UPS Original Research: Small Businesses Press Pause on Recovery

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UPS has completed the ninth week of a study to measure the impact of COVID-19 on small and medium-sized businesses across the United States. This installment went to 484 U.S.-based respondents between May 20 and May 25. 

 

Recovery Has Plateaued

After several weeks of economic gains, survey data indicates that the recovery has plateaued. While many businesses are preparing to move forward, the impacts of the pandemic remain pervasive.

Seventy-three percent of SMBs surveyed report a negative impact from coronavirus, a slight uptick from the previous week.

Businesses are closely monitoring their sales revenue as a sign of recovery, but the data for this metric has remained flat for the past two weeks: Nearly two-thirds still say the pandemic is causing a decrease in revenues for their business.

 

Back in Business

And after several weeks of businesses unlocking their doors and turning on the lights again, the pace of such openings has slowed. Yet the good news is that more than 90 percent of respondents are now open in some capacity.

The biggest shift has come from previously closed businesses moving to reduced operations — a sign of more SMBs dipping their toes back into the marketplace.

While 8 percent of respondents expressed concern their business would not survive the pandemic, a reassuring sign is that just 1 percent of businesses reported permanent closure, a number that has remained consistent throughout our survey.

 

Uncertainty Reigns

No matter where they are on the path to reopening, small business owners feel a lingering sense of uncertainty about the post-coronavirus environment, as many believe factors outside their control will hinder a full recovery.

Among respondents negatively impacted by the pandemic, nearly half said they don’t expect their business to return to normal until the first quarter of 2021 or later.

Cash flow is a key element of this uncertainty. While businesses received some liquidity relief from the government’s Paycheck Protection Program, 43 percent of respondents say cash flow represents an ongoing challenge.

Cash flow is an ongoing challenge for small businesses.

The continual absence of customers is a driving force behind these cash flow issues. Among respondents who say their business is not fully reopened, 43 percent point to customer decline as a key reason they are not yet operating at pre-pandemic levels.

 

Customers Make All the Difference

Regardless of whether they serve businesses or consumers, respondents in this survey eagerly anticipate a resurgence in customer demand.

Yet this demand may return sooner for B2B companies, as B2C businesses more likely face closure or reduced capacity (51 percent) than B2B businesses (41 percent).

B2C businesses are also twice as likely as B2B businesses to remain shut down as a result of insufficient inventory or supplies (17 percent versus 8 percent respectively).

When asked why their business had not returned to normal hours, one respondent noted, “We are waiting for regular inventory shipping to get back up to normal and monitoring when customers will be comfortable enough to return.”

This small business owner is not alone.

During the weeks and months ahead, businesses throughout the world will patiently await many developments beyond their control: the lifting of government restrictions, the arrival of a vaccine, the return of customers and, perhaps most importantly, the peace of mind that will come from knowing the worst of the pandemic is behind them.  

 


Republished with permission, this article was originally written by Chris Byrne on June 1, 2020. 

 

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