This article provides the first analysis of the impact of COVID-19 on the number of small businesses operating in the United States and the United States, using nationwide representative data from April 2020 CPS, the first month to fully capture the early effects of the pandemic. Using this timely data, I’m looking into the impact of COVID-19 on small business owners in mid-April 2020, the first month of widespread shelter restrictions in the United States. Taken together, these results show that losses were spread across demographics and business types, no group was immune to the negative impact of social distancing requirements and changes in demand.
In October 2021, 29% of small businesses reported a severe negative impact from the COVID-19 pandemic, a 12 percentage point decrease from October 12, 2020 (also referred to as October 2020). However, according to a Fall 2020 survey on the impact of the COVID-19 pandemic on small businesses, only 12.2% of small business owners reported that their operations were profitable and growing. In the spring of 2020, New York City businesses were hit harder by the COVID-19 pandemic than the rest of the country, and negative impacts continue for small businesses with fewer than 500 employees.
However, as discussed in this article, even during the COVID-19 outbreak, some activity is thriving. We’ve also seen many small businesses find creative ways to succeed during the coronavirus pandemic, from entering new markets to finding new ways to offer products and services.
While all businesses need a little creativity to shine, the COVID-19 pandemic has given many entrepreneurs the opportunity to rethink their entire approach. This entrepreneurial leadership has enabled companies of all sizes to focus on the current needs of their customers, especially mass production of personal protective equipment and a hands-on approach to creating and distributing a COVID-19 vaccine.
Protecting and supporting the health of small businesses and entrepreneurs during and after the COVID-19 pandemic is essential as they play a special role in the aftermath of the crisis and the expected post-pandemic boom. Among the various things that the coronavirus pandemic has taught us is the need to modernize the economy, including identifying the small business sector and defining formal and informal sectors at the suburban level in Ethiopia, and small businesses themselves also have a role to play. Social distancing restrictions and COVID-19-related health and economic demand changes are expected to lead to the closure of many small businesses and entrepreneurial businesses, but there is very little initial evidence of an impact.
I found that the number of employed entrepreneurs has dropped dramatically from 15.0M in February 2020 to 11.7M in April 2020 due to COVID-19 mandates and changes in health and economic demand. The number of active entrepreneurs increased by 7 percentage points, resulting in a 15% decrease in commercial activity from February 2020 to May 2020 and a further increase of 5 percentage points in June, with an 8% decrease in commercial activity compared to February in June 2020 . The analysis of the impact of COVID-19 provides an answer to the question of whether there have been further closures of small businesses or their partial recovery, as small business owners tried to reopen or partially reopen.
Those working in the construction (80%) and health and welfare (86%) sectors reported a rate of decline in income in May 2020 that was faster than the state average (77%); however, the shares of small businesses that reported a decline from the previous week have steadily declined since then, reaching 16% in the health and welfare sector and 21% in construction in October 2021. Although the combined firms are more growth-oriented and stable, they recorded a 20% decline from February 2020 to April 2020. The McKinsey survey found that nearly a third of small businesses were operating at a loss or break even before the COVID-19 crisis.
Post-COVID has put pressure on entrepreneurs who have experienced an unprecedented shock for their entrepreneurs (Torres et al., 2021b). Unable to physically meet with investors and clients, some entrepreneurs have been forced to downsize their businesses; others have closed their businesses, and lone entrepreneurs have found themselves more isolated than before. When the COVID-19 pandemic began to spread and important regulatory procedures were put in place for businesses, retailers that were able to adapt to these changes successfully did not close their doors. Some companies have revised their HR policies, forcing their employees to work in shifts and shifts to reduce the risk of contracting the COVID-19 pandemic.
The macro and microeconomic impacts of the COVID-19 shock differ between small and large businesses, and between self-employed and registered businesses. Small businesses in sectors hardest hit by COVID-19 and least financially resilient (such as housing and food service, education and arts, entertainment and recreation) employ 20 million people and generate 12% of US business revenue. These numbers are even worse if you narrow down the impact of COVID-19 on black-owned businesses.
Estimates from the U.S. Census Small Business Weekly Pulse Study show that about 50% of companies report a large negative impact from the pandemic and that only 15%-20% of companies have enough liquidity to cover 3 months of business (Bon). , Mejia, & Lafortune, 2020; US Census Bureau 2020). According to the Small Business Pulse Survey, while small businesses in various sectors of New York City reported adverse effects from the pandemic in May 2020, the persistence of these effects varied significantly by industry, as shown in Figure 1. 4. More than a quarter (26%) of entrepreneurs say their work-life balance is worse than before Covid. Companies had very different ideas about the likely duration of COVID-related outages.