Small Businesses Struggle Through the Pandemic

By Amanda Maier 
JRN100 Staff Writer 

When COVID-19 hit at the beginning of 2020, the dangerous virus spread quickly through the population, but the pandemic also took its toll on the nation’s small businesses. 

Within weeks of the pandemic shutdown, 43 percent of small businesses were temporarily closed according to the study, “The impact of COVID-19 on small business outcomes and expectations,” published by the Proceedings of the National Academy of Sciences in July 2020.

Researchers conducted a survey of more than 5,800 small businesses in the spring of 2020 and found small businesses experienced mass layoffs and closures, showing how “fragile” this sector of the economy is. The article states that the median firm with monthly expenses over 10,000 had only enough cash on hand to last about 2 weeks.

The study also used the survey to review small business beliefs about the evolution of the crisis. The median business owner expected it to last well into midsummer, as 50% of respondents believed that it would last until at least the middle of June. 

The survey was sent out and distributed in partnership with Alignable which is a network-based platform focused on the small business ecosystem. It allows small businesses to share knowledge and interact with each other. The survey received 7,511 responses between March and April all being from US businesses. 

41.3% of businesses reported being closed because of COVID-19 and throughout the entire sample the number of full-time employees dropped by 32% and the number of part-time employees dropped about 57% at the start of COVID-19.

 Peter Clark, a Stonehill College business professor, said business got better when restrictions lifted but still many small stores and businesses continued to struggle because they could not bring in as many customers as they did before the pandemic.

 “The fire capacity is smaller if the store is smaller, so for small stores who during non-pandemic times allow 25-30 now can only allow 25% of that number into the store because of the virus,” said Clark.

 He said that until small businesses can get back to full capacity, their revenues will suffer. This will result in people getting laid off and store closings. 

 “Small businesses were doing worse because of COVID-19 and they are going to take a while to come back to their original state. They are getting stimulus money from the government but does not help as much as having the full capacity of patrons in the store did,” Clark said.

 Clark also works in technology for the franchise Jordan’s furniture and recalled the timeline of how he was affected as an employee from this pandemic. Clark said the store shut down and went completely remote in March and reopened in June. Clark said employees were furloughed in April and got payed to stay home for 4 weeks, but it became too expensive and that came to an end.  

 As stores opened up in June the total count of employees that returned was only 60 versus 1,000 which was the amount the store had prior to COVID-19. Clark describes how the business is doing now and states, “The employees are all back now and stores are open but the supply chain is really messed up right now. Shipments are now taking 5 times the normal amount
of time due to assembly-line factories outputting a lot less now because of the pandemic.”

 Because of the shipment problem, many of the home furnishing businesses who use assembly-line factories overseas are facing that hardship. It is ironic because they have more business since people are home more and want to update their home furnishings but since the supply chain is disrupted it cancels out. Clark said, “Many home furnishing companies, such as Jordan’s, are so behind it's going to take the next 12-18 months before they complete all these orders.  

 William Davis, the owner of Brandywine Valley Homes in West Chester, Pennsylvania, said the real estate market has recently seen a surprising boom in sales and buys, but his business took a hit during the early days of the pandemic. He had to shut his offices and send employees home. He said real estate businesses were among the last to open up.

“When restaurants were already increasing capacity levels and stores were completely open, my team and I were still sitting at home because the government shut down all real estate,” said Davis.

 When real estate did open up, all homes for sale needed to be sanitized and everyone coming through had to wear masks.

 Davis said his company began to come back with increased sales because of the mass exodus of young professionals in big cities like New York.

 “Since the reality of pandemic life has set in, people are realizing city living can hit the fan quickly, so they’re looking for suburban homes in spacious areas like here in Chester and Bucks County, Pennsylvania,” he said. 

 Clark said many small businesses that were struggling before the pandemic had to shut their doors for good. It will take time for others to recover, and in the aftermath, there will also be some new startups. 

 The study showed mass layoffs and closures emerging just a few weeks into the crisis meaning that small businesses who were financially fragile, to begin with, were facing bankruptcy depending on how long they had to stay closed.

 “I believe things will get better in the fall,” he said. “That’s when things will become normal again because we will have more people vaccinated,” Clark said. “Some small companies will be able to hold on. Some won’t. And as things stabilize, there will be new small companies that will come in.

 This pandemic has proven that natural selection and the “survival of the fittest” do not just apply to people but apply to small businesses as well. Hopefully, in the future people will prepare and learn what precautions to take in order to help preserve their small business through a crisis such as the COVID-19 pandemic.