You may have noticed more diners at your local restaurants. Or saw that some of your favorite stores are busier once again. Small businesses have made some big changes to remain open despite the pandemic. But for some that doesn't mean it's back to business as usual quite yet.
Business owners are still grappling with a variety of challenges. A February 2021 survey conducted by Goldman Sachs’ 10,000 Small Businesses Voices, which helps entrepreneurs, found that 58% of small business owners haven’t paid themselves salaries, 50% have dipped into personal savings to keep their business afloat and only 11% are confident they will be able to maintain payroll without further government relief.
Counting on Congress. To remain open, these small companies are looking to Congress for help, according to Goldman Sachs surveys. Owners told Goldman Sachs researchers that politicians should prioritize key initiatives that include: creating a new loan program to provide small businesses with access to long-term capital, lowering health care costs, enabling commercial rent deferrals or other rent assistance, increasing access to affordable child care and providing tax incentives to help small businesses offset re-opening costs.
In 2020, some small businesses received money to cover up to 24 weeks of certain expenses through the Paycheck Protection Program. But that didn’t solve all of the problems many of them ran into. Fortunately, additional aid was made available: In December, Congress set aside more money for these loans, including second loans for some businesses.
Coming together. In addition to those PPP loans, support from customers was also vital to some small business owners, including two graduates of the Goldman Sachs 10,0000 Small Businesses program. In a recent episode of the Exchanges at Goldman Sachs podcast, Brent Reaves, owner of Smokey John’s Bar-B-Que in Texas, and JoEllen Hockenbrough, owner of Providence Power Yoga in Rhode Island, described how their local communities stepped up in a time of need.
“We’ve seen some moments of hope with people just rallying behind small businesses in general and trying to really support small businesses,” Reaves said. “It was really an opportunity to go through something very tough but to see how the community came together to try to help us stay afloat...that was a beautiful sight to see.”
“Keeping the community together as a small business is huge,” Hockenbrough added. “I’ve seen such an outpouring of support for each other and a sense of resiliency just to be able to go forward.”
Small, but mighty. People root for small businesses for a variety of reasons: their charm, their local connection, and, well, a lot of people work for them. Nearly half of U.S. private-sector workers are employed by small businesses.
And these small companies are essential to the fabric of local communities and beyond – they generate nearly 44% of U.S. economic output, according to a 2019 survey from the Small Business Administration.
Rebound of small businesses. Small businesses have remained pretty resilient despite the challenge of the pandemic. The number of active small businesses has nearly recovered to its pre-pandemic level as most closures proceed to be temporary and new business formation has surged, Goldman Sachs economists noted in a December 2020 report.
Some businesses have found success during a difficult time. How? “It’s all about the pivot,” as The New York Times put it. Two examples they cited: a barware company that expanded its customer base beyond businesses to include consumers and a co-working space that started offering online classes.
Still, the challenges small businesses are facing now could “cast a pall over the U.S. economy for years to come,” The Wall Street Journal noted. If fewer small businesses survive this pandemic, there may be fewer companies that become major U.S. employers in the future – and that could affect the overall labor market.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.