![]() The median business with monthly expenses over $10,000 generally didn’t even have enough cash to cover two weeks of their spending. The vast majority of small businesses had less than two months of cash on hand to deal with shocks. Most small businesses are extremely cash strapped. This highlights both the severity of the situation, and the pace at which things are evolving.Ģ. population was living under a stay at home order. population was living under some sort of shelter-in-place or stay-at-home order. When we launched the survey on March 26, roughly 49% of the U.S. The magnitude of the shock to demand for small businesses is hard to overstate. The Pacific region, with statewide closures in California and an early outbreak in Washington, has seen equally dramatic employment reductions. In that area, more than 55% of small businesses had closed and employment had fallen by 44%. The economic carnage was particularly acute at the epicenter of the American pandemic: the mid-Atlantic region that surrounds New York City. Total employment by these businesses declined by 40% since the end of January. In our sample, 45% of small businesses were temporarily closed due to Covid-19. Large numbers of small businesses have shut down and laid off huge numbers of workers. Our Findings on the Current Small Business Landscapeġ. Second, we offer a set of steps small businesses can take to better navigate the current crisis. First, we’ll provide five findings about the small business landscape that emerged through the survey. On top of this, we spoke with banks, tech companies, and other organizations to understand how the crisis was impacting their relationships with small businesses.ĭrawing on our research, discussions with business and policy leaders, and the broader academic literature, we’ve sketched out a way forward. We focused in particular on their financial resilience and the challenges facing the implementation of the CARES relief package. We sought to understand how small businesses are dealing with the disruption and how long they expect the crisis to last. economy as a whole, it does capture the intense distress being experienced by smaller, retail-oriented firms - a snapshot of the crisis, collected over a week at the very end of March. While it is not fully representative of the U.S. The sample includes firms from most major industry groups, states, and firm-size categories, and the share of survey responses from the largest states matches up well with the share of businesses in each of those states. To assess the current landscape, we conducted a survey of roughly 5,800 small businesses from across the United States in partnership with Alignable, a small business network. Over the past few weeks, we’ve been exploring the economic effects of the coronavirus on small business and ways to mitigate the economic damage they face. But business owners also need to make the best possible decisions to get them through this difficult period. The Coronavirus Aid, Relief and Economic Security (or CARES) Act set aside $349 billion in loans and assistance for small businesses and there may be more to come. Many have ongoing expenses and little or no revenue and face the prospect that they may never reopen.įor these small businesses to come back after the pandemic abates, and once again serve as an engine of American innovation, they need aid. In the throes of the sweeping disruptions caused by the coronavirus, businesses around the country have closed temporarily. economy, they’re often financially fragile, with little cash on hand or resources to buffer even a minor financial shock. Yet while these smaller firms are an essential part of the U.S. ![]() ![]() Businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP. It will be years before we fully understand the economic impact of the coronavirus, but one thing is painfully clear right now: Small businesses across the country are facing an existential threat. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter. ![]() In these difficult times, we’ve made a number of our coronavirus articles free for all readers. ![]()
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