News, Research

New Kabbage Survey Shows Nearly One Third of Small Businesses Have Voluntarily Reinstated Restrictions Due to Rising COVID Variant Cases

Data also shows 32% of small businesses are increasing salaries for existing employees as hiring challenges persist

Kabbage, an American Express company, today issued the fourth installment of its Small Business Recovery Report, which tracks U.S. small business recovery and growth outlook through 2022. Polling 550 small business leaders, the latest report shows small businesses are self-imposing pandemic restrictions at their business, rethinking their banking relationships after a turbulent 2020, and giving existing employees raises as hiring continues to prove difficult.

“This report’s findings display the sheer complexities of a small business owner’s day-to-day,” said Kathryn Petralia, co-founder of Kabbage, an American Express company. “Running a business, while writing the playbook on how to recover from a pandemic, demands their unabated attention to ensure they, their customers and employees are safe so their business may build beyond the crisis.”

Self-Imposed Restrictions

In the May Small Business Recovery Report, 85% of small business respondents reported their company was fully open, unaffected by local or federal restrictions as the pandemic slowed and the economy reopened. However, new survey data collected between July and August shows the number of fully open businesses has regressed to 63%. The reduction is driven by small businesses who are now self-imposing restrictions due to safety concerns amid the rise of COVID-19 variant cases.

Data from the latest Small Business Recovery Report shows nearly one third (31%) of small businesses that were previously fully open have chosen to reinstate restrictions at their business.

Increased Hours, Increased Pay

As job openings spike across the country, difficulty filling them also rises. Results from the Small Business Recovery Report show 32% of small business leaders reported it’s “very” or “somewhat” difficult to fill open roles, which is up from 28% last report.

Respondents said a primary reason is because candidates are not qualified (32%), which is more than double the responses from the last report (14%). The same percentage of respondents said hiring is difficult because candidates have obligations at home to care for their children or family (32%), and that candidates do not feel safe returning to work (29%).

Ongoing hiring challenges are taking a toll on workers’ hours. Forty percent of small business leaders said their existing employees are working significantly longer hours to compensate for the lack of help—which is nearly double the responses from the last survey (24%).

As a silver lining, the extra effort is being rewarded. When asked if and how small business leaders are reallocating their unused new-hire budgets, the number one response was “increasing salary for existing staff” (32%).

Vax to Unmask?

Data from the August Small Business Recovery Report, showed 35% of small business leaders would require customers to show proof of vaccination before they could remove their masks in their store. In this report, businesses were asked their level of intention to implement such a policy, and the results suggest it varies greatly by business size.

Overall, 18% of all small business leaders said they are “100% certain” they will require customers to show proof of vaccination before they can remove their masks in their store, while nearly one-third (28%) said it was likely. The largest small businesses are the most adamant as 55% said they are either “100% certain” (28%) or “very likely” (27%) to make proof of vaccination a requirement. Contrarily, 61% of the smallest small businesses said they “will not require it at all” (45%) or “don’t know” (16%).

Changing Banks—and Expectations

The new survey data shows how small businesses are reevaluating their relationship with their financial services provider, namely their bank. As the pandemic prevented in-person visits to local branches, those behaviors have carried over into 2021. Since the start of this year, half of respondents said they visited a bank less than five times this year (34%) or not at all (16%).

In connection with this, nearly one-third (32%) of small business leaders said they’ve changed financial services providers in 2021, and of the remaining 68% who haven’t changed providers, 27% and 26% said they intend to change their personal and business checking accounts in the next six months, respectively.

Among the respondents who have changed providers, nearly one in four (24%) said the number one reason was the new provider offers multiple financial solutions that allows them to manage everything with one company. The other top two reasons were because their new provider has product features that make it easier to run their company (22%) or they wanted to change to an online banking service (21%).

Methodology: The online survey was conducted between July 27 – August 17, 2021, surveying 550 small business leaders, including 250 at the smallest small businesses (<20 employees), 200 at medium-sized small businesses (21-100 employees), and 100 at the largest small businesses (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.

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