According to the Bank of America 2020 Small Business Owner Report, US small business owners have remained resilient and flexible this year as they navigated an evolving business landscape brought on by the health crisis.
The research, based on a survey of more than 1,000 business owners, found that entrepreneurs anticipate a strong post-pandemic environment that will support small businesses. On the road to recovery, they say stronger consumer confidence and increased spending (79%), restored confidence in public health (78%), debt forgiveness (66%) and government relief programs (66%) will be most beneficial. Once the US recovers from the pandemic, many entrepreneurs believe:
- Small businesses will return to being “the backbone of the U.S. economy” (79%).
- Consumers will have a greater appreciation for small businesses (69%).
- Entrepreneurs will be better prepared to handle potential reemergence of the coronavirus (59%).
- The effects of coronavirus will impact their bottom line for two years or less (59%).
Business owners demonstrate resilience and innovation
The latest in the series of surveys reveals that more than four in five businesses stayed open in some capacity amid shutdowns this year, either as an essential business (38%) or by adjusting operations (47%). Among businesses that remained open, 78% report an impact on their day-to-day operations, including:
- Implementing enhanced sanitation practices (45%).
- Changing their primary revenue stream (37%).
- Limiting hours of operation (33%).
- Experiencing supply chain disruptions (28%).
- Shifting to a digital/online strategy (25%).
Nearly one-quarter of entrepreneurs took steps to reinvent themselves or help their local communities. Of those business owners, 61% developed new products or services and 51% donated time, products and/or services to support relief efforts.
“During what have been unprecedented challenges for small businesses this year, I’ve been inspired by business owners throughout the country who have demonstrated a commitment to innovation while serving the needs of their local communities,” said Sharon Miller, head of Small Business at Bank of America. “Every day, I hear from entrepreneurs who are retooling and adapting to create new opportunities for themselves and their employees.”
Access to capital remains crucial during the pandemic
Maintaining a steady cash flow and access to capital continue to be critical issues for entrepreneurs. Some 42% of business owners applied for at least one type of loan specifically to address the impact of the coronavirus, including a Paycheck Protection Program (PPP) loan (34%), Economic Injury Disaster Loan (16%) and/or traditional bank loan (5%). The top two ways business owners have or intend to use this financing are on payroll and staffing needs (75%) and maintaining operating expenses (62%).
Guarded business and economic outlook
Entrepreneurs are significantly less confident in the economy over the next 12 months - with optimism declining to levels not seen since 2016:
- Nearly four out of every 10 business owners (39%) anticipate their local economy will improve over the next 12 months (down from 51% pre-pandemic 2020 and the lowest since 37% in fall 2016).
- Over one-third (37%) predict the national economy will improve (down from 47% pre-pandemic 2020 and the lowest since 29% in spring 2016).
Business owners are also reporting softer business projections for the coming year, with hiring plans and revenue expectations at record lows since 2012 and 2013, respectively.
- Seven in 10 plan to keep staffing levels stable in 2021; 13% plan to hire in the year ahead.
- Earlier this year (pre-pandemic 2020), 55% of business owners expected their revenue to rise over the next 12 months. This fall, there is an even split among those who expect revenue to increase (34%), stay the same (34%) or decrease (32%).
Top economic concerns
Business owners’ top two concerns for the year ahead include the political environment (78%, up from 63% pre-pandemic 2020) and the impact of coronavirus (75%). Other top concerns for the year ahead include:
- Health care costs (62%, steady with 60% pre-pandemic).
- Consumer spending (56%, up from 46% pre-pandemic).
- Stock market (50%, steady with 47% pre-pandemic).
- Strength of the US dollar (49%, up from 41% pre-pandemic).
About the report
Ipsos Public Affairs conducted the Bank of America 2020 Small Business Owner Report survey online between July 29 and September 3, 2020 using a pre-recruited online sample of small business owners. Ipsos contacted a national sample of 1,048 small business owners in the United States with annual revenue between US$100,000 and US$5m and employing between two and 99 employees, as well as conducted 342 interviews of Hispanic small business owners, 307 interviews of Black small business owners, and 114 interviews of Asian American small business owners. In addition, approximately 300 small business owners were surveyed in each of 10 target markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The final results for the national, DMA and demographic segments were weighted to national benchmark standards for size, revenue and region, while the final results for the Hispanic segment were weighted for size, revenue, region, and whether the respondents were primarily English-speaking or Spanish-speaking.
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