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In the summer of 2021, Vice President Kamala Harris stated that one-third of small businesses in the United States had closed during the Covid-19 pandemic.
While exact figures are difficult to get, a survey by the Small Business Roundtable, which had its data tracked by Harvard University, shows that Harris was right; though that doesn’t take businesses that have since reopened into account.
For small businesses that have survived the last couple of years, many are still facing enormous challenges.
Let’s take a closer look at those challenges, as well as the common causes of small business failures, post-Covid.
Continuing Challenges
According to a survey of U.S. small businesses conducted by Goldman Sachs in January 2022, 71% of business owners said that Covid-19 was continuing to negatively affect their revenue. And by looking at a survey conducted by the Small Business Index, we can get a better idea of why small business owners are still facing challenges.
First off, one of the biggest challenges is simply being able to generate enough revenue to stay afloat. People’s buying habits changed during the Covid-19 pandemic.
For instance, many people are still concerned about mixing with other people and are therefore less likely to go into stores, restaurants, and other establishments, than they would have prior to the pandemic.
The Small Business Index survey also shows that business owners are concerned about complying with Covid-19 safety protocols, which is another hefty expense for many businesses, and that they are concerned about inflation, which has sky-rocketed in recent times, partly due to the post-Covid world.
Supply Chain Disruptions
From the moment the pandemic began, supply chain disruptions caused havoc to small businesses around the world. Indeed, alongside other causes, supply chain disruptions were a leading cause for the closure of many small businesses, and supply chain disruptions continue to be challenging for many businesses.
According to the Goldman Sachs survey, 69% of small business owners said that their bottom lines were affected by supply chain issues. Furthermore, most of those surveyed said that suppliers favored large businesses over small businesses, for the simple reason that big businesses place a larger volume of orders.
Finding and Retaining Employees
Another major issue that small businesses have faced over the last couple of years and continue to face in this emerging post-Covid world is the problem of finding and retaining employees.
The Goldman Sachs survey shows that 87% of small business owners are finding it challenging to recruit employees, and a whopping 97% said that the difficulties in finding and retaining employees are harming their bottom lines.
Many small businesses simply can’t compete with the salaries offered by bigger businesses.
Other Findings Confirm Supply Chain Issues and Labor Shortages Have Had a Negative Impact on Small Businesses
We can gain further insights by looking at the 2021 small business entrepreneurship survey from Incfile.
Out of the small businesses that were surveyed:
- 66% reported losses in 2020.
- 70% reported being negatively impacted by supply chain disruptions.
- More than 50% reported being affected by the nationwide labor shortage.
However, the survey also shows how many small businesses have been adapting to the challenges.
For instance, 40% of small businesses changed to digital solutions and almost 50% of those surveyed said they plan to make working from home a permanent solution.
An Optimistic Future
Despite the problems of the last couple of years and the ongoing issues that small businesses face as a result of the pandemic and the lockdowns, there is cause for optimism as we look toward the future.
Indeed, according to the Small Business Index survey, 77% of small business owners are optimistic about the future of their businesses.
And seeing as many small business owners remain confident in the face of adversity and are able to innovatively solve problems, there’s no reason why many small businesses can’t bounce back and be successful in a post-Covid world.
