COVID-19: Small Business Impacts

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COVID-19: Small Business Impacts

Many small businesses in the United States, and globally, have faced extreme challenges because of COVID-19. Two key challenges surround making changes in their business strategies in order to stay afloat amidst mandated lockdowns, as well as figuring out ways for existing customers to stick with them in addition to making sure new customers can discover them. Making both of these challenges more difficult, of course, is the fact that small businesses will be required to meet all these challenges at greater relative cost and, typically, with less working capital. "Small businesses with slim margins have little room to invest in the business models and technologies that they will need to survive." It will take collaboration across their communities to keep them afloat.

We have curated six additional pieces of information, data, and/or statistics surrounding the impact of COVID-19 on small businesses across the United States. This has included, but not been limited to, consumer sentiment as well as business owner sentiment surrounding how "shopping small" has changed for them. In tandem, we have also provided six pieces of information, data, and/or statistics surrounding the impact of COVID-19 on small businesses globally with an eye to Canada, Australia, Mexico and/or Japan specifically. Like the research for the United States, this has included, but not been limited to, consumer sentiment as well as business owner sentiment surrounding how "shopping small" has changed for them. To round out the entire project, we have gone beyond what was offered in the scope [5-7] and provided ten pieces of information, data, and/or statistics surrounding where people can discover or learn about small, local businesses in their communities. Where available, this has included social channels and community sites that are championing small business discovery. When available, we provided supporting statistics. This was a United States focus, but we expanded globally when the research dictated or when we found a particularly compelling data point.

We also felt that it would be helpful to bring over the relevant data points verbatim from the initial hour of research so that they could be viewed in one cohesive document. That portion can be viewed at the end of this brief.

Impact of COVID-19: Small Businesses in the United States

  • There has been an increase of 351% surrounding search strings with the words 'support small business' on the platform Pinterest. The 'Pinners' using this are clearly looking to buy and support small and independent businesses.
  • According to Accenture, eighty percent of consumers "feel more or as connected to their communities than they did before the pandemic", and eighty-eight percent of consumers "expect their community connections to stay intact long after the virus" is under control. Those percentages are quite high, so one would expect that sentiment would translate into purchases at local small businesses. However, according to GlobalWebIndex, less than 40% of consumers in the United States said they are "more likely to buy from local or independent brands after the pandemic." [Download of the video is required] Deloitte research seems to back that up as they reveal that 34% of consumers intend to purchase more locally sourced products going forward, even if they cost more.
  • COVID-19 has upended not only what consumers are purchasing, but how they are purchasing it. These new habits are predicted to stick around long after the pandemic has been tamed. Consumers have reflected upon what is important to them, given all the stay at home orders, and they appear to be committed to shopping locally, mindfully and cost-consciously. Accenture asserts that over half of consumers (56%) are "shopping in neighborhood stores or buying more locally sourced products." Of the 56% that have revealed they are doing that, when asked, 79% are planning to continue shopping locally, while 84% are planning to continue to purchase more locally sourced products into the future. The drivers for this vary from the "desire to actively support local stores or national products, and the longing for authentic and artisan products."
  • ZypMedia asked over 550 consumers in the United States whether they "believe in supporting their communities through the pandemic by purchasing from locally owned businesses instead of national retailers." The response was encouraging with 53% "stating that they are more likely to buy from a local business instead of a national retailer during the COVID-19 crisis." Further, when looking directly at "those consumers who are more likely to buy locally during the pandemic, 68% of them stated they will continue to make purchases at local businesses" even after the virus is no longer a threat. "When asked why supporting local businesses is so important", there were two drivers provided. Supporting their local community was cited by 84%, and the local economy was provided as a reason by 54%. According to Aman Sareen, CEO of ZypMedia, "[l]ocal businesses are the engine of our economy and it's reassuring to see that Americans aren't abandoning them during these uncertain times. How businesses market to their customers is more critical than ever as consumers believe in remaining loyal to their local businesses, while at the same time being conscious of their current economic and social distancing situations."

Impact of COVID-19: Small Businesses Globally

  • More than 50% of the small businesses in Mexico interviewed indicate that they have already laid off workers since the beginning of the coronavirus pandemic. More than 60% expect to lay off workers in the next six months. More than 40% of the SMEs interviewed believe that they are more likely to close than not to close in the next six months. Half of the small businesses surveyed believe that they will not recover before ten months. Only one in five companies surveyed knows of a government program that can help them.

Impact of COVID-19: Championing Small Business Discovery

  • Through the #Donate 1 Post campaign, influencers have pledged to help small businesses that are suffering due to the COVID-19 outbreak. "They have agreed to donate one or more posts, valued at $3,000+ per post to promote small businesses to their followers." Martin Ekechukwu, founder of the #Donate1post campaign asserts that "[i]f anyone can understand the struggle of minority owned small businesses, it’s the minority influencers that are and have small businesses themselves." [Please watch video in the source link for more]
  • Visa has partnered with advertising agency BBDO, Starcom for media and Proof for PR and are promoting small businesses in Canada during COVID-19 in a two pronged approach: encouraging people to support small businesses, and then in tandem, "providing guidance and direction to help individual businesses adapt to become more digitally focused." The campaign is being run almost solely through digital channels and commenced August 1st and ran through the end of September 2020. Heather Nobes, Visa Canada’s senior director marketing and sponsorships believes that "[s]mall businesses are such a critical part of our Canadian economy. And with them suffering, so do our communities. We had small business as a priority initiative as part of our plan for this year, but we have put more focus on small business as a result of the pandemic and the impact it has had on Canadian communities."

