New Survey Reveals 57% of U.S. Small Businesses Are Now Fully Open as Pandemic Shutdowns Ease
The ‘Small Business Recovery Report’ from Kabbage, an American Express Company, will track the recovery of small businesses through 2022 as they rebound from the crisis
Kabbage, an American Express Company, released the first installment of its new Small Business Recovery Report, a recurring study tracking U.S. small business growth through 2022. Polling more than 550 small business leaders, the data provides insights into how American businesses are recovering and adapting today.
The survey tracks key business performance metrics, including headcount, total revenue, profit, online strategies, as well as future outlooks, across all-sized small businesses. The survey covers the smallest businesses with fewer than 20 employees (55% of respondents), medium-sized small businesses with 21 to 100 employees (27%) and the largest small businesses with 101 to 500 employees (18%). The results show how the path to recovery differs by size of business.
As Businesses Reopen, Revenue Migrates Online
The results show 57 percent of the surveyed small businesses say their businesses are fully open as local or federal shutdowns ease. Reopen rates are aided by companies shifting operations online as one-third of businesses stated they now either exclusively sell online or expanded to a hybrid business, conducting sales both online and in-person.
The shift to online has reset revenue expectations across small businesses. Prior to the pandemic, respondents said their average monthly online sales represented 37 percent of total revenue. As of February 2021, these numbers jumped to 57 percent, a 54 percent increase in less than one year.
When asked if they’ll return to previous in-person levels once the pandemic is over:
- 33 percent of the surveyed U.S. small businesses plan to expand their digital operations to either supplement or altogether replace in-person operations.
- Only 15 percent said they will scale down their digital operations to previous levels before the crisis.
The mass shift to sell online has changed the mindset of small businesses about adopting new technologies. Overall, 77 percent of small businesses agreed they’re more open than ever before to replace old systems and adopt new technologies to run their company more efficiently.
Growth Differs By Business Size
When comparing small businesses’ year-over-year (YOY) growth between February 2020 and February 2021 across headcount, total sales and profit, large and medium-sized small businesses reported significantly more growth than the smallest of small businesses. The data illustrates that while all small businesses are making adaptations to grow their companies on the heels of 2020, the smallest of them have not yet benefited from the same growth as their larger peers.
When asked to forecast their revenue growth expectations next month versus last, the average response across all respondents was an increase of 21 percent. The largest small businesses were most bullish, projecting a 46 percent growth in revenue, followed by medium-sized small businesses (40 percent) and then the smallest companies (13 percent).
“We knew the path to recovery would look different across businesses, but it’s clear there’s a stark difference between the largest and smallest of small businesses—which represent more than 80 percent of all companies in the U.S.,” said Rob Frohwein, Co-founder of Kabbage, an American Express Company. “As our economy recovers it’s imperative all small businesses, especially those most marginalized and vulnerable, have equitable access to financial tools, systems and stimulus programs to ensure we all rebound from this crisis together.”
What recovery means to small businesses?
When asked which milestone would best indicate their business has recovered from the pandemic, the number one response was paying their employees their full wages without concern (50 percent of respondents). This was closely followed by business leaders paying themselves their pre-pandemic salaries (47 percent); reaching the same levels of gross revenue and total daily transactions as before the pandemic (47 percent); and reaching greater levels of customer demand and new inbound business (39 percent). While all are intrinsically tied to revenue, it’s telling that small businesses hold the well-being of their employees higher than their personal income and acquiring new business.
Vaccinations were also top of mind among small businesses to define recovery, citing greater access to COVID-19 vaccinations is needed to fully reopen. At the time of this survey, 12 percent of small business leaders surveyed received a COVID-19 vaccination.
Methodology: This online survey was conducted between February 4-5, 2021, polling 550 financial decision makers, including 301 at the smallest small businesses (<20 employees), 149 at medium-sized small business (21-100 employees), and 100 at a large small business (101-500 employees). Respondents represented industries across retail, marketing, healthcare, financial services, technology, food and beverage, construction, automotive, manufacturing, media, professional services, education, agriculture and more. The margin of error for the full sample is +/- 4 percentage points.