those precautions is what’s allowing businesses to reopen.”″
The CNBC|SurveyMonkey Small Business Survey for Q3 2020 was
conducted across over 2,000 small business owners between July 20-July 27. The
survey is conducted quarterly using SurveyMonkey’s online platform and based on
its survey methodology. The Small Business Confidence Index is a 100-point
score based on responses to eight key questions. A reading of zero indicates no
confidence, and a score of 100 indicates perfect confidence. The modeled error
estimate for this survey is plus or minus 2.5 percentage points.
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