FSU Study: 15.2% of U.S. Small Businesses Won’t Be Back
By Kerry Smith
A survey of small U.S. businesses and nonprofits found that 14.5% closed temporarily and 31% are operating below 40% capacity. But Fla. businesses weren’t hurt as much.
TALLAHASSEE, Fla. – A survey of U.S. small businesses by Florida State University (FSU) researchers found that 15.2% of those studied have closed their doors permanently as a result of the COVID-19 shutdown.
Assistant Professor of Management Samantha Paustian-Underdahl led the research team that examined the effects of the COVID-19 pandemic on 567 small businesses and nonprofit organizations (NPO) throughout the United States. Funded by the Jim Moran Institute for Global Entrepreneurship in the College of Business, the survey asked participants to provide feedback on employee layoffs, government loan programs, operating capacity and stress levels, among other factors, to measure how businesses have changed daily operations during the global pandemic.
It found that 15.2% of participants closed permanently, and 14.5% of participants closed temporarily. Another 31% of participants are operating below 40% capacity, while almost 40% of participants are operating at 40% or higher.
Participants also were asked if they laid off employees during COVID-19, and 46.7% reported doing so, while 51% reported that they did not. The average number of employees laid off was 10.5.
“Small businesses and nonprofits have taken a huge hit during this time, with nearly 30% of our sample needing to close temporarily or permanently as of early May,” says Paustian-Underdahl. “The good news is that most organizations are getting some help.”
Of the participants who applied for government funding, nearly 92% received some type of financial assistance.
“Florida seems to be faring better than other parts of the country, as only 10% of the 137 Florida businesses in our sample have temporarily or permanently closed, and only 32% have laid off any employees,” Paustian-Underdahl says.
Government loan programs
Participants were surveyed about their experience applying for and receiving funds from the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL). Overall, business owners and non-profit leaders received funding from one of the government loan programs – but not both.
Of the respondents, 75.5% applied for one or both types of government aid. Of participants who applied, 28.9% received PPP funding only, 26.8% received EIDL only, 11.3% received both PPP and EIDL, and 8.3% didn’t receive anything.
COVID-19 and personal stress
“Consistent with recent research by Gallup, we found that women who own small businesses are experiencing higher levels of stress and burnout during COVID-19 compared to men,” Paustian-Underdahl says. “While some may assume this could be due to higher work-family-conflict, we found the men surveyed are reporting higher work-family-conflict than women.”
One reason could be that women are already used to juggling work with family, but men may be making more of an adjustment during COVID-19, Paustian-Underdahl says.
“Despite being more stressed, the women in our sample are more satisfied with their performance and that of their organizations during COVID compared to men, so maybe their hard work is paying off,” she adds.
Through a series of open-ended questions, participants were asked to share strategies and solutions they’ve implemented to meet the challenges faced during COVID-19.
The most common strategies included:
- Increased communication with employees to ensure tasks are followed and support is given during these difficult times
- An increased focus on implementing technology and creating online content in greater frequency than before the pandemic
- Shifting from actively seeking new clients and instead creating unique ways to contact and keep existing clients
- Adopting cost-cutting strategies, including reducing full-time employees to part-time, layoffs, furloughs and/or implementing creative new tasks for employees
- Pivoting into new services, goods and customers
- Increasing their focus on healthy living, exercise and mental health for employees and customers
Reprinted with permission Florida Realtors. All rights reserved.