Posted by Shivali Anand
December 8, 2021 | 3-minute read (493 words)
Small companies are an essential part of the American economy, with the U.S. Small Business Administration reporting they employ almost half of the country's workforce and generate around 66% of all net new employment. Furthermore, small firms account for 44% of all economic activity in the country, per the SBA.
Small-business insurance company Huckleberry, in a February 2021 survey that investigated how small business owners weathered the COVID-19 pandemic, found that while hurdles varied by sector, the most prominent roadblock across the board was a shortage of cash. Some 37% of small company owners mentioned limited financial flow as their top business concern.
Another 29% listed a lack of demand as one of their company's major concerns. Furthermore, 26% claimed it was tough to comply with pandemic safety regulations, while 20% said hiring was a key business difficulty, and 17% stated the same about marketing.
The industries most, least impacted by the pandemic
Businesses that require frequent face-to-face engagement were, unsurprisingly, the worst hurt. According to Huckleberry’s statistics, active insurance plans for day cares declined by 43%, while coverage for retail and fitness establishments dropped by more than 20%. The number of active insurance policies in restaurants and barbershops both dropped by 10%.
The home remodeling and maintenance industries performed the best, while the number of active insurance policies in the plumbing and HVAC industry increased by 50%. According to Huckleberry data, landscaping companies, construction companies and flooring companies were all close behind.
Small companies used these tactics to remain viable
When possible, businesses that relied on personal connections went online. Retailers, for example, have shifted to internet sales, while gyms have shifted to remote workout courses. Businesses that were able to stay open depended heavily on safety precautions, while eateries that couldn't provide in-person service tended to use curbside pickup.
Meanwhile, 70% of those polled claimed they had reduced their spending. Only 34% of small businesses indicated they had been able to get government grants or loans, and 61% of small companies that reduced their spending cut marketing and advertising. According to Huckleberry, 41% of respondents had reduced their own salary, 30% reduced their rent or mortgage payments, and 20% chose to forgo company insurance coverage.
How effective were their strategies to stay afloat?
Approximately half of those polled said they were profitable at the close of 2020. Some 29% said they had broken even in 2020. Almost 1 in 5 responders said the business operated at a loss for the year.
Small business owners saw 2021 as a mixed bag
Half of those polled stated they were positive about their company's prospects this year. Meanwhile, 29% indicated they were pessimistic, and 21% said they were neutral in their attitude. More than 75% said they have no contingency plan in place for new COVID-19 limitations.
Almost one-third of small company owners stated they would compel their employees to receive the COVID-19 vaccination. Undecided respondents accounted for 20% of the total.