  • Shops is something Facebook has initiated for small businesses to display and sell their products. This is a welcome feature on Facebook as many small businesses have been mandated to close their brick-and-mortar locations due to the pandemic. This allows them an avenue to sell online. It works in this manner: for no cost, businesses can create digital storefronts so that their customers can buy products directly from Facebook or their business website. This is then amplified by Instagram, allowing users to discover Shops via Stories or ads that the business has already placed in the Shops feature. Shops is not to be confused with Facebook's other feature called Marketplace which has been in existence since before COVID-19. Marketplace is more like Craigslist or eBay, insomuch as it is focused more on selling personal belongings. Shop is specifically focused on businesses that want to directly compete with the giants like Amazon and Etsy. When Facebook launched this feature, they formed a partnership with eight 3rd party platforms, with one of them being Shopify. This is especially useful for small businesses as it allows for a smoother customer experience with Shopify launching its unified Facebook channel. All a business has to do is connect their existing Shopify business [if they have one] to Facebook, which gives a seamless experience to all their customers.
  • YouTube has solved a small business issue by launching their ‘Video Builder Tool'. This is a free feature that permits small businesses to create quality video content. Small businesses are often not well-equipped to produce flashy and sometimes pricey video content, leaving them at a disadvantage to be discovered by customers. Of course a key pain point currently with COVID is the fact that businesses cannot even do in-person shoots. In a nutshell, the small business owner can create and then customize short six second or fifteen second videos which they can then subsequently share on YouTube or even use in a YouTube ad campaign. One value add for this is the fact that videos are meshed with the Google Ads program. In other words, the video content will be matched to relevant viewers on YouTube, allowing for an organic discovery moment for the customer.
  • Connecting brands to influencers got easier when Fohr provided no cost access for one month to their influencer platform to any brand in April 2020. The founder of Fohr explained his thought process surrounding the idea in this blog post.

  • Google is assisting small local businesses with customer discovery by letting them inform their communities exactly how they can support them during COVID-19. Spanning twenty-four countries, "Google is permitting businesses to add support links for donations and gift cards to their Business Profiles." Additionally, Google has a specific 'Get Discovered' feature. As Google itself explains: "[m]erchants who are verified on Google My Business will [...] be able to add attributes like “online classes,” “online appointments,” or “online estimates” to their Business Profiles to let people know how they’re operating. Today merchants can add one of these attributes using Google My Business, and [...] it’ll be visible on merchants’ Business Profiles in Search and Maps."

  • In Canada, the BC Marketplace, which is an initiative from Small Business BC, "is a place where consumers can find products and services from thousands of small businesses across British Columbia." Interested consumers can "filter by location, search by keywords, and support the businesses that make [their] community and provide jobs to [their] local economies."
  • Ironically, a large business in Canada is attempting to relay a message about the importance of small businesses. The Royal Bank is shelling out a lot of money on advertising campaigns that highlight the importance of small businesses and encourage Canadians to shop in their local communities. They are using many channels to reach out to consumers, even going as far as offering financial incentives in the form of extra points on their RBC Rewards card to customers who support small businesses. RBC has also pledged money to a special fund aimed at small business owners that will provide up to $5,000.00 to assist with costs that have cropped up due to COVID-19 that threaten to shut their business down. Every time someone views, likes, or shares a video on social media that RBC created surrounding the importance of small businesses, they donate five cents towards this fund.
  • We noted that this research is to help with a pitch to American Express. We did come across some initiatives that American Express Canada has deployed to help in small business discovery. We did not elaborate on this, as we were not sure whether this was something that was known or not, or even desired. To that end we are simply linking to the article detailing their efforts.

Relevant Findings from the Initial Hour of Research

General Data

  • A recent survey conducted by the National Academy of Science in the United States of more than 5,800 small businesses revealed that many small businesses are not financially stable. "The median business with more than $10,000 in monthly expenses had only about 2 weeks of cash on hand at the time of the survey."
  • "Small- and mid-sized businesses in the U.S. have demonstrated a disproportionate impact from the COVID-19 pandemic, with over 43% surveyed reporting a significant to severe impact, according to findings from the CBIZ Main Street Index. The index found the majority (84%) of businesses surveyed realized some impact from the pandemic and corresponding economic slowdown. Notably, smaller businesses, those with 1-4 employees, were most severely affected by the pandemic."
  • "A survey from Tech.co found that 80% of small business owners say COVID-19 has hurt their businesses."
  • "Sixty-seven percent of people are more hopeful now than when the pandemic began and seventy-five percent plan to support small businesses as much as possible once restrictions on non-essential businesses are lifted in their areas."
  • "The average American plans to spend nearly $100 a week at local businesses post-COVID-19, up 16% versus before the pandemic, in the hopes of boosting their local economy."

"Shopping Small" Data

Discovering Small Businesses

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