Thursday, July 16, 2020

Only 38% of Small Businesses May be Left Standing

The nation's small businesses are reeling from the coronavirus pandemic. What was once thought to be a few weeks of lockdown has turned into months of disruption. A National Bureau of Economic Research study examined how big the impact of the pandemic is likely to be, querying small businesses on their ability to survive.

At the end of March/early April, NBER researchers asked a sample of small businesses whether they would still be in operation in December 2020 if the Covid crisis lasted one month, four months, or six months. The 72 percent majority of small businesses said they likely would be in operation in December if the Covid crisis lasted just one month. At four months, only 47 percent thought they would still be around in December. At six months, just 38 percent said it's likely they would survive. Here are the percentages of small businesses that think they could survive a 6-month Covid crisis by industry...

Percent of businesses likely to be in operation in December 2020 if Covid crisis lasts 6 months
Banking/finance: 59%
Real estate: 56%
Professional services: 54%
Construction: 45%
Arts/entertainment: 35%
Health care: 35%
Tourism/lodging: 27%
Personal services: 22%
Restaurant/bar: 15%

"The Covid-19 crisis represents a once-in-a-generaton crisis for America's small businesses," the NBER researchers conclude, "especially those that specialize in face-to-face service."

Source: National Bureau of Economic Research, How Are Small Businesses Adjusting to Covid-19? Early Evidence from a Survey, Working Paper 26989

No comments: