A Capital One survey found that small business owners are reducing spending, and most are not planning to hire new staff during the first half of the year.
Small business owners are cautiously optimistic about the next six months while still keeping an eye on shaky supply chains that could cause problems. Two stats from a new survey released by Capital One today illustrate this combination of worry and hope:
- 73% of business owners are concerned for their success over the next six months
- 85% are confident that they will still be operating six months from now
Anne Kave, head of business brand marketing at Capital One, said these contradictory sentiments are not surprising given that small business owners have always been quick to adapt to change.
"Pivots to enable them to stay afloat," she said. "Small business owners also are innovating in terms of product offerings and finding new pathways to profits."
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Kave said that small business owners are bracing for ongoing COVID-19 uncertainty by cutting costs now and stocking up on personal protective equipment. The survey found that 89% of business owners report having taken or planning to take these actions.
"They've gotten ahead of the current wave but they're wondering what the next year will entail," she said.
Capital One surveyed 1,635 business owners and financial decision makers across the US in November to understand how they were faring during the ongoing pandemic.
Fifty-three percent of business owners report that their business' financial position is the same or better than pre-pandemic. This is only down slightly from the last survey three months ago when 57% of business owners selected this response. Sixty-seven percent of business owners are confident that their businesses will return to pre-pandemic operations and revenues at some point.
Surprisingly, 75% of business owners have been able to keep the same number of employees or even increase staffing since the onset of the pandemic. This figure is down from 82% in December. Sixty-two percent are not planning to hire any new employees in the first half of 2021.
Small business owners are also optimistic about the US economy in the new year with 60% feeling confident that the outlook for the US economy will be favorable to businesses in 2021.
In the short-term, business owners are worried about the impact of a rise in coronavirus cases and the operating restrictions that may be imposed:
- 73% of business owners are concerned that an increase in COVID-19 infections will impact the overall success of their businesses in the next six months
- 65% say the pandemic has impacted their supply chain/vendors
- 71% of survey respondents with supply chain concerns were worried it would impact performance in the fourth quarter
Forty-two percent of business owners said sales had dropped over the last three months, and about the same amount expect Q4 sales this year to be lower than last year. In the most recent survey, 11% of business owners report having temporarily closed or planning to temporarily close as a result of the pandemic in the next six months.
Kave said that small business owners have accelerated their digital capabilities as a result of the pandemic.
"We're seeing widespread adoption of contactless capabilities, online ordering and payments and other virtual ways of connecting with teams and customers," she said.
Kave expects some of these changes to last beyond the pandemic, particularly new product offerings such as virtual experiences.
Capital One has revised its services and support for customers during the pandemic particularly with online banking, she said.
Kave said Capital One is a founding partner of Small Unites, an advocacy project that makes it easy for individuals to support small businesses. The site rounds up links to a Small Business Relief Fund, the National Urban League, and GoFundMe campaigns that support small companies.
"The site provides actionable ways for consumers to get involved with cash donations or time," she said.
Kave also encourages people to promote small businesses via word of mouth as that is the best marketing tool.
"Small business owners need us now, and there's a way for all of us to support them," she said.
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