The Impact of COVID-19 on Small Businesses – May Monthly Update

Small Businesses are at the core of our nation’s economy and the challenges they face are important to everyone. To better understand the impact of COVID -19 on these businesses, the U.S. Census Bureau began reaching out to small businesses in order to aid decision-makers in serving their urgent needs. For the Survey, the Census Bureau defined a small business as a single location business with employment between 1 and 499 and receipts of at least $1,000.

Consisting of 16 questions, this 5-minute survey reaches close to 1 million businesses split across a 9-week rotation to reduce burden and lessen survey fatigue. The survey is reaching out to small businesses in every area of the U.S. Economy. The first survey was conducted between 4/26/20 and 5/2/20. The most recent results are from the week ending 5/30/20 so we can now track the evolution of the COVID-19 impact across the whole month of May.

The results are first categorized by major, 2 digit NAICS code classification. Slightly more specific data (by 3 digit NAICS code) is now available so we are able to more closely track elements which are relevant to the Pet Industry. Here are the 14 “pet relevant” groups for which we have compiled data:

• National Avg: Covers All Major Areas with a few Exceptions like Agricultural Production and Religious Organizations
• Product Related Groups:
  • 31-33: Manufacturers – All manufacturers
    • 311 – Food Manufacturers (Both Human & Animal)
  • 42: Wholesalers/Distributors – Wholesalers/Distributors of any type products
    • 424 – Distributors of Nondurable Goods (Includes food and nondurable supplies)
  • 44-45: Retail Trade – This includes everything from gas stations to Pet Stores (#453910). No restaurants
    • 444 – Building Materials/Hardware/Farm
    • 445 – Food & Beverage Stores
    • 452 – General Merchandise Stores
    • 453 – Miscellaneous Retailers (includes Pet Stores)
    • 454 – Nonstore Retailers
  • Services Related Groups:
    • 54: Professional, Scientific and Technical Services – Legal, Advertising Agencies, etc… and Vet Clinics (#541940)
    • 81: Other Services – Funeral Homes, Barber Shops, Auto Repair, etc … and Pet Care Services (#812910)
      • 812 – Laundry & Personal Care (includes Pet Care Services)

The data from each group has been bundled into 3 charts showing the group’s responses to 8 particularly relevant questions about the impact of COVID-19.

Here are the charts and the questions that will be answered on each:

Chart #1: Impact of Covid-19 on Your Business

1. Overall, how has this business been affected by the COVID-19 pandemic?

Chart #2: Key Business Elements – Weekly Changes

2. In the last week, did this business have a change in operating revenues?
3. In the last week, did this business have disruptions in its supply chain?
4. In the last week, did this business temporarily close any of its locations for at least one day?
5. In the last week, did this business have a change in the number of paid employees?

Chart #3: Government Assistance & Your Outlook For The Future

6. Since 3/13, has this business requested/received financial assistance from Paycheck Protection Program (PPP)?
7. Since 3/13, has this business received any financial assistance from any Federal Program?
8. In your opinion, how much time will pass before this business returns to its usual level of operations?

We are not going to review each group in this report. We are going to take a closer look at the National Averages, Miscellaneous Retailers (includes Pet Stores) and Nonstore Retailers. At the conclusion of the report we will make the data for all 14 groups available for you to download. You can then pick the ones that are most relevant to your particular business.

A word of caution: Remember, this data is only for the small businesses in any particular classification. It doesn’t include the big chains, which could be impacted differently because of their size, capabilities or resources.

Let’s get started with the National Averages.

• The perception of a negative impact remains high, 85+%, but it has become more moderate.
• Not too many folks are seeing any positives, but the percentage seeing little or no effect has grown to 11.4%.

• Every measurement on this chart is moving in the right direction. However, in terms of revenue businesses still have a very long way to go.
• By the end of the month, more areas were reducing “lock downs” so the closures decreased, but still impacted over 1 in every 4 small business.
• The employment situation also showed significant improvement. The gap between businesses adding and decreasing employees has narrowed.

• Perhaps the most significant change is in the number of businesses receiving PPP funds. On May 2^nd, 51% of businesses who had applied for PPP had received funds. By May 30^th, this number had grown to 95%.
• The other big change is that the projected time for recovery has increased, with 41.2% now saying a return to normal will take 6 months or more. Plus, 1 in every 10 businesses say that they will never return to “normal”.

Now, let’s look at MISCELLANEOUS STORES

• While Pet Stores were generally deemed “essential”, most stores in this group, like gift shops, art dealers and used furniture stores were not, which explains the high initial negative impact. It did moderate slightly over the month.
• The numbers are still very small, but the percentage of businesses expecting a positive outcome (5.7%) or little/no effect (7.4%) on their business are both increasing.

• The change in revenue started in the right direction but plateaued at mid-month. In the last week it appears to be moving back on track.
• Supply chain problems remain a big factor. While closures are down significantly, they still impact almost 4 in 10 businesses.
• The number of businesses with a decreasing number of employees has been cut in half. However, it is still twice the number of companies adding employees.

• The PPP funds really rolled out in May to this group. On May 2^nd, only 41% had received any $. By May 30^th, that number had grown to 93%. In fact, 78% of all these businesses received some type of federal aid.
• This group also sees a longer recovery time, with 44.5% saying that it will be 6 months or more until a return to normal. This is actually a little more optimistic than their feelings on May 23^rd when a full 62.5% thought that a return to normal would take 6 months or more (46.1%) or actually never happen (16.4%).

Finally, let’s look at NONSTORE RETAILERS

• Although the percentage dropped sharply in the last week of May, a large majority of businesses still see COVID-19 as a negative impact on their business. 12.1% said that the effect would be positive.

• The revenue situation is improving rapidly. Almost 1 in 4 businesses saw an increase in revenue, but 42.5% are still reporting declining $ales.
• Supply chain problems and closures are improving but 23.8% with closures is still high for businesses with no retail outlets.
• The employment situation totally turned around in May. As of May 30, more companies are adding employees (9.0%) than are losing them (6.9%).

• The PPP was delivered in May. By 5/30, 96% of the businesses who applied for funds had received payment.
• Their overall projection for recovery is a little better than average. 6 months or longer still has the largest number (31.8%) but 60% of this group say that there was no impact on their business by COVID-19 or that recovery will occur within 6 months.

As you can see from our examples, while the specifics may vary by business category and the situation is generally improving, COVID-19 has had a broad negative impact across the full spectrum of U.S. Small Businesses. Even small businesses in channels that are showing overall growth during the crisis, like Grocery, Hardware and Nonstore, are having serious problems. The overall national growth in these channels is being driven by the “big guys”, like Kroger, Home Depot and Amazon. The overall projection for a return to normal for small businesses is 6 or more months, which would put it in December 2020 or later.

That concludes our May update, but as we said, more data is available for you. Files with the specific data/charts for all 14 business categories that we identified as relevant to the Pet Industry (including those used in this report) are available for download. Each file is a 1 page word document with 3 COVID-19 impact charts for a specific business category. There is no commentary – just data. Pick the ones that are most relevant for your business and share them with your associates. STAY SAFE!

National Average & Major Business Categories

More Defined Supply Chain Categories

Drilling Down into the Retail Trade

Finally, Personal Care Services (includes Pet Care)