In December 2020, the Organisation for Economic Co-operation and Development (OECD), in partnership with Facebook and the World Bank Group, published a comprehensive survey on the global state of small businesses. The data from the Global State of Small Business Report was gathered over 6 monthly surveys that collected feedback from more than 150,000 small businesses in over 50 different countries—thorough and impressive data.
The report found several insights that reflect the stress that COVID-19 placed on small and midsize businesses (or SMBs). It asked about resiliency, effects on employment, and even changes to family responsibilities.
The whole report is worth reading, but here are some valuable findings that small business owners (and the B2B companies that market to them) should know.
Most Companies Were Impacted by COVID-19
The 1st data point presented in the report: 55% of SMBs reported lower sales numbers for each month compared to the same period in 2019. While all companies were affected on different levels—some had minor drops in income while others noticed significant plunges—most were hurt by the pandemic and continue to struggle.
As the surveys went on, 34% of SMBs that had lower sales numbers because of the pandemic reported shrinking their workforces, and many haven’t grown back to their pre-pandemic levels. This could have ripple effects across a community, as high unemployment will affect consumer spending habits and abilities.
Digital Sales Were a Bright Spot in a Stressful Year
As various countries and cities enacted lockdown protocols to prevent social gatherings that could spread the virus, customers turned to digital apps and opportunities to buy from businesses. This significantly helped some SMBs who would’ve otherwise lost all of their sales because their stores were closed.
According to the report, 26% of respondents either increased or greatly increased their digital sales because of the pandemic. As the creators of the report write, this is good news.
“Increased sales through digital channels can help businesses adapt to conditions, improve their performance, and, in so doing, prevent further increases in unemployment.”
This transition to digital shopping might not revert when the pandemic is over. Many customers will continue to shop online, signaling a change in human behavior caused by the coronavirus pandemic.
Communities Can’t Afford for SMBs to Lay Off Workers
As reported earlier, 34% of SMBs cut their workforce because of the pandemic. Digging deeper into the numbers, 53% of these SMBs cut their workforce in half or more over the course of the pandemic—however, this number drops to 42% for SMBs with more than 10 employees.
This trend shows that smaller companies were hit hard by the pandemic and that communities need these SMBs to stay in operation and contribute to local employment rates. According to the report, SMBs contribute 60–70% of employment in most countries. A single business hiring a few employees might not seem like a big deal, but together these SMBs have a significant impact on total employment.
When SMBs lay off their employees and cut their workforces in half, unemployment numbers will spike—as we saw in the United States and across the globe.
People Are Optimistic About the Future
When SMBs were asked how they feel about the future, many responded favorably. A little more than half, 56%, said they are optimistic or very optimistic about the future of their businesses.
While many of these business owners feel good about the future, they are also realistic about what lies ahead. 43% said they expect to contend with a lack of demand for their products or services in the next few months, limiting their opportunities for sales.
On top of that, 35% of SMBs say that they’re worried about cash flow in the coming months as they try to stay open and keep people on staff with limited income streams.
For many respondents, survival means holding on through early 2021 and hoping the pandemic subsides as vaccines are distributed. They aren’t out of the woods yet, but they feel good about where the world is headed in the fight against COVID-19.
What Should You Take Away From This Data?
As a small business owner, reading this report could be heartbreaking, especially if you lost sales and had to lay off employees this year. However, there are important messages that you can take from it.
Treat the pandemic as a lesson in resilience. What do you wish you had before the crisis hit? If you needed a better website or financial nest egg, take steps to improve those areas now.
Also, continue to do your best to protect your customers and employees. Wear a mask and make sure that they do, too. Limit store capacity and practice social distancing. The best way for SMBs to rebound is for the pandemic to end—and that requires effort from all of us.