Most US small business owners see a bright future for financial prospects, businesses returning to pre-pandemic conditions, and that they’ll still be in business in spring 2021.
It’s likely that optimism buoyed many small business owners (SBOs) to start and build their businesses to successful heights. But in March, businesses were slammed by the impact of the coronavirus pandemic, as all but essential businesses shut down. If they were lucky to have an online presence (or built one very quickly) or they were able to turn their workforce into telecommuters, it was certainly less impactful than on SBOs forced to fully shut down, as dine-in restaurants did for many weeks.
A new report from Capital One surveyed 1,000 business owners and 500 financial decision makers between Sept. 9 and 22 for its “Capital One Business Survey Fall 2020” and discovered that 62% of SBOs are confident their businesses will eventually return to pre-pandemic conditions. A vast majority (87%) predict that they’ll still be in business by spring 2021.
Returning to the best, pre-pandemic life
The report said 57% of small businesses that responded, despite the imposed restrictions and the narrowed margins, said their current financial position is the same or even better than pre-pandemic numbers.
“It’s encouraging to see that many small business owners are confident that their businesses will return to pre-pandemic revenues,” said Jenn Garbach, head of business brand and marketing at Capital One, in a press release.
Nearly four out of five (75%) business owners who applied for financial assistance (e.g., business credit card, grant, line of credit, or government relief such as a Paycheck Protection Program loan), believe that the assistance they’ve received during the pandemic will help them stay in business for the long term.
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Adaptability and growth
A legitimate fear evolved: As economic disruptions were raging, business owners dealt with the fear of having to let staff go–or the most frightening of all, be forced to shutter the business entirely. However, the majority of SBOs adapted quickly and were able to both stay in business, but keep their employees, too.
Only 2% of business owners report they had to shut down their small businesses permanently, and of the industries that were the hardest hit: Food services, construction, and technology businesses: 82% of business owners were able to either keep the same or increase the number of their employees, 57% were ordering the same amount of supplies or more than pre-pandemic, and less than 20% of business owners reported that because of the pandemic, they had to cut back on their services or products.
“In the face of an ongoing pandemic, the fact that small businesses remain optimistic is a real testament to their resiliency and the essential role they play in our communities,” Garbach said in a press release.
The Capital One report revealed that SBOs’ credit networks of associates–rather than taking on debt or applying to relief programs–were key to navigating and beating the pressures of the pandemic. SBOs said they relied on personal networks of associates, peers, and advisors for guidance, which was much preferable than to further burden the company with debt.
There were a lot of disappointed SBOs who were unable to secure money to stay afloat. The figures continue to surprise: 58% of SBOs reported they did not need financial support in the past six months.
With networking acknowledged as the key to keep SBOs, it makes sense that 61% of small businesses explained they need more practical advice and tools such as training or consulting support to help them find the best methods to run the company.
Even though many opted out of burdening the business with debt or slogging through financial aid, 43% of respondents admitted that they were open and willing to accept donations to help address the businesses’ pressing problems.
The future is bright for 83% of minority small businesses owners, and among this group, 57% said they’ve applied for financial assistance.
There’s also a race gap when it comes to the confidence they have in their business to operate through the year’s end:
- 83% of minority business owners said their businesses will be operating through the end of the year
- 89% of non-minority business owners said their businesses will be operating through the end of the year
- 57% of minority-owned businesses report they applied for some kind of financial assistance
- 39% of non-minority-owned businesses report they applied for some kind of financial assistance
- 82% of minority-owned businesses are more likely to have spent money adapting their businesses to keep them running during the pandemic
- 60% of non-minority-owned businesses are more likely to have spent money adapting their businesses to keep them running during the pandemic
- 79% of minority business owners said they have consulted an external source for financial support and advice since the pandemic’s onset.
The instinct for survival kicked in while the pandemic disrupted operations for business owners of varying generations.
Baby Boomers relied on experience and background, a culmination of their ability to survive: 32% of Baby Boomers applied for financial support, and 51% of Boomers spent money to adapt their businesses to keep it running during the pandemic. To help address their business’ financial needs, 27% of Baby Boomer business owners would accept donations, and 47% of Baby Boomers report they needed resources or tools to help them navigate their business through the pandemic.
Millennials, on the other hand, are more inclined to be open and leverage a variety of outside sources to stay in business. More than half (56%) of millennial business owners applied for financial assistance since the pandemic began. Millennials are more likely (83%) to have spent money attempting to adapt their business to keep it. When it comes to accepting donations, 77% of millennials said they would; 86% of millennials report they needed resources or tools to help them navigate their businesses through the pandemic.
“As we head into the busiest time of year for many small businesses, it’s critical for us to rally around our local entrepreneurs,” Garbach said in the press release. “One way folks can do that is by shopping directly at small businesses over the holidays, or by donating and making sure business owners have the resources they need to navigate the road ahead. In the face of an ongoing pandemic, the fact that small businesses remain optimistic is a real testament to their resiliency and the essential role they play in our communities.”